Help Needed In ESI Calculation Of 22 Worked Days

Dear All HR veterans,

I have a question: If a person whose gross income is 14500 in a particular month worked for 22 days and took 4 days of paid leave, how do we calculate ESI deduction from his side? Is it 1.75% of 14500 (total gross) or 1.75% of 10633? I am very confused and would appreciate your help.

Regards,
Meetu Singh

Salary is calculated based on the actual number of days worked in a month. For example, if an employee worked 26 days in August 2011, their salary would be calculated as follows: 14500/31 * 26 = Rs. 12,161. ESIC will be deducted at a rate of 1.75% of Rs. 12,161.

Hi Meetu Singh,

Salary is calculated based on the actual number of days in a month. For example, if you are calculating for September, the calculation would be as follows:
14500 * 26 / 30 = Rs. 12567 (Present gross)
= 12567 * 1.75% = Rs. 220

Regards,
Vinay Kumar

Hello Meetu,

ESIC is always payable on the actual earned salary.
Gross p.m. - ₹14,500/-
Number of working days (including holidays, paid leaves, etc.) - 26 days
Month days - 30 or 31 (base will be considered accordingly)
Gross Salary for the month - ₹14,500/31*26 = ₹12,161/- (for a month comprising 31 days)
ESIC Contribution by the employee - ₹213/-
Net Payable = ₹12,161 - ₹213 - (any other deductions) = ₹11,947/-

Further, if any other help or clarification is required, feel free to call or email @ +91-9873955166 / pramod.singh0812@gmail.com

Regards,
Pramod S. Bhadauriya

Hi Meetu Singh,

ESI calculation is based on the gross salary of the employee. ABC person worked for 22 days and took 4 paid leaves in the month. The total number of days to be calculated for ABC Person is 22 + 4 = 26 days. The ESI percentage for the employee is 1.75% and for the employer is 4.75%.

The calculation for gross salary is Rs. 14500 divided by the number of days in the month multiplied by the number of working days, which equals Rs. 12567.00. The actual gross salary multiplied by the employee's ESI percentage of 1.75% is Rs. 220.00, and by the employer's ESI percentage of 4.75% is Rs. 597.00.

I hope this clarifies the calculation process.

Thank you.

Dear Meetu,

The calculation of salary depends on the company policy. Some companies use actual working days for calculating salary, while others use month days for wage/salary calculation. Therefore, you need to first determine your company's policy.

If you calculate salary based on the month days, then it would be gross salary per month day multiplied by total working days. If you calculate salary based on actual days worked, then it would be gross salary divided by the actual monthly days (e.g., 25, 26, or 27) multiplied by the total working days.

Some companies use 26 for calculating salary. For example, gross salary divided by 26 multiplied by working days.

From the above, you can determine the salary for working days, i.e., earning salary. For ESIC, the deduction would be earning salary multiplied by 1.75/100.

If you have any queries, please feel free to call.

Note: ESIC contributions are now done online.

Hi All,

I have questions to ask all:

1) If the employee's leave is paid leave, why would you deduct the salary from his earnings?
2) If the employee is on leave during a specific period, have you marked him as present or absent in the ESIC attendance register? If marked present, you need to calculate based on the total gross. If marked as on leave for those particular days, you must deduct that leave period.
3) The calculation you present to the ESIC department while computing ESIC wages should only consider 26 days, not the full month (i.e., not on the 30th or 31st days).

Regards,
Siva Kumar Tata

Dear Siva,

In this case, the 4 days which are being deducted are not the 'leave with pay days'. As per the Employee State Insurance Act, for the purpose of the calculation of ESI, only the total number of working days in a month is taken into consideration. Sundays or any other kind of non-working days are deducted. Even if the employee has not taken any leave in the prescribed month, the calculation of ESI is done on 26 days and not on the basis of 30/31 days.

The salary paid to the employee would be the gross salary minus ESI and any other deductions. Paid leave will not be deducted. For any further clarification, you may discuss more.

Regards,
Parul Gupta

Dear all,

Going through all these write-ups, I found a lot of confusions. ESI has to be paid on the actual salary paid during the month. So in the case of leave with wages, the employee gets full salary, and hence the ESI deduction and contribution will be on the full salary, i.e., in this case, on Rs. 14500/-

In case it is leave without pay, then the actual payment to the employee is on the actual amount paid (14500/30*26)*1.75%

In regular practice, the payment of salary is considered on the basis of 30/31 days and not on the basis of working days. The number of working days, i.e., 26 days, is applicable only for gratuity calculation where the basic + DA is divided by 26 to arrive at the gratuity.

Regards,
VGKVKM

Dear Mr. Meet Singh,

The ESIC calculation that will be done in your case will have no change and will be done accordingly. As the employee has taken a paid leave, his ESIC calculation will be as follows: from the employee's side = Gross Salary less than 15000 * 1.75% and from the employer's side = Gross Salary less than 15000 * 4.75%. If the employee is on LWOP, then the calculation will be done based on the present days in that particular month accordingly.

Thanks and Regards,

Ravibhushan Pandav HR & Admin Executive 9970967623