AK CHANDOK
Epf & Esi Matters
9871103011
Private Consultant On Labour Laws
+2 Others

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Dear All,
I am living in Gujarat State. Please clarify my queries:
(1) ESIC Query:: If Total number of employees in a company (Registered under Shop Establishment Act) is more than 10. However, there are only 7 employees whose salary is less than Rs. 15000. Is ESIC still applicable in the company? Please provide if you any circular in this regard.
(2) Provident Fund Query:: If Total number of employees in a company (Registered under Shop Establishment Act) is 25. However, the salary of 21 employees is more than Rs. 6500. Is PF still applicable in the company? Please provide if you any circular in this regard.
Thanks,
Geetesh Shah

Yes both ESI and PF is applicable.But only those who are within the salary criteria ans satisfying other eligibility conditions are to be covered. Varghese Mathew
Dear Geetesh
The ESI Act applies to non-seasonal factories or manufacturing units, shops & establishments, Private Medical & Educational Institutions
employing 10 or more persons.
PF Act applies to every factory engagged in any industry specified in Schedule I to the Act and employing 20 or more persons and to
every other establishment employing 20 or more persons specified by the Central Government in this behalf.
Please note this provisons in Acts are for applicability to the Establishment/Company/Organization. Coverage/applicability to individual employee is governed by the salary ceiling prescribed in respective Acts. Once the Act becomes applicable to the establishment it continues to be binding even if the number of employees reduces than the presctibed minimum number.
Regards
Shailesh Parikh
Vadodara, Gujarat
99 98 97 10 65

Dear Geetesh Shah,

Your query has been very well answered by Sh Shailesh Parikh. Let me explain the same in other way, which is for the general applicability of any law or Act.You are to make a division between the applicability and coverage of the employees or beneficiaries under a particular Act.In any Act including ESI & PF, the applicability is judged from the number of workers or employees as a whole engaged by an establishment irrespective of their status or position but only such persons who meet the criteria of the provisions shall be covered under the Act.In your case both the Acts are applicable to your establishment as such you have to approached to the concerned authorities for the allotment of registration nos. for your establishment but the ESI & PF contribution shall be deducted only in respect of employees, whose the salary/wages are below the limit prescribed under the Acts.

Hence you are required to deduct and deposit ESI contribution in respect of 7 employees whose salary is less than Rs. 15000 and PF contribution in respect of 4 employees whose salary is less than Rs. 6500.

You are requested to refer to the provisions given under the respective Acts.The circulars are issued by the Authorities only where any doubt arises about the interpretation of the provisions and not otherwise.

BS Kalsi

Member since Aug 2011

Well with regards to pf a person having basic / salary for the purpose of epf more than 6500 can also be covered.
as per act the liability of the employer will be to the extent 12% of Rs. 6500/- only even if person is employed at higher wages.

ESIC Act:- Those who are getting gross wages below 15000/- are eligible for the deduction specified under the act. Industry running through the power come under the purview of 10 employees otherwise twenty or above employees. Casuals and daily wager are also eligible for ESI.
EPF Act:- Any industry where 20 and above employees are employed any one days in a year are eligible to get registered with EPF Act. All the employees who are getting salary (Basic & DA) below 6500 comes under the purview of EPF Act. Those above the prescribed limit can also deduct their EPF willingly but employer are not bound to do so.
Wish you all the best.

Yes pl.Both the Acts are applicable in the above stated circumstances. Employees though drawing more than 6500 are to be counted for the purpose of coverage under the EPF Act but Compliance is to be reported as follows-
In r/o those drawing upto 6500/ --statutorily yes,
In r/o those drawing more than 6500/-, yes if they were a member of EPF in their earlier employment before joining in this estt and have not withdrawn their PF contribution.,
If appointed for more than 6500/-, and not a member of EPF ,it is for the employer to make them member only if the employee so desire,otherwise employer is not bound to deduct and deposit the PF contribution.
Employer can restrict contribution upto 6500/- in case of new employees if drawing more than 6500/-
Chandok AK
RPFC (Retd.)
<link no longer exists - removed>

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