Respected Seniors,
My company doesn\'t have any contribution towards ESIC or PF, although it is working from past 56 years and they are having more than 30 employees in the organization. I am New in HR and even HR Department is new here. Now since employees are asking to start ESIC and PF in organization, My MD is asking me to understand the PROS and CONS of it. Please seniors help me to understand Pros and cons of ESCI and PF from COMPANY\'S POINT OF VIEW.

From India, Bhopal

sorry to say that, but, i feel that, your consern authority is trying to keep bussy in unwanted work to avoid such responsiblity.

Here, i would like to mentioned that, applicability of any law doesent depend on your choice, it is by force...

If your orgnsation having 20 & more employee & their salary (Basic + DA) is more than 6500/- then there is optiona to employee & employee to avail the PF benefits or not..

If your orgnisation having 10 or more employee, & their gross salary is less than 15000/ pm. then they have to be register under ESIC, there is nothing any choise for pros & cons....

Only you take a exemption for ESIC, but subject proove to providing the same or better benefit than ESIC.

As i belive these are the social security benefits, it is beneficial to your employees itself, i dont thing any negative in the same, infact most of possitve, in fact, if you dont avail the same, the liabilty shall be increase toward the company in term of employee health & security.


Tushar Swar

From India, Mumbai

So far as application of ESI Act, 1948 as well as EPF & Misc. Prov. Act are concerned, the coverage is automatic once your establishment employ minimum number of persons. Under ESI Act, in addition to condition of minimum numbers of employees, there is also condition that the factory or establishment must be situated in the implemented area.

The management of the factory/establishment may avoid coverage of their unit today, but as and when the same comes into the knowledge of authority and there is verification of records, the same is required to be covered from the very date the same qualifies for coverage. And in such situation, the employer has to pay the contribution as well as interest from retrospective period, but cannot deduct the same from the salary of the employees as employees share of contribution. Therefore, it is favourable to the management to cover their unit in respective enactments at the earliest possible if the unit satisfies the conditions of coverage.

The coverage of employees under social security enactments as above, will be beneficial to the employees of the unit in the long run.

From India, Noida
Dear Harsh,
In short i mean to say that, applicability of any of act. not by choice, it is by force of law...
we can't decide that, whether any wanted to follow or not on the basis of pros & cons...
& i belive, this orgnisation is runing since 56yrs.. which is not small periond, as a business person (Director, managment or owner), he should know, which are the laws are applicable to his orgnisation.

From India, Mumbai
I feel your organization has smartly managed to remain out of bounds of EPF and ESI provisions which are UN-avoidlable for the type and size of your organization as I can see. If the attention of the enforcement officers under both these statutes is drawn (of course in writing) by any employee of the organization, the employer will have to implement these requirements and that too with retrospective effect. I suggest, you may draw the attention of your employer to this vulnerable situation IMMEDIATELY.
Lalit Thakkar

From India, Surat
Dear Tusharji,
Thanks for your comments. You are well aware about the importance of statutory laws and rules/regulations framed therein. But you will see the ground realities in India regarding implementation of labour laws. The level of compliance of labour laws in India is very poor and not upto that level as that of tax laws.
A number of times, central trade unions have demanded strict enforcement of all labour laws.
However, so far coverage under ESI Act is concerned, the person who raised this issue has not clarified following aspects:-
1. Nature of establishment i.e. whether it is a factory or establishment for which State Govt. has issued notification under section 1(5).
2. Whether the said factory or establishment is situated in implemented area as notified under section 1(3).

From India, Noida
dear Querist.
I am sorry to be blunt and feel the pitty on the intelligence of MD of your company,who have been violating the statutory provisions of the ESIC and the PF Act from last 56 years even though employing more than 30 employees in his organization and has asked you to find out the pros and cons of ESIC and PF from company's point of view. If you are a HR Department personnel, you should better know that all the organizations or companies are duty bound to follow Govt. regulations without any choice. You should have advise your MD accordingly instead of approaching the senior members for advice. Please tell your MD that he has no choice other than to follow the regulations under the ESIC and the PF Act.I feel bad about the employees who have been put to so much loss by this time.The only part of ESIC, you need to check if your establishment does not fall in the non-implemented area of the ESI scheme.
BS Kalsi
Member since Aug 2011

From India, Mumbai
Quite strange to know that an estt. Working since last 56 years is not covered under these Acts from the due date of coverage.(if notified area in r/o ESI Act). If the estt is law abiding, it should contact the respective authorities immediately in order to avoid complications at later stage.
A K Chandok
RPFC ( Retd.)

From India, Chandigarh
Dear Seniors,
Thanks a lot for your valuable feedback and suggestion. I know it is a law and my company is abide by to follow such rules without concerning about pros and cons. But MD of my organization has found some other means to remain out of such laws that i came to know very recently. Actually they divided the firm in four different companies and similarly divided the employees equally in four companies. In this way they are not coming under factory's act.
Now Director under pressure of employees is thinking to start PF and ESIC and then will merge all the four companies under one if he finds some good points in it. That's why he was asking me to find the pros and cons.
Tanay Singh Kulshreshtha
HR Executive

From India, Bhopal
Dear Kalsi sir,
I am new in HR field and Don't know many things about HR Department. This is my first experience and the only person in HR Dept. is me. I am trying to learn new things and that's why i used to put up my general queries in this forum. I feel seniors are like my teachers and will teach me right and wrong. For me the only way to learn anything about HR is this forum. Still if you feel i did a wrong query, i am sorry for that.I ll keep in mind to put a correct query next time.
Tanay Singh
HR Executive

From India, Bhopal

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