Whether ESI is contributed on minimum wages if gross salary is below Minimum wages as applicable in state?

Hello seniors,

Please guide me on whether ESI is contributed on minimum wages if the gross salary is below the minimum wages as applicable in the state.

1. Sir, there is no relevance of minimum wages as far as the ESI Act, 1948, and the rules/regulations framed thereunder are concerned. Both employees' share as well as employers' share are to be deducted even if the minimum wages of an employee are less than as laid down under the relevant laws of the appropriate government. If any employer/unit is paying less than minimum wages, it is for the appropriate authorities to examine the issue under the minimum wages laws applicable in that state where said unit is located.

2. The only exemption is that in respect of employees getting average daily wages "up to and inclusive of rupees one hundred" are exempted from paying their employees' contribution. Please see Rule 52 of ESI (Central) Rules, 1950. However, in such cases also the employers' share of contribution is required to be paid.

ESIC deduction is on the gross amount, and you can exclude washing allowance from the calculation. Check the ESIC website for any clear clarification.

Sir, does that mean for ESI, minimum wages issue is not applicable? However, if an employee's gross salary is up to 3000/-, then no employee contribution is to be deducted. Your view please...

Dear Kumar Kankit,

Are you expecting a reply from CiteHR members on how to break the laws? I am astounded at your insistence on trying to find loopholes to escape ESI. Moreover, your company is doing it so unabashedly that they are not even paying the minimum wages as prescribed by law. Are you a qualified HR person? If so, I would suggest you refrain from being a party to such illegal and illicit activities.

Regards.