Applicability to Gross Salary

• ESIC contribution is calculated on the gross monthly salary of eligible employees.
  
• Gross salary includes all regular cash earnings paid to the employee.
  
• The calculation is based on the actual earned amount, not just basic pay.
  
• Contributions are mandatory up to the prescribed wage ceiling.
  
• Employers must calculate contributions on the full gross amount.
  

Components Included in Gross Salary

• Basic salary and dearness allowance are included in the ESIC base.
  
• House rent allowance and city compensatory allowance are counted.
  
• Attendance bonus, night shift allowance, and other fixed allowances are included.
  
• Meal, transport, and uniform allowances in cash form are also included.
  
• Overtime earnings are included if paid as part of regular wages.
  

Components Excluded from Gross Salary

• Employer’s contribution to provident fund is not included.
  
• Annual bonus, gratuity, and retrenchment compensation are excluded.
  
• Reimbursements of expenses are not considered part of ESIC wages.
  
• Leave encashment at resignation or retirement is excluded.
  
• Irregular or one-time lump sum payments are not counted.
  

Wage Limit for Contribution

• Gross salary must not exceed ₹21,000 per month for regular employees.
  
• For employees with disabilities, the limit is ₹25,000 per month.
  
• Contributions are calculated for employees below the respective limits.
  
• Employees crossing the limit mid-cycle remain covered for that period.
  
• Regular review of wages is necessary to track eligibility.
  

Employer’s Responsibility in Calculation

• The employer must ensure proper computation of gross salary.
  
• Payroll systems should classify salary components as per ESIC rules.
  
• Accurate monthly calculations prevent underpayment or excess deduction.
  
• Any updates in salary structure must reflect in ESIC filings.
  
• Records should be maintained for verification and audit purposes.