Navigating ESI and Workmen's Compensation: What Are the Legal Requirements for Your Company?

Respected Seniors,

If a company/establishment has more than 20 employees, is it compulsory to cover it under ESI if the number of employees drawing a salary of less than Rs. 10,000 is only one? Also, is it necessary to get Workmen's Compensation Policy under the Workmen's Compensation Act as per law if an Accident Policy has been taken? I would appreciate it if this is explained with any judgment.

Thanks and regards,
Dwipna

Dear,

ESI is not required. You have an accident policy in your organization, which is good, but still, the Workers' Compensation Act can't be neglected in any situation. For more information on this, please ask Malik or Madhu Sir.

Regards,
Vipin :icon1::icon1:

Dear Dwipna,

If you have more than 20 employees in your organization, then legally you are required to obtain an ESI code for your employees. When you review the applicability clause, it states that if you have 20 or more employees, you must obtain the code; nowhere does it mention eligible employees. You must obtain the code, and if only one employee is eligible, then payment is required for that singular employee.

Thank you,
JS Malik

Dear Sir,

In the definition of the term factory, it is stated as "persons employed for wages." But according to the Supreme Court judgment in an appeal filed by ESIC in the case of M/s M.M.Suri & Associates Pvt. Ltd, Delhi, only coverable employees within the wage ceiling limits are to be counted for 10 or 20 as the case may be and not all the persons employed for wages in the Factory/Establishment. This Judgment dated 28-10-98 has been accepted by the ESIC and adopting since then. But the definition in the Act remains unchanged. So, if the establishment is having less than 20 coverable employees, they need not register under ESI. They can bring this fact to the notice of the concerned Regional Office for verification if necessary.

Paid Directors drawing remuneration within the wage ceiling limits are to be counted for this purpose. They are also employees under Sec. 2(9).

The concept of the usage of power for the manufacturing process has been deleted from the definition of Factory in Sec. 2(12)(a) under the ESI (Amendment) Act 2010, and sub-section 12(b) of Section 2 has been deleted. In effect, all factories employing 10 or more persons (coverable employees) for wages and engaged in a manufacturing process in any part of it stand covered. This amendment is yet to come into force. There is no change in coverage of an establishment, as it is governed by the State Government's notification under section 1(5) of the Act.

Ramana Murty