Saturday, May 7, 2011

Employee State Insurance (E.S.I)

Any employee who earns less than or equal to Rs.15,000 will be deducted ESI. Employer's contribution is 4.75% and employee's contribution is 1.75%


Example:
Gross salary - Rs.20,000
P.F- Rs. 2,000
Leave Travel Allowance (LTA)- Rs.4,000


In this case if we take net salary it is Rs.14,000 (20,000-2,000-4,000) . So it is below Rs.15,000. Whether ESI is applicable???
Gross salary is Rs.20,000. So, definitely the employee will not come under the preview of ESI Act. Whether his salary goes below Rs.15,000/- in any one of the month (on the deduction of PF, LTA and any other deductions) ESI act will not apply.

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