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Asso.prof.(commerce & Management) Pg
Vmlakshminarayanan
Sr.manager - Hr&admin
Vinay127
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Dear All, We are in service industry and we have total staff of 11 employees from which 10 have gross salary more than 21000 and 1 employee has below 21000 gross salary and have join in this month only.
Kindly advice do we need to have ESIC registration if this employee crosses gross of 21000 or it is mandatory to take registration.
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Yes, it's applicable, pl.read the applicability clause reproduced herein -
The ESI Act, 1948 is applicable to all factories and notified establishments in an implemented area employing 10 or more employees employed for wages.
a) For Factory:
The threshold for coverage of “factory”, as per section 2(12) of the ESIC Act is 10 which are located in implemented areas. At present the Act is extended to 529 Districts (as per list available on ESIC website at https://www.esic.nic.in/coverage)
b) For Establishments:-
i) Central Govt. has extended the coverage to following establishments, for which it is the appropriate Government, by way of a notification under section 1(5):-
Shops, Hotels, Restaurants, Road Transport Establishment, Cinema including preview theaters, Newspaper Establishment & Establishment engaged in Insurance Business, Non Banking Financial Companies, Port Trust, Airport Authorities and Warehousing establishments.
ii) State Govts. have also extended the coverage to following establishments:-
Shops, Hotels, Restaurants, Cinema including preview theaters, Road Motor Transport Undertakings, Newspaper Establishments, Educational Institutions (27 States/UTs), Medical Institutions (27 States/UTs) and Municipal Corporation/Municipal bodies employing 10 or more employees.
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For the purpose of regn.requirements wages drawn by the employees whether more or less or threshold limit of Rs.21ooo/- is not relevant.
Amendments issued if any, issued from time to time will apply.

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File Type: docx Applicability of the ESI scheme.docx (35.9 KB, 38 views)

Hi Vinay,
If that employee's gross is more or less nearing 21k increase it slightly so as to cross 21 k so that employer and employee contribution payment is not needed.
Hi,
As per the ESIC act ammendment, it is mandatory to register under ESIC if the employee strength of a company is above 10 and the employee gross is below 21000. for assistance in registration of ESIC and compliying all labour laws you can contact me.
Regards,
KM,
Consultant - Labour and HR compliance
7708907021
if after appraisal gross salary Exceeds 21K slab for deduction, can the deduction be stopped with immediate effect even if the ESIC deduction cycle(1st Oct’19 to 31st Mar’20) already started .i.e. if we deposit ESIC for the month of Oct’19. How a person can be compensated.
Will he get the deducted amount back if he not remain in the deduction slab from April 1st 2019 onwards.
Hi,
As you are aware the contribution period & benefit period are as follows:
Contribution period Corresponding Benefit period
1st April to 30th Sept. - 1st January to 30th June of the following year
1st Oct. to 31st March - 1st July to 31st December of the year following
Since deduction/contribution already commenced it's not advisable to stop the deduction. On the other hand if your contribution is continued you get the benefits during the benefit period i.e., 1st July to 31st Dec.forthcoming notwithstanding the fact that your salary exceeded the coverable limit. There is no possibility of any refund on the plea that your 'salary' has crossed the threshold limit of Rs.21000 but entitled to ESI benefits.
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