ESI is applicable only for Employees drawing Gross Salary of rs21,000/- & below.Something is better than nothing.
I feel you need to review your answer by reading the query once again.
It seems to me that you have made mistake in reading the query. Company is paying basic component less than minimum wage rate. Basic component between 4000 to 5500 is definitely much lower than minimum wages in any of the schedule industries in Mumbai.
The query needs to be examined under the scenario wherein the establishment does not fall under schedule industry.
The salary structure should always be realistic. Why Rs.4000 to Rs.5500 be treated as Basic? Why not at Zero basic and all your remunerations / salary be treated as HRA or any other allowances? You are employing more than 20 persons and applicability of ESIC and EPF is their. Now when you are intended to get the establishment covered, you are going to split your salary into certain allowances and such practices are opted to deprive employees from the benefits. The inspecting authorities, in such cases, can make you liable to pay contributions on the wages as existed on the day or prior to the day of coverage.
Anyhow, if you are going to restructure your salary, take into confidence the staff members too and fix allowances in genuine way.
The reply given was based on Judgements 1.Minimum Wages can be Split in to Allowances 2.Employer, not PF Authority can Fix Wages for Contributions.The Judgements are attached for your Perusal.Besides, Present Gross Salary is around Rs25,000/-
I subscribe to your opinion in toto, but as already mentioned, the MD concerned has given wage slips of one dozen companies from Mumbai wherein the Basic is shown between 4000 to 5500. PF is deducted on this basic. Already PF Coverage is delayed.Future, consequences will be at the sole risk of Employer
As far as concern about salary structure of employees, i think, when we divide the gross salary/ ctc in various allowances, we should consider basic+DA amount should not be less than the existing minimum wages of that particular region or state. That will be better for compnay if it put the amount in Basic +DA more than the minimum wages because the PF contribution is based on it.
it may be non compliance of less contribution of PF amount and PF Deptt. may take the action over it. In addition with, The labour deptt. also take step on it.
Thanks for your valuable Comments and inputs.
Mr. Ajay Kr Kuntail can you provide any notification in this regard, that Basic salary should be minimum wage. I have employees with low salary , if we show state wise min wage for them, then net is less for them. Though we are following the same for safe guard.
But if any notification you have please share.
Debashree Ghosh Dutta