Employee's Salary Increase Affects ESIC Eligibility: Can We Keep Him Covered?

Hi HR Folks, One employee joined the organization in January 2022 with a monthly salary of Rs. 20,000, and his name was included in ESIC. After completing his service, his salary was revised from Rs. 20,000 to Rs. 23,000, and now he is not eligible for ESIC (as the wage limit is Rs. 21,000).

Question about ESIC Eligibility

My question is, can we continue his name in ESIC or not? If we can continue, how can we do so? How much wage should we show in ESIC?

MOST URGENT PLEASE

When his salary crossed Rs 21,000, he became ineligible for ESI coverage from the next contribution period onwards. That is, if his salary increase took place in February 2023, he will continue to be in ESI for one more month, and from April onwards, he will be out of ESI. However, the ESIC has introduced a new scheme whereby the employee can retain their ESI coverage even after an increase in salary beyond Rs 21,000. The date on which this will be made effective and other details are not known right now, but I will get them very soon.

If an employee's salary is more than 21,000/-, they should take health insurance or a workmen's compensation policy for the employees.

With Regards,

Karunakaran Y N

[website] www.klpcorporateservices.com

Phone: [Phone Number Removed For Privacy-Reasons]

If an employee's salary is less than 21,001/- for the month of April, then ESI will be deducted. Now, the salary has increased in the month of May, and the salary has become 25,000/-. In this case, ESI will be deducted on 25,000/-. If an employee becomes a member for the month of April, then he will continue from April to September.

Contribution Periods in ESI

There are two contribution periods in ESI:

a) April to September
b) October to March.

Benefit Periods

The benefit period for a) April to September will be January to June of the succeeding year, and for b) October to March, it will be July to December.

Wage Ceiling and ESI Coverage

Any employee who crosses the wage ceiling of Rs. 21,000/- during a contribution period a) or b) will continue to be covered under ESI until the end of the contribution period. However, ESI has to be paid on the wages exceeding Rs. 21,000/-; in your case, it will be Rs. 23,000/- until the end of the respective contribution period, subject to deductions for LOP if any. Beyond the contribution period, he/she will be outside the purview of ESI.

Medical Benefits Beyond ESI

It is the prerogative of the company to extend medical benefits to those employees who are outside the purview of ESI, and it is not mandatory.

Trust your query is clarified.

Regards,
MVK