How to enable/disable ESI for an employee

What is ESI? 

ESI is a self-financing scheme, which provides protection to employees against disablement/death due to employment injury, sickness, and maternity. As per the ESIC act, the employees and the employers make regular monthly contributions to the scheme at a certain percentage of their wages, and this is applicable to employees having wages less than 21000 per month.

ESI contribution cycles are from April 1st to September 30th and then from October 1st to March 31st.

When to disable ESI? 

As per the statutory norms, the employee and employer contribute to ESI on a monthly basis.

But if in between the contribution cycle, the salary got revised and now the employee's wage is greater than 21000 monthly then you can go and disable the ESI eligibility for the system to stop calculating the ESI contribution amount for the employee or group of employees.

To enable/disable ESI for an employee, click on Payroll (1) and go to PAYROLL ADMIN (2). You should already be on the  Operations (3) tab.

Now find Payroll Status, Tax Regime & Financial Details (1) and under this, click on Employees' Statutory Info (2).

In the window that opens now, first make sure that the relevant Pay Group (1) is selected. and then

Either use Search and find out the employee or filter the employee based on eligibility (from the ESI Eligible dropdown). Once the employee is chosen, click Edit (2).

Now, the following screen will pop up. Click on the Employee's State Insurance (ESI) (1) and then check or uncheck the check box (2) under Please Provide ESI Details to Disable/Enable ESI contribution respectively. Once done, click Update.

If choose to uncheck the box, you need to provide the ESI number for the employee and the employer.

There may be times when you don't have the employee's ESI number, in such you can just check the option below to still deduct ESI contributions from the employee.

ESI for an employee cannot be enabled if ESI is disabled on a pay group level.

And that is how to enable/disable ESI for an employee. You can also check out this article on How to enable/disable ESI for a pay group.

If there are more queries, please check out the other articles or contact us!