Employee State Insurance 

Purpose

This component calculates the Employee State Insurance (ESI) contribution

·        To be deducted from the salary of the employee.

·        To be made by the employer.

Eligibility

·        An employee is eligible for ESI only if,

¡        Other Statutory DeductionsInfotype (0588) Subtype ESI (0001) record exists for the employee.

¡        ESI Basis of the employee is less than or equal to the amount stored in the ESI Eligibility Limit Constant (ESILT) of the table view Payroll Constants (V_T511P). This amount is set by the government.

ESI Basis is the sum of basic salary, dearness allowance, all allowances and overtime. Overtime is excluded from ESI Basis for the calculation of ESI eligibility but is included for the computation of ESI contribution.

·        If the average wage per day of the employee is less than or equal to the amount stored in the Min.Avg.Wage per day Constant (ESIMN) of the table view Payroll Constants (V_T511P), the system calculates only an employer ESI contribution of 4.75% of the ESI Basis.

Average wage per day for an employee is ESI Basis Nominal Wage Type (/113) divided by the value in the No.of days in month for calc Constant (DYSMN) of table view Payroll Constants (V_T511K).

·        If the employee is eligible for ESI in any one month of the ESI contribution period, then the employee is eligible for all the subsequent months in that contribution period.

Integration

Payroll function P0588 reads the Input Table P0588 and updates the Input Table ESI. Payroll function P0588 determines the following:

·        Number of ESI days - Reads the Other Statutory Deductions Infotype (0588) Subtype ESI (001).

·        ESI Grouping of the employee - Reads the table view Personnel area/subarea Grouping for Employees' State Insurance (V_7IN0P_ESI).

·        ESI contribution percentages - Reads the table view Employees' State Insurance Contribution Rates (V_T7INE3).

Payroll function INESI reads the Input Table and ESI, and updates the Input Table. This function

·        Reads the following wage types:

¡        ESI Basis Wage Type (/112) - This is the actual ESI basis. This includes loss of pay and overtime. This wage type is calculated by the Gross input and storage Rule (X023). Based on the specification of Processing Class 20 and if the Cumulation Class 12 of the wage type is selected, the Gross input and storage Rule (X023) includes the value of the wage type in the ESI Basis Wage Type (/112).

¡        ESI Basis Nominal Wage Type (/113) - This wage type does not take into account loss of pay or overtime. Eligibility for ESI is calculated on the amount in this wage type. This wage type is calculated by the Nominal Cumulations Rule (IN72). Based on the specification of Processing Class 72, the Nominal Cumulations Rule (IN72) includes the value of the wage type in the ESI Basis Nominal Wage Type (/113).

·        Generates the following wage types:

¡        In case of an original payroll run

§         Actual ESI Basis Wage Type (/3EA) - This is the effective ESI basis, on which the ESI contributions are calculated.

/3EA = (Amount in /112) multiplied by (Number of ESI days) divided by (Number of Calendar days).

The system reads the Number of ESI days from the Other Statutory Deductions Infotype (0588) Subtype ESI (0001).

If the number of days for which an employee is eligible for ESI is same as the number of calendar days in a period, Actual ESI Basis Wage Type (/3EA) will be same as ESI Basis Wage Type (/112).

§         Ee ESI contribution Wage Type (/3E1) - This is the employee ESI contribution calculated on Actual ESI Basis Wage Type (/3EA).

§         Er ESI contribution Wage Type (/3E2) - This is the employer ESI contribution calculated on Actual ESI Basis Wage Type (/3EA).

¡        In case of a retroactive payroll run

§         CF ESI basis Wage Type (/AEA) - This is the difference in the values of Actual ESI Basis Wage Type (/3EA) for the retrospective run and previous payroll run.

§         BF ESI basis Wage Type (/ZEA) - This is the cumulation of the values of all the CF ESI basis Wage Types (/AEA) generated during a retrospective payroll run. This wage type is generated during an original payroll run.

§         Ee ESI Refund-Monthly Wage Type (/AER) - This is the refund amount for the retrospective period. If there is retrospective deletion of Other Statutory Deductions Infotype (0588) Subtype ESI (0001) record during a retrospective payroll run, there may be a refund of ESI contribution made by the employee.

§         Ee ESI Refund-Total Wage Type (/ZER) - This is the cumulated values of all the Ee ESI Refund-Monthly Wage Types (/AER) generated during a retrospective payroll run. The value of this wage type is brought forward to the current payroll period for a refund.

Features

There are two ESI contribution periods with their respective benefit periods:

Contribution Period	Benefit Period
April 1 - September 30	January 1 - June 30
October 1 - March 31	July 1 - December 31

·        Employee makes a contribution of 1.75% of the ESI Basis.

·        Employer makes a contribution of 4.75% of the ESI Basis.

·        You have been provided with a user exit EXIT_HINCALC0_001, in the enhancement HRINCLWF, if you want to change the ESI Grouping for an employee. You can configure this user exit through the IMG under Payroll India ®  Statutory Social Contribution ® Employees' State Insurance User Exit: Determine Personnel Subarea Grp for ESI and LWF.

See also:

Employee State Insurance Set Up

Retroactive Employee State Insurance Calculation

Form 6 and 7 for Employees' State Insurance Report (HINCESI0)

Other Statutory Deductions Infotype (0588) Subtype ESI (0001)