Navigating ESI Rules: Are Trainees Eligible and What Happens If We Don't Comply?

Dear Sir/Madam,

I represent an 18-year-old embedded company located in Bangalore with around 80 employees. We provide private insurance for all employees but do not offer ESI. Our organization has 21 employees earning less than 10,000 CTC per month, including Technicians, Office Assistants, Front Office staff, Trainees, and Apprentice employees. I have some doubts regarding ESI and hope you can assist me in resolving them.

1. Is ESI mandatory for employees in an organization?
2. Are Trainees or apprentices eligible for ESI?
3. Are there any alternatives to ESI, such as other corporate private insurance options?
4. What are the repercussions if the rules regarding ESI are not followed within the organization?

I look forward to hearing from you.

Best regards, [Your Name]

Dear friend,
Employee under ESI Act - ‘Employee' means any person employed for wages in or in connection with work of a factory or establishment to which the ESI Act applies. Earlier employees drawing wages upto Rs. 6,500 per month were covered under the ESI Act scheme. [Section 2(9)]. However, w.e.f 1st April 2004, this wage ceiling has been increased to Rs. 7,500 per month again wage ceiling has been increased to Rs.10,000/- (now / at present).
Employees include * persons employed through contractor * Apprentices other than those covered under ‘Apprentices Act' * Persons employed in administration office, department or branch for purchase or sale of products. * Casual workers engaged in work incidental to or connected with work of factory or establishment * Employees working at head office when factory is located at different place * Canteen staff, watch and ward staff are employees * Staff in hospital attached to factory are employees. - - Members of Indian Naval, Military or Air Forces are excluded.
Following are not Employees - * Persons drawing wages over Rs. 7,500 per month * member of Army, Navy or Air Force. * Partners of firm are not employees even if they are drawing wages - RD, ESIC v. Ramanuja Match Industry AIR 1985 SC 278 = 1985(1) SCC 218 = 1998(6) SCALE 38 * Persons employed in Government establishments. * construction workers engaged in raising additional building subsequent to initial set up of factory.
so, blow Rs.10,000/- those who are getting, Casual, Contract employees all are eligible for ESI Payment even though company has their own private policies.

If more than Rs.10,000/- they will not comes under ESI, but they will eligible for workmen compensation act.

hope u get the idea

regds...

Hi Jagadish,

Trainees are out of ESI as they are not employees of the organization, and the compensation paid to them is referred to as a stipend and not termed as salary. There is a provision in the ESI Act when the employer provides a better insurance scheme than ESI, the organization is exempted from the same.

Regards,
Madhurima

Be clearly understood: Only trainees under the Apprentices Act, 1961 are excluded, not the trainees under the company's scheme or certified standing orders of the company, even if they are being paid a stipend.

Ak Malhotra
Sr. General Manager

Dear trainees appointed through the Apprentice Act are only exempted under ESI; otherwise not. There is no alternative to ESI. You may have a good insurance scheme, but the ESI Act will be applicable to you. As Madurima mentioned, nowhere in the act is it stated that if you have a better scheme, you can be exempted from the provisions of this act.

Thanks,
J.S. Malik

Hi,

Only the healthcare industry, private medical, etc., or the industries that have their medical facilities like TATA, Birla, etc., and simultaneously offer other benefits like mediclaim, GPA, etc., whose service is undoubtedly better than the service provided by the ESI. Only the employees of such establishments would be exempted from the ESI. Before that, prior intimation should be given to the ESIC when the employer is going to opt-out of the ESI services.

Regards,
Sidharth

Hi all,

Other than apprentices (enrolled in the Apprenticeship Board), everyone is covered under ESI.

Is this applicable to software firms as well? We are providing health insurance for all our staff.

If a person came to the premises to do some work and gave a bill for labor charges, and we have to pay him Rs. 600 per day, is ESI deducted? Some people are calculating and connecting this with the exemption rate of Rs. 15,000/- (as his monthly income is Rs. 18,000 considering Rs. 600 per day), hence he is exempted from ESI.

Experts, please clarify the doubt.

Dear All,

I am having doubts regarding ESIC. As per my understanding, except for Apprentices training, all trainees should come under ESIC. However, when we receive trainees from colleges for Industrial training who are supposed to receive 2000 per month, are they eligible for ESIC or PF? If yes, then what is the meaning of Minimum Wages?

Thank you.