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The purpose of this Wiki is to understand the scenario how ESI is calculated in case of retrospective salary change of an employee.
This Employees' State Insurance (ESI) calculation happens in the INESI function in the payroll. Here we will see if the salary is changed retrospectively, how system is going to calculate the ESI in case of positive arrears,
Payroll results for the employee must exist for at least one period.
All the configuration for deduction of ESI already present properly in the system. Refer KBA No. 2458961 - New ESI areas need to be set up with different contribution percentages.
Reproducing the Behavior
Running the Payroll of newly hired employee
Hire an employee say from 01.04.2018 and maintain the salary of this employee e.g. 15000 INR per month as shown:
Maintain infotype 588 Subtype 0001 for this employee from 01.04.2018 so that ESI should start deducting from April 2018 payroll run.
Run the payroll of employee in live mode and check the payroll log as per below
Changing the salary of the employee (retrospectively) and see the changes in next month's payroll run
Change the salary of employee to 18000 INR (from 15000 INR earlier) in infotype 0008 (Basic Pay) with effect from 01.04.2018
Refer KBA No. 2312741 - ESI computation on negative arrears
Additional / Relevant Information