Why Is ESI Not Deducted for a New Joiner?

Scenario

The employee is configured as ESI applicable, and the ESI component is visible in the Salary Breakup. However, ESI is not being deducted in payroll.

This can occur when the employee joins midway through an ongoing ESI contribution cycle.

In such cases, Keka checks the employee's ESI Previous Income for the applicable contribution months.

• If the required ESI contribution is available in Previous Income, the employee is considered for ESI calculation.
• If it is not available, the employee may not be considered for ESI and may be shown as Ceased for the applicable contribution cycle.

Resolution

There are two ways to handle this scenario:

Option 1: Add ESI in Previous Income

If the employee's previous income details are available:

Employee Profile → Finances → Manage Tax → Previous Income → Edit

1. Add the required ESI Previous Income for the applicable contribution months.
2. Save the details.
3. Reprocess the applicable payroll and verify the ESI calculation.

Option 2: Override ESI

If the required Previous Income is not available, override the ESI amount for the applicable month.

During Payroll: 
Payroll → Run Payroll → Select Pay Group and Payroll Month → Override (PT, ESI, TDS, LWF) → ESI Override

Or:

Payroll → Payroll Admin → Operations → Overrides → ESI Deduction Override

Enter the required Employee and Employer ESI amounts, add a relevant comment, and save the override.