ESI is not getting deducted

[Former Member]

Experts,

2 employees were hired on 23 May and their salaries are 6500 & 11500 Rs. Both are eligible for ESI.

But during the May 11 payroll run, only for employee who gets 6500 rs ESI deduction happened and other one there was no ESI deduction.

IT 588 has been maintained for both of them properly.

Pls help

Edited by: Saravanan .V on Jun 11, 2011 2:56 PM

[Former Member]

what is the value of /112 & /113?

[Former Member]

6500 Rs employee. Dedution happened

/112 ESI Basis 1,843.62

/113 ESI Basis N 2,820.40

11500 Rs. employee ...No deduction

/112 ESI Basis 3,440.25

/113 ESI Basis N 4,860.57

[Former Member]

Check the settings of processing class 72 because the proration of wage types will happen based on this.

For the first case

/113 ESI Basis N 2,820.40 which is for the 9 days and when it will be projected for the whole month - 2820.40*31/9 = 9713.33

which is less than 15000 and thats why ESI contribution is happening.

For the second case

/113 ESI Basis N 4,860.57 which is again for 9 days. Projected amount will be - 4860.57*31/9 = 16741.96 which become more than 15000.

Now as you said that for first employee amount is 6500 and for second it is 11500 whereas projection amount is coming something more than this. Hence probably you have missed the proration of for some payment wage type proration which is impacting it here.

Check all the payment wage types and prorate all of them. This proration will be handled with processing class 72 as per your requirement. Set a appropriate specification for this as per your requirement.

[Former Member]

All the earnings wage types have PC 72 assigned, i believe factoring is working fine and that is how he got his salary only 9 days.

If we assume, system does projection for all the wage types for ESI calculation, stil the employee is eligible for ESI. Here his salary component assigned in IT0008

*1000 Basic Salary 1,875.00

1001 Dearness Allowance 2,343.75

1006 Children Education 150.00

1010 Canteen Allowance 400.00

1011 Washing Allowance 150.00

1009 Vehicle Expense Rei 1,940.00

1025 Other Allowance 3,341.00

1003 House Rent Allowanc 1,800.00

• Total 11,999.75*

Do we have to maintain PC 72 for /112 & /113 as well....it is blank in my system...pls suggest.

System is deducting his ESI for Jun 11 also perfectly, it is not happening only for May 11 (9 days)....

[Former Member]

What is the curent patch level?

I felt your system is taking ESI eligibity -10000. which has been changed to 15000 from 01.05.2010. Please check the table VV_511P_B_ESILT_AL0. And do lets know, what is the current ESI limit there

Don't make any changes in PC72 of wage type /112 and /113

Edited by: sandeep_1979 on Jun 13, 2011 9:45 AM

[Former Member]

Since wage type /113 is generating more, please check, are you making any payment other than IT0008. If yes, check the pclass 72 & CClass 12 of that wage type.

Regds,

[Former Member]

Hi,

Also check /3EA which is used for calculating the ESI amt & the INESI fuction in the payroll log which will show you the processing.

[Former Member]

Sandeep....ESI limit set 15000 only

and all the wage types are correctly set PC72..

Venky..

/3EA is getting generated for ESI amt and INESI Funciton there are no logs showing under the processing.

[Former Member]

You have assgined the PClass 72, that's fine, please chech have you ticked CClass 12 also,.

Regds,

[Former Member]

/112 ESI Basis 1,843.62
/113 ESI Basis N 2,820.40

11500 Rs. employee ...No deduction
/112 ESI Basis 3,440.25
/113 ESI Basis N 4,860.57

Why i am saying there is difference because if you check /112 is coming differently than the /113 which should not happen. That means the proration methods for the /112 and /113 are different here.

Now let me explain the proration process for both the wage types u2013

For /112 proration will happen based on the processing class 10 which happens in PCR XVAL.

Whereas for /113 proration will happen based on processing class 72 only which happens in PCR IN72.

Refer to my previous reply for the reason why I am saying proration method is different u2013

/113 ESI Basis N 2,820.40 which is for the 9 days and when it will be projected for the whole month - 2820.40*31/9 = 9713.33
which is less than 15000 and thats why ESI contribution is happening.
For the second case 
/113 ESI Basis N 4,860.57 which is again for 9 days. Projected amount will be - 4860.57*31/9 = 16741.96 which become more than 15000.

Now if you will see for 11500 actual basis nominal basis is coming as 16741.96.

Hence either you have to match the proration process for /112 and /113 (use the same period factor /8** wage type for both) else whatever is happening with current processing is correct.

[Former Member]

Hi Mr. Praveen,

Can u pls elaborate me more about /113 calculation? I am also getting the same issue.

Why these two wage types have different calculation? I know that /113 does not take into account loss of pay or overtime. pls let me know why it is considering the /113 amount when the deduction happens for ESI? I am unable to understand the calculation of /113 in case of loss of pay. In our system Min.Avg.Wage per day is defualt 26. Please help me to understand the calculation process of /113 and /112. pls guide me in this.

Thanks,

Shree NP

[Former Member]

Well /113 is nominal basis which is used for the comparison of the ESI basis with the limit defined by the ESI authority. Thats why any type of pay reduction don't be considered for it. ESI contribution will be calculated on the basis of /112.