I have a gross salary below Rs. 15,000 and had ESI. During April and May 2013, I earned more than Rs. 15,000 with a performance-linked allowance (PLA), and my employer stopped ESI contributions. From June 2013, again my gross and take-home pay is below Rs. 15,000. Why am I not eligible for ESI from April 2013? Is ESI insurance on and off based on salary during contribution months of April and October? To my knowledge, only the gross is considered for ESI eligibility, not gross + PLA, which is earned based on performance. However, PLA will be paid every month if performance targets are met. Please reply.
From India, Hyderabad
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6From India, Hyderabad
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ESIC Contribution and Salary Parameters
It is true that only the gross salary is a parameter for ESIC contribution. I would like to know one more aspect: were you deducted for your ESIC contribution for the period in which you earned more than Rs. 15,000 (Gross + PLA)?
Currently, an employee covered under the scheme has to contribute 1.75% of the wages, whereas an employer contributes 4.75% of the wages payable to an employee. The total contribution in respect of an employee thus works out to 6.50% of the wages payable. The total salary includes Basic + DA + Conveyance + other allowances + PF + bonus. A total salary that exceeds Rs. 15,000 per month is exempted from the payment of contribution. These rates and exemption limits will be changed from time to time.
Any deduction from the employee and not from the employer may also indicate if the company did not follow the proper compliance regulations.
From Netherlands, Group
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It is true that only the gross salary is a parameter for ESIC contribution. I would like to know one more aspect: were you deducted for your ESIC contribution for the period in which you earned more than Rs. 15,000 (Gross + PLA)?
Currently, an employee covered under the scheme has to contribute 1.75% of the wages, whereas an employer contributes 4.75% of the wages payable to an employee. The total contribution in respect of an employee thus works out to 6.50% of the wages payable. The total salary includes Basic + DA + Conveyance + other allowances + PF + bonus. A total salary that exceeds Rs. 15,000 per month is exempted from the payment of contribution. These rates and exemption limits will be changed from time to time.
Any deduction from the employee and not from the employer may also indicate if the company did not follow the proper compliance regulations.
From Netherlands, Group
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It is a wrong practice; kindly get in touch with your HR as there may be some mistake or oversight, or perhaps the payroll software may not be compliant with statutory norms. Kindly update after confirmation.
From India, Ahmadabad
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From India, Ahmadabad
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Thanks for the reply. Either employer or employee contribution was not deducted from April 2013, so I believe my ESI was lapsed. My question was, "Will ESI lapse when an employee earns more than Rs. 15,000 (Gross + PLA/variable allowance)? PLA/variable allowance is not guaranteed pay but can be earned by an employee with performance every month; otherwise, only gross is paid that is below Rs. 15,000. I hardly earn above Rs. 15,000.
From India, Hyderabad
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From India, Hyderabad
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Kindly confirm whether the ESI for June has been deducted from your salary. If it has been deducted, then for two months, the ESI should be deducted, which was an oversight by HR. If ESI has not been deducted in the June and July salaries, please bring it to the attention of HR.
From India, Ahmadabad
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From India, Ahmadabad
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ESI Circular - New Salary ceiling of Rs. 15,000 effective May 1, 2010.pdf
Salary Breakup with ESI.xls