What is ESI?
ESI is defined as Employees state insurance (ESI) is a beneficial scheme for employees in India during their health-related problems. Employees' monthly contribution is deducted from employee and employer accounts as ESI Contribution.
As per ESIC rules, ESI deduction is applicable for employees at organizations with the strength of more than 10 persons and it is applicable for full-time employees and not for contract employees.
ESI Contribution is a type of social security for state employees, Deductions and calculations depend on the states of India.
How is esi calculation on salary is done?
Major parameters are
1. Gross pay
2. DA(Dearness allowance)
3. Employment state
4. City compensatory allowance
ESI contribution is from both employee and employer as employee's contribution is 0.75 % of the gross salary whereas the employer's contribution is 3.25% of the gross salary of the employee.
A sophisticated HRMS solution can make ESI calculation and compliance management easier for the HR department and payroll department.