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"Image/data in this Wiki is from SAP internal systems, sample data, or demo systems. Any resemblance to real data is purely coincidental."

Purpose

The purpose of this Wiki is to understand the scenario how ESI is calculated in case of retrospective salary change of an employee.

Overview

Use

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, 

 

Prerequisites

Payroll results for the employee must exist for at least one period.

Required Configuration

All the configuration for deduction of ESI already present properly in the system. Refer KBA No2458961 - 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

 

Run the payroll of employee / PERNR for May 2018 month i.e. period 2.
Retro will trigger.
Check Payroll Log as per below:
First check Period 1 2018 run in 2 2018 
In this go to Retroactive accounting INDIA and search for PDT IN54 (can be custom rule in customer system)
Check if difference ot 18000 - 15000 = 3000 INR is present in /AEA wage type.
Now check the next result i.e. Period 2 2018 run in 2 2018 
Find INESI function in this period
Here, /AEA wage type will be passed as /ZEA wage type which is added to /3EA to form ESI basis and accordingly ESI is deducted on the total ESI basis (as per standard system)
Hence 1.75% of 21000 INR will be 368 INR (rounded off) as /3E1 
and 
4.75% of 21000 INR will be 998 INR (rounded off) as /3E2 
(values as per the configuration in the ESI relevant views). 

Result 

Refer KBA No. 2312741 - ESI computation on negative arrears

Additional / Relevant Information 

See Also 

KBA No. 2312705 - ESIC Deduction Issue
KBA No. 2386101 - ESI not calculated for separated employee 

 

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