How is an employee's ESI contribution affected when their salary crosses Rs. 21,000?

Created by Product Content Team, Modified on Fri, 15 Mar at 3:11 PM by Product Content Team

ESI contribution is mandatory for all employees who draw a gross of less than 21000/-. ESI refers to Employees State Insurance. This is a self-financing social security and health insurance scheme for the working class and is run by ESI Corporation.

In this scheme, an employee contributes part of salary as an insurance premium. The employer also contributes to the scheme. ESI Corporation collects this money and runs ESI Hospitals. An employee can avail of the hospital service for free.

After the employee's salary exceeds 21,000/- employee ceases to fall within the limit after the end of the current financial year. As per the ESI Scheme, even after the revised salary, this employee will continue to fall within the limit of Rs. 21,000, till the end of the contribution period.

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