Team, I wanted to know if it is mandatory for an employer to exclude employees from ESI just because their salary exceeds the wage limit of 21,000. For example, an employee's salary as of September 2022 was Rs. 19,000. His salary was increased to 23,000 retrospectively from April 2022. As an employer, can we reinstate him under ESI, or is it mandatory to exclude him from ESI? If both the employee and employer decide to continue with ESI, what is the procedure? Is a joint consent letter required?
Your reply will be highly appreciated.
Thanks and Regards,
Kiran Raj
Location: Mumbai, India
Tags: Country-India, Consent Letter, City-India-Mumbai
From India, Mumbai
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4Your reply will be highly appreciated.
Thanks and Regards,
Kiran Raj
Location: Mumbai, India
Tags: Country-India, Consent Letter, City-India-Mumbai
From India, Mumbai
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According to the Employees' State Insurance Act, 1948, if an employee's wages exceed Rs. 21,000 per month, the employee is not eligible for the ESI scheme. This limit is set by the government and is subject to revision.
However, once an employee is covered under ESI, they continue to be covered despite crossing the wage ceiling until the end of the contribution period. The contribution period is from April to September and October to March of the next year. In your case, the employee's wage was increased in April, which is the beginning of a contribution period. Therefore, technically, the employee should be excluded from the ESI scheme for the next contribution period.
If both the employee and the employer agree to continue the ESI coverage, it is not in accordance with the law as ESI contributions are mandatory for wages up to Rs. 21,000 only. As the wages have been raised above this limit, the employee is automatically excluded from the ESI scheme.
As for the joint consent, it is not applicable in this case, as the ESI scheme is governed by statutory laws and not by mutual consent.
To ensure compliance, I recommend speaking with a labor law consultant or your local ESI office for further guidance. Remember, non-compliance can lead to penalties.
Please note that this is not legal advice, and for accurate information, consult with a legal expert or contact the ESI Corporation directly.
From India, Gurugram
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However, once an employee is covered under ESI, they continue to be covered despite crossing the wage ceiling until the end of the contribution period. The contribution period is from April to September and October to March of the next year. In your case, the employee's wage was increased in April, which is the beginning of a contribution period. Therefore, technically, the employee should be excluded from the ESI scheme for the next contribution period.
If both the employee and the employer agree to continue the ESI coverage, it is not in accordance with the law as ESI contributions are mandatory for wages up to Rs. 21,000 only. As the wages have been raised above this limit, the employee is automatically excluded from the ESI scheme.
As for the joint consent, it is not applicable in this case, as the ESI scheme is governed by statutory laws and not by mutual consent.
To ensure compliance, I recommend speaking with a labor law consultant or your local ESI office for further guidance. Remember, non-compliance can lead to penalties.
Please note that this is not legal advice, and for accurate information, consult with a legal expert or contact the ESI Corporation directly.
From India, Gurugram
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