Government has reduced the contribution of EMPLOYEES’ STATE INSURANCE ACT- (ESI) Act to 4% from 6.5%, It will help to increase the take home salary of Our workers. This includes a reduction of 1.5% in employers% contribution to 3.25% from 4.75% and 1% reduction in employees’ contribution to 0.75% from 1.75%.
It is effective from from 1st July 2019 .
From India, New Delhi
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5It is effective from from 1st July 2019 .
From India, New Delhi
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Hi Alok Singh,
Please note that the Employers' contribution has been reduced from 4.75% to 3.15% (not to 4.00% as you mentioned). Similarly, the Employees' contribution has been reduced from 1.75% to 0.75%. Please see the notification copy attached in this regard.
From India, Bangalore
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Please note that the Employers' contribution has been reduced from 4.75% to 3.15% (not to 4.00% as you mentioned). Similarly, the Employees' contribution has been reduced from 1.75% to 0.75%. Please see the notification copy attached in this regard.
From India, Bangalore
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@Kumar S, please read carefully. I also mention that employees would now have to contribute just 0.75% of their salary (basic plus allowances), instead of the existing 1.75%, while the employer's contribution will come down from 4.75% to 3.25%, according to the Ministry of Labour and Employment.
From India, New Delhi
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From India, New Delhi
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Hi Alok singh,
You stated as -
"Government has reduced the contribution of EMPLOYEES’ STATE INSURANCE ACT-
(ESI) Act to 4% from 6.5%, It will help to increase the take home salary of Our workers
This includes a reduction of 1.5% in employers% contribution to 3.25% from 4.75%
and 1% reduction in employees’ contribution to 0.75% from 1.75%
It is effective from from 1st July 2019 .
21st June 2019 From India, New Delhi."
" (ESI) Act to 4% from 6.5%,"
First of all, it was NOT 4% but 4.75% which now reduced to 3.15%
Secondly,
" ...while the employers contribution will come down from 4.75% to 3.25%, according to the ministry of labour and employment.
Today From India, New Delhi
Alok Singh.
Welfare Officer"..
Unquote -
Again you mentioned ..from 4.75% to 3.25% which is NOT, whereas it should be read as "from 4.75% to 3.15% "
The notification extracted here below for your ref:
" ... (a) in clause (a), for the words “equal to four and three-fourth per cent of the
wages”, the words “equal to three and one-fourth per cent. of the wages” shall be
substituted; (Unquote 31/4th ie. 3.15%)
(b) in clause (b), for the words “equal to one and three-fourth per cent (Unquote- 1.3/4th%) of the wages”, the words “equal to three-fourth per cent (Unquote- 3/4th ie., 0.75%) . of the wages” shall be substituted.
[F. No. S-38012/01/2016-SS-I)
VIBHA BHALLA, Jt. Secy. "
From India, Bangalore
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You stated as -
"Government has reduced the contribution of EMPLOYEES’ STATE INSURANCE ACT-
(ESI) Act to 4% from 6.5%, It will help to increase the take home salary of Our workers
This includes a reduction of 1.5% in employers% contribution to 3.25% from 4.75%
and 1% reduction in employees’ contribution to 0.75% from 1.75%
It is effective from from 1st July 2019 .
21st June 2019 From India, New Delhi."
" (ESI) Act to 4% from 6.5%,"
First of all, it was NOT 4% but 4.75% which now reduced to 3.15%
Secondly,
" ...while the employers contribution will come down from 4.75% to 3.25%, according to the ministry of labour and employment.
Today From India, New Delhi
Alok Singh.
Welfare Officer"..
Unquote -
Again you mentioned ..from 4.75% to 3.25% which is NOT, whereas it should be read as "from 4.75% to 3.15% "
The notification extracted here below for your ref:
" ... (a) in clause (a), for the words “equal to four and three-fourth per cent of the
wages”, the words “equal to three and one-fourth per cent. of the wages” shall be
substituted; (Unquote 31/4th ie. 3.15%)
(b) in clause (b), for the words “equal to one and three-fourth per cent (Unquote- 1.3/4th%) of the wages”, the words “equal to three-fourth per cent (Unquote- 3/4th ie., 0.75%) . of the wages” shall be substituted.
[F. No. S-38012/01/2016-SS-I)
VIBHA BHALLA, Jt. Secy. "
From India, Bangalore
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Dear Sir,
Due to amendments in wage components, we wish to restructure the wage system to leverage benefits from PF & ESI. The proposed wage components are as follows:
- Basic
- HRA
- Washing Allowance (Max-1000)
We intend to restructure the total gross salary into these three components with fixed percentages of 61%, 35%, and 4% respectively. We are seeking confirmation on whether this proposed salary structure aligns with the recent changes in PF & ESI calculations. Currently, we have over 5 wage components and aim to streamline them into three, as mentioned in my previous query. Both HRA and Washing Allowances are already part of our existing wage structure.
Implementing the proposed salary structure may lead to a reduction in the TAKE HOME SALARY of employees/workers. This is a significant concern, especially for low-salaried employees/contract workers protected under the Minimum Wages Act.
We also require clarification and advice on variable allowances like Attendance Bonus, Night Shift Allowance, Overtime wages, in light of the recent PF judgment and ESI amendments.
Additionally, we seek guidance on calculating Gratuity and Leave Encashment for employees. Should it be based solely on Basic Wage or PF Gross (Basic + Children Edn. + Washing Allow.), as directed by the Supreme Court?
Your expert advice on these matters is invaluable to the HR community in avoiding any potential show-cause notices from relevant authorities.
Regards, Krishna Kumar
From India, Hyderabad
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Due to amendments in wage components, we wish to restructure the wage system to leverage benefits from PF & ESI. The proposed wage components are as follows:
- Basic
- HRA
- Washing Allowance (Max-1000)
We intend to restructure the total gross salary into these three components with fixed percentages of 61%, 35%, and 4% respectively. We are seeking confirmation on whether this proposed salary structure aligns with the recent changes in PF & ESI calculations. Currently, we have over 5 wage components and aim to streamline them into three, as mentioned in my previous query. Both HRA and Washing Allowances are already part of our existing wage structure.
Implementing the proposed salary structure may lead to a reduction in the TAKE HOME SALARY of employees/workers. This is a significant concern, especially for low-salaried employees/contract workers protected under the Minimum Wages Act.
We also require clarification and advice on variable allowances like Attendance Bonus, Night Shift Allowance, Overtime wages, in light of the recent PF judgment and ESI amendments.
Additionally, we seek guidance on calculating Gratuity and Leave Encashment for employees. Should it be based solely on Basic Wage or PF Gross (Basic + Children Edn. + Washing Allow.), as directed by the Supreme Court?
Your expert advice on these matters is invaluable to the HR community in avoiding any potential show-cause notices from relevant authorities.
Regards, Krishna Kumar
From India, Hyderabad
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ESI Amendment.pdf