Confused About ESIC Registration for Small IT Firms? Seeking Clarity on Legal Requirements

Dear All,

Our IT company has 12 employees earning Rs. 10,000/- or less. Now, my question is:
1. Whether IT companies fall under the "10 with Power" or "20 without Power" criteria as per the Act.
2. Do we need to obtain an ESIC registration number for our company?

I have spoken to a few consultants, and I have received mixed responses. Some say it is not required, while others say it is necessary. Please guide me on this matter.

Thank you all in anticipation.

Surya Mukherjee

If I am giving a monthly bonus to my employees, will ESI be applicable on the bonus amount? Please reply as early as possible.

Dear Sudhanshu,

Please do not change the topic by putting your question in between. You can raise your query separately.

Mr. Surya, Rajeev has asked you a question, and you have not replied to the same. The ESI applicability is not decided by earning 10,000 or less on a payment basis. It is determined by the total number of employees in the organization. In your case, if the total number of employees is 20 or more, then ESI will be applicable because I think you are not covered under the Factories Act as there is no manufacturing process. If you have a manufacturing process and are covered under the Factories Act, then ESI is applicable regardless of strength.

Thank you,
J.S. Malik

We are an educational institute. Please suggest whether we are applicable under the ESI Act. The strength of the company is 50.

Please reply soon as it is urgent.

Regards,
Aman

Dear Mr. J.S. Malik,

The ESI applicability depends on the earnings and the number of employees working in the company. For non-manufacturing companies, a minimum of 20 employees who earn a salary/wage of less than 10000 P.M. is required. For manufacturing companies, a minimum of 10 employees who earn a salary/wage of less than 10000 P.M. is required.

Dear Surya Mukherjee,

ESI Act does not apply to your company as you have only 12 employees.

Sanjeev Kwatra
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Dear Sanjeev,

As you have mentioned ESI applicability for a manufacturing concern - 10 or more employees getting less than 10,000, and for a non-manufacturing concern - 20 or more employees getting less than 10,000, I feel you have not gone through the act and are sharing your experience only. Please go through the act and see whether it is written as 10 or more employees/20 or more employees or written as exempted employees.

Even though it has been cleared by the Karnataka High Court in the case of Employee State Insurance Corporation vs. Corner House Fun Food Cafe, refer to Section 2(9) and 2(12) of the ESI Act.

Thank you,
J.S. Malik

Dear Mr. Malik,

I also have the same opinion that the applicability of ESI Act is based on the employees employed in the establishment, not on the employees receiving a salary of up to Rs.10,000.

As per the definition of a Factory:
Factory means any premises including the precincts thereof— (a) where ten or more persons are employed... and so on. It specifies "persons," not "employees" as defined in the Act.

Hence, if in any factory or establishment where 21 or 11 (as the case may be) are employed, even if the number of employees whose wages or salary does not exceed Rs.10,000 is just one, ESI is applicable.

Please correct me if I am wrong.

Thanks