ESIC — Employees' State Insurance

The Employees' State Insurance Corporation (ESIC) administers a social security scheme that provides medical, sickness, maternity, and disability benefits to employees and their dependents. Governed by the Employees' State Insurance Act, 1948, ESIC coverage is mandatory for eligible employees. Udyamo HRMS automates ESIC eligibility checks, contribution calculations, and report generation to simplify your organization's compliance.

This chapter explains ESIC rules, how to configure ESIC in Udyamo HRMS, how to enroll employees, and how to generate the required reports.

What You Will Learn

• ESIC eligibility criteria and contribution rates
• How to enable the ESIC component at the organization level
• How to enter the organization's ESIC code number
• How to enroll individual employees with their ESIC number
• How automatic eligibility checks work
• How ESIC is calculated during payroll
• How to generate ESIC reports
• Half-yearly return filing requirements and deadlines

Prerequisites

Required: Before configuring ESIC, ensure the following are complete:

• Your organization profile is set up (see Organization Profile & Branding)
• Salary components are configured with gross salary calculations (see Salary Components)
• You have your organization's ESIC code number from the ESIC portal
• EPF configuration is recommended to be completed first (see EPF)

Understanding ESIC Rules

Applicability

ESIC applies to establishments (factories, shops, hotels, restaurants, cinemas, road transport, newspaper, and other notified establishments) employing 10 or more persons in most states. Some states have a threshold of 20 employees.

Eligibility Criteria

An employee whose gross monthly salary (all components except overtime) is at or below Rs 21,000 is covered under ESIC. Once covered, the employee continues to be covered for the full contribution period (six months) even if their salary subsequently exceeds the ceiling during that period.

Contribution Rates

Tip: Employees earning up to Rs 176 per day are exempt from paying their share (0.75%). The employer's share (3.25%) is still payable for such employees.

Contribution Periods and Benefit Periods

ESIC operates on a six-month contribution-and-benefit cycle:

Enabling the ESIC Component

Step 1: Navigate to Statutory Components

1. From the sidebar, click Settings.
2. Under the Payroll section, click Statutory Components.
3. Locate the ESIC component in the list.

Step 2: Enable ESIC

1. Click the ESIC component row to open its configuration.
2. Toggle the Enable switch to On.
3. Enter your organization's ESIC Code Number. This is the 17-digit code assigned when your establishment was registered with ESIC.
4. Click Save.

Warning: The ESIC Code Number must match your registration with ESIC exactly. Verify the number against your ESIC registration certificate before entering it.

Step 3: Verify Configuration

After saving, the ESIC component appears as Enabled in the Statutory Components list. The ESIC code number is displayed alongside the component name.

Enrolling Employees for ESIC

Automatic Eligibility Check

Udyamo HRMS includes an automatic eligibility check for ESIC. During payroll processing, the system evaluates each employee's gross monthly salary against the Rs 21,000 ceiling:

Entering the ESIC Number for an Employee

1. From the sidebar, click Employees.
2. Search for and click the employee's name to open their profile.
3. Navigate to the Statutory Details tab.
4. In the ESIC Number field, enter the employee's ESIC Insurance Number (IP number).
5. Ensure the ESIC Enable toggle is set to On.
6. Click Save.

Tip: For new employees who do not yet have an ESIC IP number, register them on the ESIC portal (https://www.esic.gov.in) first. Enter the assigned IP number in Udyamo HRMS once available.

Enrolling Multiple Employees

If you are enrolling several employees at once:

1. Navigate to Employees and use the list view.
2. Open each eligible employee's profile in a new tab.
3. Enter the ESIC number and enable ESIC for each employee.
4. Alternatively, use the Bulk Import feature (see Bulk Import) to update ESIC numbers for multiple employees via a spreadsheet.

Enabling or Disabling ESIC for Individual Employees

When to Disable ESIC

How to Disable ESIC

1. Open the employee's profile.
2. Navigate to Statutory Details.
3. Set the ESIC Enable toggle to Off.
4. Click Save.

Warning: Do not disable ESIC mid-contribution period for an employee who was enrolled at the start of that period. ESIC coverage must continue for the entire six-month contribution period once the employee is enrolled.

ESIC Calculation in Payroll

When you run payroll, Udyamo HRMS automatically calculates ESIC contributions for all eligible and enrolled employees.

Calculation Logic

1. The system identifies all employees with ESIC enabled.
2. For each employee, it determines the gross wages for the month (excluding overtime payments).
3. It calculates:
   • Employee ESIC contribution = 0.75% of gross wages
   • Employer ESIC contribution = 3.25% of gross wages
4. Contributions are rounded to the nearest rupee.

Example Calculation

Another Example — Employee at the Ceiling

Viewing ESIC on Payslips

After payroll is processed:

1. Navigate to Payroll > Payslips.
2. Select the month and click on an employee's payslip.
3. The Deductions section shows the employee's ESIC contribution (0.75%).
4. The employer's ESIC contribution (3.25%) is shown in the payroll summary.

Tip: The employee only sees their own 0.75% deduction on their payslip. The employer's 3.25% is an additional cost borne by the organization and appears in the organization's payroll cost reports.

ESIC Reports

Available Reports

Generating the ESIC Contribution Report

1. From the sidebar, click Reports.
2. Select ESIC Report (or Statutory Reports > ESIC).
3. Choose the Month and Year.
4. Click Generate.
5. The report displays each enrolled employee with their:
   • Employee name and ESIC number
   • Gross wages for the month
   • Employee contribution (0.75%)
   • Employer contribution (3.25%)
   • Total contribution
6. Click Export to download in Excel or PDF format.

Filing Requirements and Deadlines

Monthly Payment

Half-Yearly Returns

Filing Process

1. Run payroll for each month in the contribution period.
2. Generate the ESIC Monthly Contribution Report for each month.
3. Make the monthly payment on the ESIC portal by the 15th of each following month.
4. At the end of the contribution period (September or March), generate the Half-Yearly Return Data from Udyamo HRMS.
5. Log in to the ESIC portal and file the half-yearly return using the exported data.

Warning: Late payment of ESIC contributions attracts interest at 12% per annum. Additionally, failure to file returns on time can result in penalties and prosecution under the ESI Act.

Handling Salary Changes and ESIC Eligibility

When an employee's salary changes, ESIC eligibility may be affected. Here is how Udyamo HRMS handles common scenarios:

Tip: Review ESIC eligibility at the start of each contribution period (April and October) to ensure accurate enrollment. Use the ESIC report to verify which employees are currently enrolled.

Troubleshooting

Next Steps

• Configure Professional Tax for your offices — see Professional Tax
• Set up TDS for income tax compliance — see TDS — Tax Deducted at Source
• Review the payroll process — see Running Payroll