Is ESIC Mandatory for Our Service-Based Company Under the Bombay Shop and Establishment Act? Seeking Guidance on Exemption Options

Dear All, My Company Pvt. Ltd. Company and we are in fabrication and erection bussiness. We have 12 sites all over the india and HO in Pune. My question is whether ESIC is applicable for my company? Factories covered under Factories Act then ESIC is applicable. Our company is not in manfacturing so we Factories ACT is not applicable so ESIC is also not applicable. 1) But Section 1(5) permits, extension of the provisions of the Act, to any other class of establishments, industrial, commercial or agricultural. We come under Bombay Shop and Establishment Act. 2) and as per Section 1(5) Although “shop” is not defined it has been held by judicial interpretation to cover an activity where goods or services are sold. No premises is necessary. We are service based company. according to point no. 1 and 2 ESIC Act is applicable but we are better benifits then benifits covered under ESIC ACT like Sickness Benefit- Covered under Medicalim Policy • · Medical Benefit- Yealry we are giving 15 days salary • · Maternity Benefit- YES • · Disablement Benefit-Covered under Personal Accident Policy • · Dependent's Benefit- YES • · Rehabilitation Allowance-YES • · Funeral Expenses.-YES Hospital Facility- We are tie up with welknown Hosipital better then ESIC Hospital. We have all proofs for these covearge. So guys whole history is in fornt of you please guide me 1. whether ESIC is applicable if yes and we can take exemption then how to take exemption? 2) if yes and not exempted then what is next step? regards Khusro

Since you have fabrication work at one place, you are deemed to be a factory. I do not know how you came under the Shops Act. If you employ at least 10 employees with less than Rs 10,000 as salary at the fabrication site, then you are covered by ESI. For employees who are working exclusively on the construction site/installation site, ESI exemption is available. It is right that you have been providing better medical facilities to your employees than what the ESIC provides. However, a careful examination has to be made to find out whether the facilities provided by you to the employees and their dependents are better than the facilities given by ESIC. For example, if you give 15 days' salary in lieu of medical benefits, this may be insufficient. There is no limit to the medical benefit offered by ESIC. You have a mediclaim policy through which employees (and dependents) receive sickness benefits. How much? Is it equal to the amount spent on medicines and other hospital expenses? What about the salary lost due to absence? The employee should either take CL or Sick Leave or exhaust their earned leave. However, in the case of an employee covered by ESI, they receive treatment free of cost plus wages (from ESIC) calculated based on the average daily rate of wages. Similarly, for each and every facility provided, there may be some differences. As far as the employer is concerned, being under the ESI fold is also beneficial. The maternity matters of ESI-covered women employees will be taken care of by ESIC, and the employer does not have any obligations toward it. The three months of leave shall be leave without pay only. Similarly, for disablement, the employer has no liability under the Workmen's Compensation Act, but the same will be paid by ESIC. However, if you feel that your company should be exempted from ESI, please apply to the Regional Director, ESI Corporation for exemption. Exemption will be granted if they are satisfied with the schemes available in your company. In case you do not meet the required norms, you will be covered with retrospective effect. In that case, you will have to remit the contribution (both employees' and employers') with interest, and you cannot recover the contribution of employees paid later on. If you come under the Shops and Establishment Act only due to the nature of your activities as satisfied by the concerned authorities, then you should have a minimum of 20 employees to be under the fold of the ESI Act. Here also, employees who report directly at sites shall be exempted as if they are construction workers. There is no guarantee for such exemption since exemption is given for employees (construction employees) at building sites only. If the ESI Inspectors do not accept these employees as construction workers based on the nature of work they are doing in the direction of some fabricated job, then they will also be covered for the time being. The obligation to prove that they will also come within the meaning of construction workers lies with you, the employer, and not the ESIC. Regards, Madhu.T.K

Thanks for the reply. Yes, we are in fabrication and erection, but fabrication and erection are done on-site. Our sites are temporary, not lasting more than 9 months. Therefore, for sites, we are exempted under section 88. However, for the Head Office (HO), we are not exempted. Under section 1(5), we are exempted if we prove that we provide better facilities than ESIC, which we are currently providing.

Regards,
Khusro