Query Related To ESI - CiteHR
Hr Executive
Human Resources Management
Maheswara Rao Chaduvula
Sr. Manager - Hr
Senior Hr Executive
Md Meraj
Hr Business Partner

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Dear All,
I am working as a Senior Hr Executive in a start-up BPO in Chennai. From beginning itself we had this problem of ESI implementation in our company. My understanding is, every org has to pay ESI if they have more than 20 employees.
But management in this company wants to avoid this, if possible. So i was just trying to find out a way, if there is any.
I will be greatful if anybody can help me out in this.

i am sorry to say one thing that please remain loyal to HR profession. because we r not only living for management but mainly for the welfare of the labour. cheating the government is not a matter. but please dont try to cheat the employees who r working for daily bread and wine. sorry if i said anything wrong.

Hi Srinivas,
as far as statutory issues, you can't overrule them. If you have employees who comes under ESI coverage, you ought to contribute ESI lest your company will be penalised by ESI Corporation.
It is always beter to follow the statutory rules.
srihari rao

If your management wants to avoid paying ESI then ask them to pay a minimu salary of 10100 and above to all the employees. Or else they should shift to non-ESI coverage area. These are the only legal way to avoid contributing towards ESI.
Sriniwas, Non Compliance to ESI Act is a serious issue and may lead to heavy penal fines and damages. Please appraise your employer of the consequences. Meraj
Hi Srinivas,

I dont know about BPO, but I assume BPO employees would be more concerned with Pay and appraisal monetary benfits and since they earn good amounts it doesnt matter to them whether they come under purview of ESI act or not.

But when i was working with a MNC mfg co, i observed that workers knew all benefits of ESIC and if anything new was introduced they informed us, even the HR manager had info about all ESIC rules and latest amendments if I am not wrong till Dec06 it was 6500 and from onwards it has been made 10000 so if any of ur employee is earning below 10000 u need to do the necessary to enable esic to him, ESIC from the workers point of view is very important as they need it for medical facilities / they cannot afford costly private doctors and hence the ESIC point is active in our company, but even after compiling with almost all laws a notice came from ESIC office and we had to pay a fine of some 4-5 K rupees, for some delay or something, so even our HR dept being knowledgable of all ESIC acts, we had to pay penalty since ur company seems ignorant about ESIC if any one notices this your company may be heavily penalised / taken legal action against.

Better clear in begining.. itself,,, take help of some legal consultant..

Hai Srinivas,
I have gone through your query, first of all find out whether your organisation falls under the purview of ESI Act or not . That means your organisation is under notified area of ESI Act . Then the second issue would be all of your employees are getting more than 10,000/- wage / salary per month. Based on these points you can avoid esi.
Maheswara Rao.CH

hi Srinivas,
Plz check the sec.87,88 & 91A of ESI Act which deals with application for exemption from provisions of the Act.
However, to claim any exemption Company will have to satisfy the govt. that your company has arranged better medical facility/other associated welfare measures for its employees, which is more feasible & convenient to employees than ESI Corporation. Your case being BPO industry, i guess hardly few employees will come under the purview of the Act.

Hi, It is our duty to pay all the statutory dues to the Government. Intentionally to try for not covering the company under esi act is not fair and justice to the country and its men concerned.
so do not advice your management to do so .
Madan Singh
HR Professional - NOIDA

i am being in HR in a KPO, i wd advice the same. Dont try to play around the laws. Its always beneficial for employees with less than 10000/- salary should be covered under ESI. Pl check that your company has been covered under Establishment/ What else?
We have recently finished with covering few of our employees under that it makes an impact when you will think further when it comes to legal bindings & even in case of HR Audit as well.
Surely it will help you & make sure that you inform management about this & the complications ahead.

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