TABLE OF CONTENTS

• Introduction
• Employer Contribution
• Additional Settings
  • Allow overriding of ESI at salary structure level
  • Exclude employer share from Gross in ESI calculation
  • Exclude Employee Gratuity contribution from gross in ESI calculation
  • Restrict ESI Gross to Statutory Gross during the contribution period
  • Include Bonuses and One-Time payments in gross for ESI eligibility calculation
  • Include Bonuses and One-Time payments in gross for ESI Contribution calculation.
  • Do not adjust (reduce) Special Allowance value, in case ESI contribution is impacted by LOP

Introduction

ESI is a mandatory statutory contribution made by the employer and employee. This is applicable for employees who have a monthly gross salary of less than INR 21,000/- or who are a part of the contribution cycle already. So ensure that you are remaining compliant when you are deciding to enable or disable ESI for a pay group. 

The window also shows the default contribution rates where the employee contributes 0.75% of their gross salary and the employer contributes 3.25% of their gross salary. Usually, the gross salary is limited to the statutory amount of INR 21,000/- for calculating the value of the monthly contribution.

To start editing the ESI settings, navigate to Payroll (1) and then go to Settings (2). 

In the Pay Groups tab (3), you will see the various pay groups that you have configured on Keka. 

Select the pay group and click on the Configure icon (4).  

On the Pay Group Configuration window, select the Contributions tab (5). Here you can see the various settings in brief. Click on the three dots (6) on this window and from the drop-down, select Update ESI Settings (7).

 

In the Employee State Insurance Settings window, you can make changes to the ESI settings for the pay group. 

Using the toggle button on top, you can toggle ESI settings on and off for the pay group. 

Employer Contribution

The first setting to make is whether the employer's contribution to ESI is a part of the employee's annual salary or not. If the ESI contribution by the employer is not included in the employees' annual salary, select the No. Employer's contribution of ESI is paid by employer, over and above the Annual Salary of an employee checkbox.

If you include ESI contribution in the annual salary of your employees, select the other option Yes. Employer's contribution of ESI forms a part (and is deducted) from Annual Salary of an employee

If the ESI contribution is a part of the annual salary, you can also choose to exclude this from the payslip. Select the Hide Employers' contribution of ESI from Payslip checkbox. 

Additional Settings

There are a few important additional settings to consider in this window. Let us take a look at each of these additional settings.

Allow overriding of ESI at salary structure level

Selecting this option allows you to override the value of ESI contributions at a salary structure level using formulae. You can define the formul