How to enable/disable ESI for a pay group

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.

The threshold limit for ESI coverage is still 20 in several states.

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 a pay group, navigate to Payroll (1), then find Setiings (2) and go to the Pay Groups (3) section. Select the pay group and click on Configure Icon (4) under Actions.

Navigate to Contributions, click on the Three Dots, and then on Update ESI Settings. 

Once ESI Settings tab opens, click on the toggle button to Enable/Disable ESI for Pay Group (7). Then click Update (8).

If you disable the ESI, then the following confirmation dialog box will appear where you have to select the Yes, Disable ESI option.

Now the ESI will be shown as Disabled (1) in the Contributions.

 And there you go! If you need any more assistance, please refer to the other articles or talk to us!