Salary components applicable to ESI deductions?


Which new employee becomes member of the ESI scheme? What salary components are applicable to ESI deductions?


When the monthly salary are up to and equivalent to Rs.21,000 at that point within 10 days of joining . It is the duty of the Employer to guarantee that such new worker and his family or wards are covered under the Scheme and a insurance number is apportioned to the employee. When the employee is enrolled under the Scheme, various benefits are also currently accessible to the guaranteed worker for self and his relatives or wards.

ESI contributions (from the employee and employer) are calculated on the employee’s gross monthly salary.

For ESI calculation, the salary comprises of all the monthly payable amounts such as:

  • Basic pay,
  • Dearness allowance,
  • City compensatory allowance,
  • House Rent Allowance (HRA),
  • Incentives (including sales commissions),
  • Attendance and overtime payments,
  • Meal allowance,
  • Uniform allowance and
  • Any other special allowances.

The gross monthly salary, however, does not include Annual bonus (such as Diwali bonus), Retrenchment compensation, and Encashment of leave and gratuity.

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