Industrial Relations And Labour Laws
Assistant Human Resource Manager

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Dear All,
Need a small clarification on ESIC deduction and its appilcability, Below are the queries:-
1- Is ESIC is appilcable on the daily wages? if yes. than please let me know the section of the act which have provisions of the same?
2- Suppose If a daily wage worker is getting a wage of Rs 650 per day and he is earning above Rs15, 000/- per month than whether ESIC is applicable for him?
3:-Is ESIC applicable for the employees of the company if management has taken the accident policy and workmen's compensation policy?
We have a big group working for us and they are paying daily wages to worker and according to them ESIC is not applicable on them since every worker is withdrawing wages above than 15k in a month?
Please advise.

Law has not made any distinction between daily rated workers and monthly rated workers. ESI being a social security measure, is to be paid irrespective of nature of employment. Therefore all employees whether permanently employed, employed through another employer (contractor) or engaged for a day or few days (casual workers) should be given ESI subject to one condition that they get not more than Rs 15000 per month.

Now in respect of workers who work for a few days, lesser than the normal working days in a month, the ESI has decided to implement the notional wages policy. Notional wages means the total wages the worker would have earned if he had worked for all the 26/ 30 days in a month. Therefore, if for a part of a month one employee gets Rs 650 per day that could be notionally computed as Rs 16900, ie, 650 X 26 and exclude such employee from the coverage of ESI. Please find the circular in this regard.

Medi Claim policies, Accident policies or Workmen Compensation Policies will not be at par with ESI for various reasons. No medi claim policy in India gives coverage to the entire diseases whereas there is nothing like, existing, pre existing or age of parents connected with ESI. You cannot get a mediclaim with your 85 year old parents included. Yes, you may get it but by paying a very high premium. You cannot get cover for your existing diseases. Under ESI age is not a factor, pre existency of diseases is not a matter, the employee will get benefits.

Under Accident policies also, accidents are covered but who will bear the expenses of hospitalisation in connection with other sickness?

The purpose of workmen's compensation policy is different and it is mandatory for those who are not covered under ESI and not for workers under ESI.

Attached Files
File Type: docx Worker employed for a short period-notional wages.docx (11.7 KB, 200 views)

Dear Madhu Sir,
You are always there to help us.
Thanks for explaining in such a waonderful manner. Just want to know if supoose one worker is working one month for 26 days and getting wages above than 15 k and next month onwards if he had worked for 15 days and drwaing wages less than 15 k in that particular month than ESIC will be deducted in that month?
How he will get the benefit of the scheme.

Dear Madhu Sir,
One more querry.
Would it be objectionable by the ESIC if in one month contribution has been deducted for one person in one month and in other month there will be zero contribution.
what all are the documents needs to be kept ready for ESIC audits?

Normally once covered, he will continue to be covered for the entire contribution period irrespective of salary. Therefore, if in April he was covered, he will have to contribute till Sept even if his salary exceeds Rs 15000 in May or June. If in any month he has not worked and subsequently his salary was zero, no contribution can be paid and you can mark the cell as absent. There will not be any objection.

If an excluded employee's salary becomes less than 15000 due to not working for the entire month, you need not cover him because his notional salary is still more than Rs 15000.

For ESI audit, you have to submit the attendance register, Wagees register (if paid directly to bank, payroll sheet), accident report, accident register, financial statements (P&L Account and balance sheet), vouchers in support of payment made to labour involved payments (they will verify particularly the Repairs and Maintenance A/c ) contract labour agreement, payment mode to contract labour, contract labour attendance register, Visit book etc.


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