How Does a Change in Gross Salary Impact ESIC Contributions and Employee Take-Home Pay?

Hello,

If the gross salary changes in any month, does it affect the ESIC contribution? Also, I want to know how to structure the gross salary to avoid ESIC contribution for employees with gross salary <= Rs. 21,000, while maintaining the same net take-home salary. What adjustments can be made in terms of deductions and the gross amount?

Thank you.

Employee contribution is at 1.75% of the gross salary; hence, it may change every month. This is very basic information.

You can't avoid ESIC for employees earning Rs. 21,000 or less per month.

Contribution Periods Under the ESI Act

The ESI Act envisages splitting up a year into two contribution periods, i.e., from 1st April to 30th September and again from 1st October to 31st March. If the salary limit is crossed during a contribution period, the contribution has to be continued until the current contribution period is over, and there cannot be any discontinuance in between. So, please complete the contribution period, and you can avail of the ESI benefit until the corresponding benefit period is over (1st Jan to 30th June & 1st July to 31st December, as the case may be).