Understanding ESI Deductions: Do Low-Salary Employees and Conveyance Allowance Apply?

Hi, Please confirm whether employees earning a Gross Salary below Rs. 5200/- need to contribute to ESI. If the employees are not required to contribute, then please confirm whether the employer has to contribute the entire 4%.

Also, please confirm whether ESI needs to be deducted from the Conveyance Allowance paid to employees separately.

Workers whose daily rate of wages is Rs. 176 or less are not required to contribute their share. However, the employer must contribute their share of 3.25%, meaning there is no need to pay the full 4%.

Conveyance Allowance and ESI Contribution
Conveyance allowance paid separately as reimbursement will not attract ESI. Following a Supreme Court verdict, even the traveling or conveyance allowance paid along with the salary is excluded from the salary for ESI contribution.