CA Darshan Balai
Chartered Accountant
Labour Law
Esi, Pf Consultant
+3 Others

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Is it mandatory for a Pvt Ltd company to provide ESI insurance to employees (more than 20) below Rs.15000 wage limit.
Dear Rajeshwar, Can you provide some more details on your organisation, bye,
I am Parameswaran Yes it is very clear in the ESI Act that either direct or indirect now they getting below Rs 15000/ they are covered under ESI Act Thanks With Regards R.Parameswaran
ESI is applicable only for the establishments/ factories located in implemented areas, which are notified as such. The Act is not applicable to the units located in non-implemented ares. The list of the areas implemented is available at ESIC local offices.

Dear Rajeshwar78,
On the basis of information provided by you, the ESI Act is applicable to your private limited company. Under Section 1(3) of ESI Act, 1948. the act is applicable to all the factories and specified establishments employing more than 20 employees. Thus, it is a statutory obligation for your company to register the organisation, provided it falls in the implemented areas. The registration process can be done by submitting Form 01 along with the enclosures to the Regional ESIC Office.
Another clarification is that the wage limit of Rs.15000 is considered only to determine whether the contribution is payable a particular employee. In case, the no of employees in your company drawing less than Rs.15000 does not exceed 20, but the aggregate number of employees employed by you or through a contractor exceeds 20(irrespective of the wage limit), still the ESIC Act is applicable.

Thanks for replies. I was under ESI insurance along with hundreds of fellow employees till March 2013, so my company is under ESIC act. But surprisingly from April 2013 it denied ESI insurance as we are earning more than Rs.15000 along with incentives. My salary structure is Net pay Rs.12000 (basic+all fixed allowances), Incentives based on my performance are around Rs.5000-10000. I am not earning incentives every month and my Gross few months in a year is just my basic i.e. Rs.12000. I believe ESI eligibility is calculated on Net salary but not Gross salary which is not constant. I got the answer as, it is the company's wish to provide ESI insurance and decide who are eligible for it. But employees who are earning less than Rs.15000 and has more Net pay than me are still provided with ESI insurance. Please reply me.
Dear Rajeshwar78, w e f 02nd January 2013 the number of Employees were reduces to 10 for ESI coverage.
Dear Rajeshwar,

Coverage of factory/establishment

First, this Act is applicable to all non-seasonal factories utilizing power and employing ten or more individuals, as well as is applicable to non-power using manufacturing organizations and establishments employing 20 or more persons for wages and falling under the ambit of an implemented geographical area. As of now, employees of establishments, companies or factories that fall within the ambit of coverage and earning wages not exceeding Rs. 15,000/- per month are covered under this ESIC Scheme.

Under Section 1(5) of the Act, the provisions of ESIC Act have been extended to the following classes of establishments:

Shops and Commercial establishments

Cinemas, including preview theatres

Hotels & Restaurants


Newspaper establishments

Road Motor Transport establishments

Under Section 1(5) of the ESIC Act, the Indian Government is empowered to extend the Scheme to any other establishment or class of establishments, commercial, industrial, agricultural or otherwise, with the passage of time. A State Government may extend the provisions of this Act in consultation with the ESIC and with the prior approval of the Central Government, after submitting six months notice of its intention in the official gazette; provided that where the provisions of this Act have been brought into force or implemented in any part of State, the said provisions shall stand extended to any such establishment or class of establishments within that part, if such provisions have already been extended to similar establishments or class of establishments in another part of that same State.



Resolve Business Services

If our company workers are working in another company for completion of project / Buildings for the few months & all our workesr are covered in Workmen compensation plolicy as ESIC is not applicable for us.
But that other company is applicable in ESIC & they are submiiting ESIC contribution of our workers for the said period & this contribution amount will debited to our company.
In view of above, is it right?
Hope you will reply to the same.
Thanks & Regards
Suhas Deshmukh

Please submit documentary proof of coverage under Workmen compensation act to the other company for exemption from ESIC.

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