Is ESI Coverage Applicable for Small Software Companies with Low-Salary Employees?

Nature of Company: Software

Total Number of Employees: 32

Coverable Employees (ESI): 12 (i.e., below 15,000/-)

Now, please tell me in this case whether ESI is coverable or not.

Thanks & Regards,
Murthy

I too have a similar scenario.

We are a software firm with 30 employees, and we have not yet registered with ESI. Can someone suggest whether ESI is applicable to software companies too? We have opted for PF but not ESI. I read somewhere that ESI is not applicable to software/IT firms. Any suggestions are appreciated.

Dear Friends,

COVERAGE UNDER THE ESI ACT, 1948

Under Section 2(12) of the Act, it is applicable to factories employing 10 or more persons, irrespective of whether power is used in the process of manufacturing or not.

Under Section 1(5) of the Act, the Scheme has been extended to shops, hotels, restaurants, cinemas, including preview theatres, road motor transport undertakings, and newspaper establishments employing 20 or more persons.

Furthermore, under Section 1(5) of the Act, the Scheme has been extended to Private Medical and Educational Institutions employing 20 or more persons in certain states.

The State Government has been requested to issue a notification under Section 1(5) on the lines of Section 2(12), keeping the threshold limit for coverage at 10 employees instead of 20.

The existing wage limit for coverage under the Act is Rs. 15,000 per month (with effect from 01.05.2010).

Warm Regards,
Mahesh Kumar Pandey

As of today, even if you have 10 employees (and none of them are coverable, i.e., none earning a salary less than or equal to Rs 15,000), you are covered under the ESI Act. The production of software is considered a manufacturing process; thus, the ESI Act is applicable.

Please let me know if you need any further clarification.

Regards,