What Is ESIC?

What is ESIC? Is it compulsory? How is it calculated? I have done my MBA in HR, so I just want to know about ESIC. Can any of you help me out?

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1. Sir, I suggest that you read the necessary literature, namely the ESI Act of 1948 and the rules and regulations framed thereunder, as well as the material on social security. You can download some of the material from the website of ESIC.

2. After going through all such material, if you still have any doubts, you can raise them on this site by indicating the doubts or seeking clarifications briefly. ESIC and social security are vast subjects, and it is difficult to cover them in just one paragraph or even a few paragraphs.

Employee State Insurance Corporation Act 1948 is a social security act in which the government provides medical facilities to employees. Primarily, it is applicable to employees (on-roll as well as contract) having a salary less than Rs 15,000 per month. Organizations that provide their own medical facilities are exempted from this act, like PSU. The employee's contribution is 1.75% and the employer's contribution is 4.75% of the salary (gross).

I suggest you please read Taxmann's Labour Law. It is quite helpful for MBA level.

It is a social security scheme. In this scheme, the insured person will receive medical benefits for themselves as well as for their dependents. Only those employees covered under this scheme whose salary is less than 15,000/- per month. In this scheme, the employee has to contribute 1.75%, and the employer contributes 4.75% share every month.

Calculation of ESI can be done in the following way:

Employee State Insurance Act, 1948:
- ESI: Employee State Insurance is calculated at 1.75% on the gross salary of the employees whose salary is below Rs. 15,000 per month (w.e.f 2010), and the Employer contributes 4.75% on the gross salary of the employee. The aggregate 1.75% + 4.75% is remitted to the ESI Department.

- 4.75% of gross salary (Employer's contribution) + 1.75% of gross salary (Employee's contribution)

Note: Individuals receiving a gross salary above Rs. 15,000 are not applicable for the ESI Act.

Example:
- Employee Side: 1.75% of gross per month
So, if the gross of an employee is Rs. 8,000 per month, then the ESI contribution would be Rs. 8000 * 1.75% = Rs. 140.

- Employer side: 4.75% of gross per month
ESI contribution would be Rs. 8000 * 4.75% = Rs. 380.

Juin

You are most welcome, Mr. Ikash.

Regards,
Dr. (Ms.) Juin Choudhury