Harsh Kumar Mehta
Consultant In Labour Laws/hr
Manager - Human Resource
Epf & Esi Matters
Sr.hr Executive
Sr.manager Hr & Legal
Hr Executive
Raj Kumar Hansdah
Shrm, Od, Hrd, Pms
Private Consultant On Labour Laws
Lalit Thakkar
Systems Consultant
+1 Other

Thread Started by #infotech.tanaysk

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.
14th April 2014 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
14th April 2014 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.
16th April 2014 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.
16th April 2014 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
16th April 2014 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).
16th April 2014 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
16th April 2014 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.)
16th April 2014 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
17th April 2014 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
17th April 2014 From India, Bhopal
Dear friend
If your company wishes to continue its business; it HAS TO COMPLY with the labour laws.
There is no question of CHOICE; or deciding of advantages or disadvantages.
Such matters should be reported to the Authorities, as a whistle-blower; and such erring MDs and owners should be brought to book and punished.
You must have seen the remarks of other members.
It is HORRIFYING to know that such heinous violations are being committed by an IT company.
17th April 2014 From India, Delhi
Dear Sh. Raj Kumar Hansdahji,

I generally read your comments in this cite with too much attention and I feel that you have very rightly expressed your views. But I must submit again that the level of compliance of labour laws in India is very very poor. As a result, the poor workers are not in a position to get their due legal rights as laid down in various labour laws including social security laws.

The member who initiated this thread has now stated that their principal employer has divided the establishment in number of units and hence their unit is not coverable under different labour laws. I may bring to your notice that such like tactics are adopted by employers to avoid implementation of labour laws. However, I want to inform that that the bifurcation of unit into various parts will not help much because there are number of court judgments in respect of EPF & Misc. Prov. Act as well as ESI Act, 1948 vide which Hon'ble courts have clubbed different units as one for implementation of labour laws on the basis of facts of unity of purpose, unity of functioning, unity of finance, transferability of workers from one unit to another and continuity of manufacturing process etc.

If it comes into the knowledge of above authorities that there was artificial division of unit and in actual the same constituted as one, the same will be coverable, in my opinion, from that date when all the units total employed minimum numbers as required in above enactments.

Further I feel that HR officials working in the factories/establishments are employees and have to follow the orders of their owners and therefore have very little option with reference to ensure the strict compliance of statutory laws.
17th April 2014 From India, Noida
Dear Harsh
I totally agree with your views.
There are constraints in ensuring compliance; especially for fresh HRs who lack experience and strength of commitment.
However, our endeavor should be to GUIDE THEM IN THE RIGHT PATH.
These are the formative years for the young HR professionals, and we should not let them acquire a complacent ("chalta hai") attitude that will affect their whole life and career, but enable them to pick up the right knowledge and attitude.
Even if they are not able to ACT in the right way due to lack of authority, they should know and be aware of what is right and legal.
Warm regards.
18th April 2014 From India, Delhi
Respected Raj Kumar SIr,
I know that company is not going on a correct path regarding IR laws but even if i want to change the current policies within the organization that is not possible for me because, as Harsh Sir Said it is already very difficult for me to start this new trend all of a sudden in a company working from 56 years and all over that I am the whole sole person in HR Department with only 3 months of experience. No one is there to support me for the same. But THANKS A LOT for understanding my problem and helping me.
I will keep your words in mind and will definitely not acquire a complacent ("chalta hai") attitude. I'll still put my all efforts with my boss to let him follow all the laws that are necessary and compulsory. Even if they do not agree, at least i can keep these points in mind for my better career.
Thanks and Regards
Tanay Singh Kulshreshtha
HR Executive
18th April 2014 From India, Bhopal
Respected Harsh SIr,
Thanks a ton for understanding my actual problem. Yes that is very difficult for me to suddenly put any change in company's policy or to make them follow laws and regulations but i'll try my level best to bring the change.
The only questions that arises in my mind is:
Harsh Sir and respected seniors please help me on this if possible...
Thanks and Regards
Tanay Singh Kulshreshtha
HR Executive
18th April 2014 From India, Bhopal
Dear Kulshreshthaji,
In this thread, we have shared with you some of our experience in respect of labour laws particularly EPF & ESI. For you kind information I am enclosing herewith a copy of judgment of Hon'ble Supreme Court of India, which is very relevant in the matter as discussed by you. As suggested by senior members in above remarks, I hope you will form your definite opinion, and will work for tension-free environment in your organisation by making compliance of all statutory laws.
18th April 2014 From India, Noida

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File Type: docx Hon'ble SC Judgment ON EPF CLUBBING 26-11-2011.docx (33.4 KB, 29 views)

Dear Tanay,
As u mention above that you start ur career recently with 3 months so its natural to face difficulty in any org and u r not wrong anywhere. I suggest always try to learn new things everyday thru routine work or by website. There is so many things in HR which need time to learn and understand.
Always read factory act and other acts to understand HR function and basic requirement of statutory compliance in org.
19th April 2014 From India, Mumbai
Dear Harsh SIr,
Thanks for the Reference you provided, i.e. Judgment of Hon'able SC regarding clubbing of two different entities.
With the above Example i came to know some points,
1) All the Three Entities are working under same Director. One Entity is having another Director, but she is from the same family.
2) All four companies are having Financial Integrity with each other.
3) Employees are swapped within the organization
4) They are using Different letter heads but with same Contact No and Gram No.
I guess these points are enough, along with the above example to let me explain my boss the future consequences.
Thanks Harsh sir and all Respected seniors in helping me sorting out this matter.
Tanay singh kulshreshtha
HR Executive
19th April 2014 From India, Bhopal
Dear Sh. Kulshreshtha,
After reading your thread, I feel 'Gimmicks' would not amount to a unprofessional or impolite word if I use here your higher ups have resorted to. Gross violation of the laws enacted for welfare of employees is not only a penal offense but it is a sin morally. Please persuade your higher ups to stop these unfair practices and resort to the unavoidable implementation of these statutes ASAP.
Lalit Thakkar

19th April 2014 From India, Surat
In such a case , you need not to educate your management. Just give a tip of information to the ESI, PF department. They will give the PROS N CONS to you r management if not complianced with the Act.
19th April 2014 From India, Guwahati
Dear Anuja ji, If you can put your views... then no need to paste any advertisement of naip..
23rd April 2014 From India, New Delhi
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