ESIC Contributions After Salary Increase: Should Payments Continue Until March 2018?

Dear Team, An employee has been covered under ESIC, and contributions are being paid on a regular basis. In the month of November 2017, the employee received an increment. With the revised salary paid in November, the monthly gross now exceeds INR 21,000. The increment is effective from 1st April, and the arrears are paid in mid-December.

As per my understanding, ESIC contributions, once initiated, need to continue for a 6-month period. In this case, contributions should be paid until March 2018. Starting from April 2018, ESIC contributions will cease.

Since ESIC contributions are being made, the employee will be eligible for benefits as per ESIC rules.

I would appreciate your views and suggestions if my understanding differs from current practices.

Thank you.

Dear Deepak,

You are absolutely right. You need to continue the contribution up to March 2018. The employee will keep getting the benefits from ESIC until the subsequent benefit period, which will end in December 2018.

Regards,
Mahesh Kumar

Little correction: Benefits period will be from April 2018 to September 2018.

Thank you!

Please find below an excerpt taken from the ESI FAQ booklet on the ESIC site, which clarifies contribution and benefit periods.

What are the contribution periods and benefit periods?

The financial year from April to March has been divided into two six-monthly contribution periods, i.e., 1st April to 30th September and 1st October to 31st March of the next year. The relevant benefit period corresponding to each contribution period commences three months after the end of that contribution period, i.e., January to June and July to December. (The calendar year from January to December has been divided into two six-monthly benefit periods).

Thank you all for the responses.

Request to share any of the documents or excerpts that support the statement mentioned by me (ESIC contribution once started needs to be continued till the completion of a 6-month period. In this case, the contribution shall be paid till March 2018. From April 2018 onwards, the contribution to ESIC shall be stopped.) in the earlier post as I am not able to find the same from the ESIC Act.

Dear Deepak Pawar,

The proviso to Rule 50 of ESI Rules 1960 lays down that if at any time after the commencement of the contribution period, the wages of the employee exceed Rs. 21,000 per month, he will continue to be an employee till the end of the contribution period. Hope this explanation suffices.

B. Saikumar
HR & Labour Relations Advisor
Navi Mumbai