How is ESI Computed?

The rates of the Employees’ State Insurance (ESI) contribution are calculated on the wages paid. Currently, the employee or worker contribution is 0.75 percent of wages paid or payable, & employer contribution is 3.25 percent of wages paid or payable.

Illustration

Let us say Mr. Hard Working with wages of Rs. 18,000 works in a factory unit. The contribution will be as follows:

Employee Contribution – 0.75%*18,000 = 135

Employer Contribution – 3.25%*18,000 = 585

So a total contribution of Rs. 720 will be made. The onus of deducting the contribution & depositing the same is on the employer. The same can be deposited online or to authorized designated branches of State Bank of India (SBI) / other designated branches.

Contribution Period and Benefit Period
 

The Contribution period is first April 2020 – 30th September 2020 & hence the deduction will continue on the revised salary up to September & he will be eligible for the avail up to 30th June of the following year.

Without Change, say a worker Mr. Diligent earns a wage of Rs. 20,000 till October 2020 & from next month he earns Rs. 23,000. The deduction must continue on the revised salary up to 31st March 2021 & he will be eligible for the avail up to December 2021.

Hence ESI contribution must be made by both employee & employer & the avail help the worker in unfortunate circumstances.

Wages as Per the ESI Act

Some of the inclusions & exclusions from the wage component are as follows:

What are the establishments that attract coverage under ESI? In an area notified u/s 1(3) by Central Govt.?

In an area notified u/s 1(3) by Central Government. Further, according to the notification issued by the appropriate Govt. under Section 1(5) of the Act, the following establishments employing 10 or more persons attract ESI coverage: (I) Shops (ii) Cinemas including preview theaters (III) Newspaper establishments (IV) Private Educational Institutions (PEI)

How long is the Medical benefit available?

The insured person & his family are entitled to the Medical Benefit from every 1^st day of his or her joining the insurable employment. A person who is just covered under the scheme for the 1^st time is eligible for primary & secondary medical care for self & family for three months. If the insured person is in Employees’ State Insurance (ESI) coverage for at least two years from the date of Online Registration, contributed for not less than 156 days & IP is eligible for Sickness Benefit in any one of the contribution period & is suffering from any of the 34 specified long term diseases, the medical avail is admissible till the incapacity lasts & family. 11 Further, If the insured person is in Employees’ State Insurance (ESI) coverage for at least 2 years from the date of Online Registration, contributed for not less than 156 days before the date of diagnosis & IP or IW is eligible for Sickness Benefit in at least two contribution period then he along with his family members will be eligible for getting super specialty treatment.