Introduction
Employees’ State Insurance or ESI is the insurance that provides medical care to industrial workers and other employees. You can use this insurance in case of sickness, maternity, injury, and other medical-related matters.
The ESIC has now increased the wage limit for the ESI Act to Rs 21,000. The wage ceiling was last raised in May 2010. Back then, the wage limit was increased from Rs 10,000 to Rs 15,000. Now the wage limit has been raised to Rs 21,000. This brings it in line with the wage limit for the Payment of Bonus Act.
ESI wage ceiling for the past 20 years
Impact of increase in the ESI wage ceiling
- The increase in the wage ceiling for ESI from Rs 15,000 to Rs 21,000 means that an employer makes contributions for more number of employees earning between this limit. The important factor to decide whether an employee covers under the ESI Act is whether the employee’s monthly ‘wages’ exceeds Rs 21,000.
- The wages here mean an employee’s gross earnings. I.e., The total of all earning heads.
- The increase in wage ceiling impacts the finances of the employees. For the ESI Scheme contributions are made from both employers (4.75%) and employees (1.75%). So, the take-home salary of employees earning between Rs 15,000 to Rs 21,000 decreases as the employee contribution of 1.75% deducts from their salaries.
- Once an employee starts earning a wage of more than Rs 21,000, ESI contributions will be made only till the end of the contribution period. It is a 6-month period.
- E.g.: Consider that an employees’ gross earning is Rs. 20,000 in April. In July, that person gets an increment which leads him out of ESI coverage, i.e, salary increases to Rs. 25,000.
- In this case, the employee will continue to contribute 1.75% for ESI on Rs. 25,000 from July to September. From the second half of the year i.e., October to March there will be no contribution towards ESI.
With the rise in the wage threshold, about 3.5 million employees will now fall under the ESI Act. From a company’s perspective, we see that the impact of this change is a financial one.
The ESI notification of the amendment is here: Find the notification here.
P. S: For users of our Saral PayPack Software, we have updated the ESI rates to the latest ceiling. Please ensure you are using the more recent version of the software.
If you are not a user, you can try our software for free. Do check it out.
Image made with the help of icons from Freepik, licensed under CC 3.0 BY
64 Comments
NO, it is not possible
Yes, they will
I was eligible in ESI lat Sep-2022 now my salary is above 21000. Now i wish to continue my ESI contribution manually. Is it possilbe?
will central government or state government issues notification ?
Contribution is not be by both Employer and employee once the ESI eligibility ceases
For a salary above 21,000, Can the employer still pay ESI even if he is not liable to? If yes, then at what rate?
My salary is just 21200 from April 2023 with 26 days attendance. Can I continue my ESI. If I attend only 25 days can I get my ESI
Does festival bonus comes under esi ceiling
Will have to wait for the notification from government
Sir when will esi increase the ceiling of salery
OT will not be included for ESI Gross calculation. So you will have to consider teh employee for ESI contribution
NO RECENT Changes in the limit
IS ANY CHANGES IN ESI LIMIT
BECAUSE ALMOST EVERYBODY WILL COMES UNDER ESIC NOW IT WILL BE A PROBLEM FOR POOR AND MIDDLE CLASS PEOPLE.
Hi…. My employee’s fixed gross is 20000. Including OT he is getting 23000Rs.
ESI should calculate on 21000*0.75% or 23000*0.75%???
If 21000 means, Pls let us know the ESIC act sec.
NO, except they are covered under Medical Insurance by the company
So does someone earlier more than 21000 after 6 months gets any sort of medical benefits under a different schemes
Currently no
Hi
Any new revisal of salary limit for ESI coverage
Plz elobrate on your query
25000 how to used ESI inspection cover ?
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