Hello Suman
There is some error in the reply of malikjs and amit lycos, I am sorry to say so. It appears that they are not aware of the famous Supreme Court judgment in Suri Case, some years back.
Let me make it clear that as per final judgement of Supreme Court only those drawingt Rs 10000 or beloe per month can be counted for the purpose of payment of ESI contribution as well for the purpose of determining whether the factory or Establishment is coverable under the ESI Law. This is final. I have in this very site few month back gave exhaustive reply and illustration on this point and I think you can search this site and get the illustration.
If the ITES or IT unit is only providing softwre support, call centre and such services, without providing any hardware support, repair, maintenance etc, it will come under the category of Establishment/Shop and not factory. But if there is any manufacturing process including mass printing of information etc. it will come under the category of Factory. For factory the required number of employee is 10 to come under ambit of ESI scheme and for Establishment (Shop) it is 20. That means the number of employees drawing Rs 10000 per month or below should be 10 or 20 (for factory and establishment). For Eg, in an establishment there are total 100 employees and 81 of them draws monthly "Wage" above Rs 10000 and only 19 draws Rs 10000 or below, then that establishment will not be covered under ESI Act. In what is called as Suris case, Supremen Court has clarified and I am not aware of any amendment by Parlisment to get over this judgment thought ESI department was trying this.
Now the word "Wage" is defined in Sec 2 (22) of the ESI act, as all cash compensation paid in consideration of work including additional money paid in periodicy less than two month. Employers contribution to ESI, EPF, Gratuity and superannuation Scheme, Annual Bonus, facilities given in kind like house, free food and reimbursement given for educational expences of child, housing, medical care etc will not be counted. Only cash payment is taken. In this "Fixed conveyance allowance" (different from reimbursement of conveyance allowance for duty or actual reimbursement as per ticket) will be treated as Wage. Whatever is defined as wage will be treated as wage for the purpose of deciding coverage and payment of contribution. For Eg. if a employees has Rs 9800 as basic, Da and other cash allowance and 300 as "fixed conveyance allownce' then his month wage is abov e Rs 10000 and he is not covered. If wearing of Unifvorm is compulsory, then washing allowance will not be treted as wage.
If you still have some doubt you need to give the wage structure for your employees and then get a reply since different companies have different nomenclature.
O. Abdul Hameed
Formerlhy Additiona Commissioner
ESI Corporation New Delhi
Now General Manager, Private Company
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