Is ESI Deduction Mandatory for Employees Earning 15k with Mediclaim Benefits?

Hi all,

Employee salary is 15k per month. The employer provides medi-claim benefits to the employee, and there is no ESI deduction in his salary.

Is there any mandatory clause to deduct ESI and pay the ESI amount? (Is ESI benefit and deduction compulsory for employees earning below 21K or not?)

Dear Mr. Shankar,

You need to ascertain whether your establishment is registered under the ESI Act, 1948, or whether the ESI Act is applicable to your establishment. If the Act is applicable, all employees whose monthly gross salary is Rs 21,000 and below will fall under the purview of the Act, irrespective of coverage under any insurance or mediclaim policy, etc.

Dear Shankar, if your organization is in an ESI-implemented area and the Act is applicable to your organization, then you must cover your employees under ESI if their monthly gross salary is 21K or below. However, an exemption may be granted only if you can prove that you provide better medical benefits to your employees than ESIC. The appropriate officer is empowered to accept or reject the application regarding exclusion from ESIC.

Thanks & Regards,

V. SHAKYA
HR & Labour, Corporate Laws Advisor

Dear Mr. Shankar, as per my understanding, it is mandatory to have ESI coverage for your employees who are drawing a gross salary below 21K per month when your organization has 10 or more employees. Any other medical benefits may not replace ESIC coverage, as most ESIC inspectors may not agree with your claim that your medical coverage offers better benefits than ESIC (in case there is a medical insurance coverage policy that covers all the benefits that ESI offers). Since ESI offers many benefits to the covered employees, I personally don't believe it can be replaced by any other insurance policies. (Sorry if I am wrong.)

The medical insurance coverage policy will replace ESI in areas declared as ESI-Non-implemented areas. The attached information may be helpful for you.

Thanks and Best Regards,
Syam

As your organization is enrolled with ESI, then whoever is earning gross wages of 21,000/- or below, ESI contribution is mandatory.

Any employee who is earning above 21,000/- may have other health benefits such as mediclaim.

In your case, ESI deduction is compulsory. Mediclaim càn not be a substitute to ESI scheme. Mediclaim can be given besides ESI Scheme viewing present policy of eligibility of super speciality treatment.

Hi,

Even if the so-called mediclaim policies are obtained in respect of all employees (even for those earning wages less than Rs. 21,000 per month), such employees will still be covered under the ESI Act, 1948. This coverage is compulsory, and there are no exceptions available.

Thank you.