Dear All,
I am working in an I.T. company in Ahmedabad. Until now, we had only professional tax deductions in our salary, but from this month (July salary, which was paid in August), there is a huge deduction in our salary.
Eligibility for ESIC
My CTC is 8000 Rs/month. Am I eligible for ESIC? I have heard ESIC is not applicable if the gross salary is more than 6500 Rs. If ESIC is applicable for me, then I am only entitled to pay 1.75%, but my employer has deducted 520 Rs. They say employees have to pay 4.75% as well. What can be done if they are not paying their part?
Company Registration and ESIC Compliance
We have opposed this and have asked to remove ESIC, but they are saying that our company is now registered as a Pvt. Ltd., so ESIC is mandatory. However, even our ESIC forms are not submitted yet, and the salary is deducted for last month. They are asking us to submit the ESIC form now. Even though I am declining to fill up the form, our HR is saying that it is mandatory.
Employment Bond and Salary Dispute
Following this, I informed our HR & Manager that if they will not give me the said salary (8000 Rs/month), then I am not going to do this job. But our HR told me that I have to continue for 1.5 years, or I have to pay them 40,000 Rs. I just joined this company 1 month ago. I have not signed any bond/legal or stamp papers with them, but what happened with me is when HR gave me the appointment letter, she asked me to sign on their copy. In company policies, it is written that for the first three months, an employee is on training & probation period. If any employee leaves the company before 1.5 years, then he has to pay 40,000 to the company as a training amount.
I feel I have been cheated because when our HR gave me the appointment letter, she gave me a copy and asked me to sign on their copy. She told me that this is general company policies. So, I had signed it; it was just on a simple paper, company letter pad. I told our HR that I have not signed any bond, so you cannot do anything. In court, this paper has no value, and also the company has not provided me any training. I am working on live projects from the very first day. I told her that to prove that the company has spent on my training, you have to give me training in real, and during the training period, I have not to do any productive work. But she told me that rules are different for IT companies. "You are working under sir's guidance (team leader's guidance), so that is one kind of training."
Finally, she told me that they will not increase my salary, and I can leave if I want, but first, I have to pay them 40,000 or face legal problems.
Options and Concerns
So, what can be done in this case? I do not want to continue in this company if they don't offer the said amount. They also do not give any paid leave during the probation period. So, my gross salary becomes very less after all tax, ESIC, leaves, etc. deductions; it becomes 6000, and I cannot afford to go there for this salary. I am working as a software engineer.
One thing I can do is:
- Go to the company and not do any work so they can terminate me?
- Not go to the office regularly... like I go for 2 days, and then 3 days in a week I don't go to the job! So legally, they cannot prove that I have broken the bond or let's say their employment terms!
In no way is it written in company policy that if the employer terminates the employee, then the employee has to pay 40,000 (NOTHING SIMILAR TO THIS IS WRITTEN).
One more thing is written in the offer letter/company terms:
If any employee remains absent for continuous 7 days without prior notification, then their employment gets canceled.
HR's Responses to ESIC Queries
Here are answers by our HR to the questions we (employees) had submitted to her regarding ESIC. Enjoy it!
============================
- Why have you (Company) deducted 4.75% when it should be deducted from the company?
- Because it is part of your CTC, i.e., Gross salary.
- Please make it optional to go for ESIC. If not, then you (Company) should pay 4.75%.
- There is no option available for that.
- If PF will be deducted, then the same analogy will apply? i.e., 24% from our salary?
- It will be part of your CTC, so the same analogy will apply, but there is a different formula and provisions for PF.
- If it is the thing, then increase our salary.
- It can be increased on the time; it cannot be increased without any proper procedure or channel.
- Does an employee need to afford the whole 6.5%? I have found on some blogs & forums that 4.75% are to be paid by the Company.
- Only if it is not part of the CTC, but it is, so it will be deducted, and the company as well is not getting any benefit from it.
- We had a meeting about all this stuff this month only, then why ESIC deduction from last month's pay?
- Because the company has been registered in the month of JULY.
- How come we have been charged when we have not even registered?
- Even the company is in the registration process, still we need to deduct.
- Why were we not informed about this deduction in advance? & we are informed now after deduction?
- There was a seminar conducted to give you information.
- For trainees, 3 months we are told to get a stipend. And this reduction is on salary, so on what basis is this reduction done for trainees?
Difference Between Apprentice and Trainee
1. A trainee employee is an actual employee and hired by certain organizations. Organizations have to pay them a salary and provide certain benefits. An apprentice is not an employee, but he/she may get some subsidy from the organizations or individuals.
2. Both trainee employees and apprentices are under agreement with organizations/individuals, but the agreement between trainee employees and organizations should be a standard labor contract. The agreement between apprentices and organizations/individuals should be a loose statement regarding the learning environment, subsidy/benefits, and contract period.
3. The period of apprenticeship training, which shall be specified in the contract of apprenticeship, shall be for those who, having undergone institutional training in a school or other institution recognized (so you are not getting that training).
4. The contract of apprenticeship shall terminate on the expiry of the period of apprenticeship training, which may be 3 months or 6 months (We have not hired you for 3 months or 6 months).
Still, you consider yourself as a trainee then,
Further, Section 2(9) of the ESI Act has also been amended from 01-06-2010. In view of the amendment: ALL APPRENTICES and TRAINEES appointed under the Standing Orders of the Factories/Establishments are covered under the provisions of the ESI Act.
Regards,
From India, Ahmadabad
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I am working in an I.T. company in Ahmedabad. Until now, we had only professional tax deductions in our salary, but from this month (July salary, which was paid in August), there is a huge deduction in our salary.
Eligibility for ESIC
My CTC is 8000 Rs/month. Am I eligible for ESIC? I have heard ESIC is not applicable if the gross salary is more than 6500 Rs. If ESIC is applicable for me, then I am only entitled to pay 1.75%, but my employer has deducted 520 Rs. They say employees have to pay 4.75% as well. What can be done if they are not paying their part?
Company Registration and ESIC Compliance
We have opposed this and have asked to remove ESIC, but they are saying that our company is now registered as a Pvt. Ltd., so ESIC is mandatory. However, even our ESIC forms are not submitted yet, and the salary is deducted for last month. They are asking us to submit the ESIC form now. Even though I am declining to fill up the form, our HR is saying that it is mandatory.
Employment Bond and Salary Dispute
Following this, I informed our HR & Manager that if they will not give me the said salary (8000 Rs/month), then I am not going to do this job. But our HR told me that I have to continue for 1.5 years, or I have to pay them 40,000 Rs. I just joined this company 1 month ago. I have not signed any bond/legal or stamp papers with them, but what happened with me is when HR gave me the appointment letter, she asked me to sign on their copy. In company policies, it is written that for the first three months, an employee is on training & probation period. If any employee leaves the company before 1.5 years, then he has to pay 40,000 to the company as a training amount.
I feel I have been cheated because when our HR gave me the appointment letter, she gave me a copy and asked me to sign on their copy. She told me that this is general company policies. So, I had signed it; it was just on a simple paper, company letter pad. I told our HR that I have not signed any bond, so you cannot do anything. In court, this paper has no value, and also the company has not provided me any training. I am working on live projects from the very first day. I told her that to prove that the company has spent on my training, you have to give me training in real, and during the training period, I have not to do any productive work. But she told me that rules are different for IT companies. "You are working under sir's guidance (team leader's guidance), so that is one kind of training."
Finally, she told me that they will not increase my salary, and I can leave if I want, but first, I have to pay them 40,000 or face legal problems.
Options and Concerns
So, what can be done in this case? I do not want to continue in this company if they don't offer the said amount. They also do not give any paid leave during the probation period. So, my gross salary becomes very less after all tax, ESIC, leaves, etc. deductions; it becomes 6000, and I cannot afford to go there for this salary. I am working as a software engineer.
One thing I can do is:
- Go to the company and not do any work so they can terminate me?
- Not go to the office regularly... like I go for 2 days, and then 3 days in a week I don't go to the job! So legally, they cannot prove that I have broken the bond or let's say their employment terms!
In no way is it written in company policy that if the employer terminates the employee, then the employee has to pay 40,000 (NOTHING SIMILAR TO THIS IS WRITTEN).
One more thing is written in the offer letter/company terms:
If any employee remains absent for continuous 7 days without prior notification, then their employment gets canceled.
HR's Responses to ESIC Queries
Here are answers by our HR to the questions we (employees) had submitted to her regarding ESIC. Enjoy it!
============================
- Why have you (Company) deducted 4.75% when it should be deducted from the company?
- Because it is part of your CTC, i.e., Gross salary.
- Please make it optional to go for ESIC. If not, then you (Company) should pay 4.75%.
- There is no option available for that.
- If PF will be deducted, then the same analogy will apply? i.e., 24% from our salary?
- It will be part of your CTC, so the same analogy will apply, but there is a different formula and provisions for PF.
- If it is the thing, then increase our salary.
- It can be increased on the time; it cannot be increased without any proper procedure or channel.
- Does an employee need to afford the whole 6.5%? I have found on some blogs & forums that 4.75% are to be paid by the Company.
- Only if it is not part of the CTC, but it is, so it will be deducted, and the company as well is not getting any benefit from it.
- We had a meeting about all this stuff this month only, then why ESIC deduction from last month's pay?
- Because the company has been registered in the month of JULY.
- How come we have been charged when we have not even registered?
- Even the company is in the registration process, still we need to deduct.
- Why were we not informed about this deduction in advance? & we are informed now after deduction?
- There was a seminar conducted to give you information.
- For trainees, 3 months we are told to get a stipend. And this reduction is on salary, so on what basis is this reduction done for trainees?
Difference Between Apprentice and Trainee
1. A trainee employee is an actual employee and hired by certain organizations. Organizations have to pay them a salary and provide certain benefits. An apprentice is not an employee, but he/she may get some subsidy from the organizations or individuals.
2. Both trainee employees and apprentices are under agreement with organizations/individuals, but the agreement between trainee employees and organizations should be a standard labor contract. The agreement between apprentices and organizations/individuals should be a loose statement regarding the learning environment, subsidy/benefits, and contract period.
3. The period of apprenticeship training, which shall be specified in the contract of apprenticeship, shall be for those who, having undergone institutional training in a school or other institution recognized (so you are not getting that training).
4. The contract of apprenticeship shall terminate on the expiry of the period of apprenticeship training, which may be 3 months or 6 months (We have not hired you for 3 months or 6 months).
Still, you consider yourself as a trainee then,
Further, Section 2(9) of the ESI Act has also been amended from 01-06-2010. In view of the amendment: ALL APPRENTICES and TRAINEES appointed under the Standing Orders of the Factories/Establishments are covered under the provisions of the ESI Act.
Regards,
From India, Ahmadabad
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First of all, your employer cannot force you to pay Rs. 40,000/- based on the appointment letter. If it were so easy, what importance would a bond paper possess? An appointment letter does not constitute any legal obligation, so he cannot take any legal steps.
Secondly, yes, you are eligible for ESIC because employees with a salary of Rs. 15,000/- or below are eligible for ESIC. You only have to pay 1.75% of Rs. 8,000/-, i.e., Rs. 245/-.
Now, concerning PF, you need to check your salary breakup on the offer letter. If the salary breakup is not provided in the offer letter, ask for it from your HR Manager. If your salary breakup shows a basic salary of Rs. 6,500/- or below, then your PF should be deducted at 12% of the basic salary, whether voluntarily or involuntarily. However, if your basic salary is more than Rs. 6,500/-, you have the following options:
- Whether you want PF deduction is entirely your choice.
- Whether you want PF deduction based on the actual basic salary or only on Rs. 6,500/- is also your choice.
- No employer can deduct your PF by more than 12% without your consent. If you wish to increase that percentage for more savings, you can, but the employer cannot avoid their contribution. This means the increased percentage would be an addition to 24% (12% of basic salary from the employee + 12% of basic salary from the employer).
PF and ESIC contributions can be deducted from the month of registration only.
If you have any other queries, feel free to ask.
Regards,
Pooja
From India, Hyderabad
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11Secondly, yes, you are eligible for ESIC because employees with a salary of Rs. 15,000/- or below are eligible for ESIC. You only have to pay 1.75% of Rs. 8,000/-, i.e., Rs. 245/-.
Now, concerning PF, you need to check your salary breakup on the offer letter. If the salary breakup is not provided in the offer letter, ask for it from your HR Manager. If your salary breakup shows a basic salary of Rs. 6,500/- or below, then your PF should be deducted at 12% of the basic salary, whether voluntarily or involuntarily. However, if your basic salary is more than Rs. 6,500/-, you have the following options:
- Whether you want PF deduction is entirely your choice.
- Whether you want PF deduction based on the actual basic salary or only on Rs. 6,500/- is also your choice.
- No employer can deduct your PF by more than 12% without your consent. If you wish to increase that percentage for more savings, you can, but the employer cannot avoid their contribution. This means the increased percentage would be an addition to 24% (12% of basic salary from the employee + 12% of basic salary from the employer).
PF and ESIC contributions can be deducted from the month of registration only.
If you have any other queries, feel free to ask.
Regards,
Pooja
From India, Hyderabad
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Dear Private Employee,
Your query seems to be very confusing, so first, I am trying to put them in order:
Q 1. Am I under the provisions of ESI if my CTC is ₹8000?
A1. Yes, you are under the provisions of the Act.
Q 2. Company is asking to fill the forms pertaining to ESI. Should I fill the same?
A2. Yes, it is mandatory to fill the forms.
Q 3. Company has deducted ESI at 4.75% of your gross salary. Is it correct?
A3. If the share of the employer has been deducted from your salary, then it is illegal. However, I think that you are confusing the concept of CTC vs. gross/net salary. So, I request you to share your salary breakup so that other members can also give their valuable inputs on the topic.
Q 4. I want to quit the job, but is the agreement legal? Will I have to pay ₹40000?
A4. If you only signed the general company policy document, then you don't have to worry about anything.
Before you take any step, it is suggested that you first discuss the matter with your company HR and get clarity about the salary structure and the so-called bond.
Regards,
Preetam Deshpande
From India, Mumbai
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Your query seems to be very confusing, so first, I am trying to put them in order:
Q 1. Am I under the provisions of ESI if my CTC is ₹8000?
A1. Yes, you are under the provisions of the Act.
Q 2. Company is asking to fill the forms pertaining to ESI. Should I fill the same?
A2. Yes, it is mandatory to fill the forms.
Q 3. Company has deducted ESI at 4.75% of your gross salary. Is it correct?
A3. If the share of the employer has been deducted from your salary, then it is illegal. However, I think that you are confusing the concept of CTC vs. gross/net salary. So, I request you to share your salary breakup so that other members can also give their valuable inputs on the topic.
Q 4. I want to quit the job, but is the agreement legal? Will I have to pay ₹40000?
A4. If you only signed the general company policy document, then you don't have to worry about anything.
Before you take any step, it is suggested that you first discuss the matter with your company HR and get clarity about the salary structure and the so-called bond.
Regards,
Preetam Deshpande
From India, Mumbai
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Dear Mr.,
First of all, I would like to confirm the applicability of ESIC and PF for you.
If your gross salary is less than ₹15,000, then you are eligible for ESIC, and it is mandatory for the company to deduct the same.
In the case of PF, if your basic salary is ₹6,500, then you are eligible for the deduction of PF from your salary, which is at 12% on the (Basic + DA).
CTC and Deductions
Now, as per the details you provided, it is mentioned that you are getting a CTC of ₹8,000.
When you are receiving CTC, the PF and ESIC employer's share will be deducted from your salary. For ESIC, the employer's share of 4.75% will be deducted from your salary.
Legal Implications of Not Signing Documents
As you mentioned that you have not signed any document, bond, or legal paper at the time of joining, the company can't take any legal proceedings against you for the recovery of ₹40,000.
It is advised that you leave the company despite signing the appointment letter along with the company policy letter. If you leave, you will lose a maximum of a month's salary, i.e., ₹8,000. However, if you continue the job, it may cause problems for you and your professional career. It will also be a waste of time for your professional growth.
Regards,
Munish Kumar
[Email Removed For Privacy Reasons]
From India, Delhi
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First of all, I would like to confirm the applicability of ESIC and PF for you.
If your gross salary is less than ₹15,000, then you are eligible for ESIC, and it is mandatory for the company to deduct the same.
In the case of PF, if your basic salary is ₹6,500, then you are eligible for the deduction of PF from your salary, which is at 12% on the (Basic + DA).
CTC and Deductions
Now, as per the details you provided, it is mentioned that you are getting a CTC of ₹8,000.
When you are receiving CTC, the PF and ESIC employer's share will be deducted from your salary. For ESIC, the employer's share of 4.75% will be deducted from your salary.
Legal Implications of Not Signing Documents
As you mentioned that you have not signed any document, bond, or legal paper at the time of joining, the company can't take any legal proceedings against you for the recovery of ₹40,000.
It is advised that you leave the company despite signing the appointment letter along with the company policy letter. If you leave, you will lose a maximum of a month's salary, i.e., ₹8,000. However, if you continue the job, it may cause problems for you and your professional career. It will also be a waste of time for your professional growth.
Regards,
Munish Kumar
[Email Removed For Privacy Reasons]
From India, Delhi
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ESCI total contribution is 6.50%. The employee's contribution is 1.75% of the basic salary, while the employer is to contribute 4.75%. In contrast, EPF requires a 12% contribution from both the employee and employer. The remaining few funds are to be collected from the employer for Account 21 & 22 and Account 1, 2 & 10.
Understanding CTC and Contribution Percentages
Do you have any idea what the percentage is? Can anyone tell me what CTC means? For example, please provide more information.
Thank you.
From India, Coimbatore
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Understanding CTC and Contribution Percentages
Do you have any idea what the percentage is? Can anyone tell me what CTC means? For example, please provide more information.
Thank you.
From India, Coimbatore
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