ESIC

Note: This topic keeps updating whenever a new payroll report is added to Keka

As of now, there are around 50 payroll reports available on Keka with many more coming soon.  To view the available reports, please go to Payroll >> Reports.

Few examples of payroll reports available on Keka:

Payroll:

• Current Salary Structure
• Current Salary With Bonus
• Employees Current CTC
• Expense Claim Report
• Financial Information
• Component break up for each employee (Pay Register)
• Contribution / Deduction Reconciliation Report
• Head Count Monthly Report
• Monthly Batch Payment – Bank Transfer, Cheque, Cash
• Payroll Journal Vouchers Report – Tally
• Salary Revision Report
• All Employee YTD Report

Income Tax:

• Annual Income Tax Report
• Annual HRA Reports
• Investment Declaration Summary Report
• Monthly Income Tax Statement

Provident Fund (PF):

• PF Remittance Report
• PF Monthly Electronic Return (ECR)
• PF Contribution card – Form 6A
• PF Joinee Statement – Form 5
• PF Exits Statement – Form 10
• PF Monthly Statement – Form 12A (Revised)
• Aadhar (UIDAI) submission Form
• PF Summary Report
• PF Arrear Report
• PF Admin Charges Report

Employees’ State Insurance (ESI):

• ESI Monthly Statement
• ESI Monthly Return (Electronic)
• Contribution Register (Form 5)
• ESI Overrides
• ESI Summary Report

Professional Tax (PT):

• PT Monthly Statement
• PT State Wise Report (Form 5)
• PT Override Report

If you are looking for any specific report, write to support@keka.com.

Changing Employees’ Salary Payment Mode

In situations where new employees join your organisation and don’t have a salary account yet, chances are that few initial months of salary is being paid out to them by cheque.  There can also be cases where the account information changed, or the mode of payment changed. In any such cases, it is required to update the salary payment mode details on Keka as soon as there has been a change, to avoid any issue that might arises due to this change.

To change the salary payment mode of an employee, please follow the steps below:

Step 1: Go to employee’s profile by typing the employee’s name in the search bar

Step 2: On employee’s profile, go to Finances >> Preferences tab

Step 3: Under Preference, go to ‘Salary Deposit’ section and you can view the current salary payment mode. Click on ‘Edit’ link if you wish to change the mode of payment or existing bank details (in case salary mode is Bank Transfer).

Step 4: On the new pop-up screen that appears, you can change the mode of payment, and add/edit account details (in case mode is Bank Transfer)

Once done with updating the salary payment mode details, click on ‘Update’ and this will add/update the information.

IMPORTANT: In case you want to update salary payment mode details for many employees (in bulk), write to support@keka.com and you will be provided with a custom link to do this.

Updating Employees’ Financial Information (PAN Information, Provident Fund, Aadhaar Information)

Though it is recommended to have all employees’ financial information with you during Keka setup/on-boarding, it is at times inevitable to have all these data at hand.  In such cases, it is recommended to update the financial information of employees as and when you have it available with you.

To update the financial information of an employee, please follow the steps below:

Step 1: Go to employee’s profile by typing the employee’s name in the search bar

Step 2: On employee’s profile, go to Finances >> Preferences tab

Step 3: Under Preference, you can find financial information sections (PAN Information, Provident Fund, Aadhaar Information) and option to edit them as well. Click on respective ‘Edit’ links to update the details.

Once done with updating the financial information, click on ‘Update’ button (for each section, i.e., PAN, PF and Aadhaar) and this will add/update the information for the employee.

IMPORTANT: In case you want to update financial information for many employees (in bulk), write to support@keka.com and you will be provided with a custom link to do this.

If you are having trouble updating the salary mode or financial details of your employees, write to support@keka.com.

Enabling ESI for Employees

Employees State Insurance Act has been passed to provide certain benefits to employees in case of sickness, maternity and employment injury and to make provisions for related matters. As the name suggests, it is basically an ‘insurance’ scheme i.e. employee gets benefits if he is sick or disabled.

Employees State Insurance provides cash and medical benefits to employees (and their families) who are earning a gross of Rs. 21,000 or less.

In case ESI is applicable for your employees, you can enable the same in Keka, so that the system starts calculating ESI for your employees every month. To enable ESI for your employees, follow the steps below:

Step 1: Go to Settings >> Payroll >> PF and ESI Settings

Step 2: Use the toggle button to turn on ESI Status. Click on button to set the status as ‘ON’ (in case it was previously ‘Off’)

Once done, review the additional options and make changes to them (if applicable) and then click on ‘Complete’ button to save the settings. The system will automatically calculate ESI for employees whose are eligible.

Related:

How much do an employee and employer contribute towards ESI?

The ESI amount calculated doesn’t seem to be correct percentage of gross, what can be the issue?

Can ESI amount calculation be restricted to max gross of 21000 during the contribution period?

In case you are having trouble with setting up ESI , write to support@keka.com.

Restricting ESI to maximum gross of Rs. 21,000 during contribution period

The Employees State Insurance Act says, that in case the salary goes above Rs 21,000 per month during the contribution period, the ESI would be calculated on the higher salary.

For example, if the salary of an employee is raised to Rs 30,000 per month during the ESI contribution period, then the ESI would be calculated on Rs 30,000 instead of Rs 21,000.

Since ESI is a contribution and reduces the take-home salary of employees, an organisations can decide to limit the ESI calculation on maximum gross of Rs. 21,000 and not the actual raised gross (resulting in more take-home salary), Keka gives its users an option to restrict the ESI calculation to gross of Rs. 21,000. To enable this restriction, follow the steps below:

Step 1: Go to Settings >> Payroll >> PF and ESI Settings

Step 2: Under ESI Contribution, check the option ‘Restrict ESI Gross to Statutory Gross during the contribution period’.

Once done, click on ‘Complete’ button to save the settings.

Note: You will be required to ‘Preview run payroll’ again to see the updated ESI calculation.

In case you are having trouble restricting ESI amount to maximum gross of Rs. 21,00 during contribution period, write to support@keka.com.

The contribution payable to the Employees State Insurance Corporation (ESIC) in respect of an employee shall comprise of employer’s contribution and employee’s contribution at a specified rate. The rates are revised from time to time.

Current Contribution Rate for ESI:
Employee Contribution = 1.75% of the wages paid/payable in respect of the employees in every wage period.
Employer’s Contribution = 4.75% of the wages paid/payable in respect of the employees in every wage period.

For ESI calculation, the Gross salary comprises of all the monthly payable amounts such as Basic, Dearness Allowance, City Compensatory Allowance, HRA, Incentives, Attendance Bonus, Meal Allowance, etc. The Gross salary, however, does not include annual bonus, retrenchment compensation, encashment of leave and gratuity.

ESI Amount Calculation:

ESI amount is calculated on the Gross of an employee. If you are seeing a difference in value of ESI, and think that this might be an error, please check if the Employer’s share of PF and ESI is part of the Gross salary.  In case the employer’s share of PF and ESI is included in the Gross salary of employee, the ESI calculated might be on a higher side, since the Gross considered for calculation is also taking employer’s share (of PF and ESI) into account.

To confirm & exclude Employer’s share of PF and ESI from Gross for the purpose of ESI calculation, follow the steps below:

Step 1: Go to Settings >> Payroll >> PF & ESI Settings

Step 2: Under ESI Contribution, check the option ‘Exclude employer’s share from gross in ESI calculation’

Once done, click on ‘Complete’ button to save the settings.

Note: You will be required to ‘Preview run payroll’ again to see the updated ESI calculation.

IMPORTANT: Making change to exclude employer’s share for calculation will not affect any other salary settings and will only exclude employer’s share from Gross for the purpose of ESI calculation.

In case employer’s share of PF and ESI is outside Gross salary, and ESI calculation seems incorrect, write to support@keka.com.

ESI Contribution

Employees State Insurance provides cash and medical benefits to employees (and their families) who are earning a gross of Rs. 21,000 or less.

The contribution payable to the Employees State Insurance Corporation (ESIC) in respect of an employee shall comprise of employer’s contribution and employee’s contribution at a specified rate. The rates are revised from time to time.

Current Contribution Rate for ESI:
Employee Contribution = 1.75% of the wages paid/payable in respect of the employees in every wage period.
Employer’s Contribution = 4.75% of the wages paid/payable in respect of the employees in every wage period.

Employees in receipt of a daily average wage upto Rs.100/- are exempted from payment of contribution. Employers will however contribute their own share in respect of these employees.

For ESI calculation, the Gross salary comprises of all the monthly payable amounts such as Basic, Dearness Allowance, City Compensatory Allowance, HRA, Incentives, Attendance Bonus, Meal Allowance, etc. The Gross salary, however, does not include Annual Bonus, Retrenchment Compensation, Encashment of leave and gratuity.

Example of an ESI calculation:

Gross salary of employee = Rs 18,000/month

Employee ESI Contribution (@ 1.75%) = 1.75% of 18,000 = Rs 315

Employer ESI Contribution (@ 4.75%) = 4.75% of 18,000 = Rs 855

Total ESI Contribution = Rs 315 + Rs 855 = Rs 1170

In case you are facing issue with ESI calculation on Keka, write to support@keka.com.

The current maximum gross salary eligible for ESI is Rs 21,000 per month (w.e.f. 1st Jan. 2017). This means all industrial workers drawing a salary of up to Rs.21,000 will be eligible for health care – from primary to tertiary – at more than 1,500 clinics and hospitals run by the Employees’ State Insurance Corporation (ESIC) directly or indirectly.

Employees State Insurance Act has been passed to provide certain benefits to employees in case of sickness, maternity and employment injury and to make provisions for related matters. As the name suggests, it is basically an ‘insurance’ scheme i.e. employee gets benefits if he is sick or disabled.

Employees State Insurance provides cash and medical benefits to employees (and their families) who are earning a gross of Rs. 21,000 or less.

Employees State Insurance (E.S.I.) Scheme being contributory in nature, all the employees in the factories or establishments to which the Act applies shall be insured in a manner provided by the Act. The contribution payable to the Employees State Insurance Corporation (ESIC) in respect of an employee shall comprise of employer’s contribution and employee’s contribution at a specified rate. The rates are revised from time to time.

Current Contribution Rate for ESI:
Employee Contribution = 1.75% of the wages paid/payable in respect of the employees in every wage period.
Employer’s Contribution = 4.75% of the wages paid/payable in respect of the employees in every wage period.

Employees in receipt of a daily average wage upto Rs.100/- are exempted from payment of contribution. Employers will however contribute their own share in respect of these employees.

For ESI calculation, the Gross salary comprises of all the monthly payable amounts such as Basic, Dearness Allowance, City Compensatory Allowance, HRA, Incentives, Attendance Bonus, Meal Allowance, etc. The Gross salary, however, does not include annual bonus, retrenchment compensation, encashment of leave and gratuity.

Example of an ESI calculation:

Gross salary of employee = Rs 18,000/month

Employee ESI Contribution (@ 1.75%) = 1.75% of 18,000 = Rs 315

Employer ESI Contribution (@ 4.75%) = 4.75% of 18,000 = Rs 855

Total ESI Contribution = Rs 315 + Rs 855 = Rs 1170

Collection of Contribution:
An employer is liable to pay his contribution in respect of every employee and deduct employees contribution from wages bill and shall pay these contributions at the above specified rates to the Corporation within 21 days of the last day of the Calendar month in which the contributions fall due. The Corporation has authorized designated branches of the State Bank of India and some other banks to receive the payments on its behalf.

Contribution Period and Benefit Period:
There are two contribution periods each of six months duration and two corresponding benefit periods also of six months duration as under.

• For contribution period ‘1st April to 30th Sept’, the benefit period is ‘1st Jan of the following year to 30th June’
• For contribution period ‘1st Oct to 31st March of the year following’, the benefit period is ‘1st July to 31st December’

An employee can only avail ESI benefits after 9 months of joining employment and contributing to ESI. This is because the ‘Benefit Period’ starts 3 months after the end of ‘Contribution Period’, and any medical or maternity benefits can be availed during the benefit period only.

IMPORTANT: In case the salary goes above Rs 21,000 per month during the contribution period, the ESI would be calculated on the higher salary. For example, if the salary of an employee is raised to Rs 30,000 per month during the ESI contribution period, then the ESI would be calculated on Rs 30,000 instead of Rs 21,000.

Applicability of ESI:

Under Section 2(12) the Act is applicable to non-seasonal factories employing 10 or more persons.

Under Section 1(5) of the Act, the Scheme has been extended to shops, hotels, restaurants, cinemas including preview theatres, road-motor transport undertakings and newspaper establishments employing 10* or more persons.

Further under section 1(5) of the Act, the Scheme has been extended to Private Medical and Educational institutions employing 10* or more persons in certain States/UTs.

*Note: However in some States threshold limit for coverage of establishments is still 20 Employees of the aforesaid categories of factories and establishments. These State Governments/UTs are in the process of reducing the same.

The existing wage limit for coverage under the Act is Rs. 21,000/- per month ( w.e.f. 01/01/2017).

Areas Covered:
The ESI Scheme is being implemented area-wise by stages. The Scheme has already been implemented in different areas in the following States/Union Territories of Indian Union.
STATES – All the States except Manipur, Sikkim, Arunachal Pradesh and Mizoram.
UNION TERRITORIES – Delhi and Chandigarh

Visit ESIC website »

Related: How do I enable ESI for my employees on Keka?

In case you are having trouble setting up ESI for your employees, write to support@keka.com.