Navigating ESI Coverage: Do Traveling Employees Need ESI in Exempted Areas?

Dear HR Fraternity,

Would you like to share your views on the much-complicated scenario of ESI Coverage and exemption?

There is a Company/Establishment registered and operating in an area that falls under the ESI Exempted region. There are no branches elsewhere. Consequently, the Establishment is not contributing towards ESI. However, the Employer has subscribed to a Workmen Compensation Policy and is providing full coverage to all employees in terms of Hospital, Insurance, Accident, etc.

Most employees primarily work at the Establishment.

However, there are specific Functions/Departments where employees, such as those in Marketing & Sales, have to travel and visit areas not exempted from ESI. Additionally, there is a set of employees, less than 10 in number, who are deputed to other areas or premises of other parties/vendors that are not exempted from ESI.

I would like to understand whether, in situations 1 & 2 mentioned above, the Establishment/Employer needs to take ESI coverage for these sets of employees if their salaries fall within the ESI range, i.e., gross less than Rs. 10,000/- per month.

As I understand it, if the monthly gross is above Rs. 10,000/- per month, such an employee is to be excluded from ESI coverage.

I hope to receive expert comments on both situations.

Update on ESI Coverage Salary Ceiling

Now, the salary ceiling for ESI coverage has been increased to Rs. 15,000 from Rs. 10,000.

Regards,
Abbas.P.S

If the deputed employees work for a short period in the areas covered under ESI and if their salary is paid from the Head Office, you need not apply for ESI registration or pay contributions for them. However, you have taken care to cover them under the WC Act, which suggests your attitude to take care of them in case of accidents. The coverage limit is Rs 15,000.

Vijayakumar Kanna

Dear Vijayakumar,

Thanks for your inputs.

Some time back, I witnessed a situation where the ESI Inspector was inquiring about the coverage for employees working in areas not exempted by ESI. The payroll was centralized, and the Registered Office was in an ESI Exempted area. All the employees were listed under the Office situated in an ESI Exempted area.

The Inspector mentioned that even though the payroll is centralized and all the employees are part of an Office in an ESI Exempted area, if they are working in an office falling under ESI coverage, they are to be covered. Fortunately, all the employees had a gross income above the entitled limit.

Similarly, there is a new case where it is informed that if an employee is on the Company's roll in an ESI exempted area, but due to travel or deputation, they have to visit an ESI-covered area, even for a day, and are eligible for ESI, they should be covered under the scheme, even if there is a WC Policy in place.

This situation is somewhat confusing.

No confusion at all. The payroll process location has nothing to do with ESI coverage. ESIC coverage is decided as per the area of activity of the concerned employee/worker.

Regards,

Subject - ESI Wages

Hi guys,

As per the ESI regulations, a person earning less than INR 15,000 in wages is eligible for ESI coverage. Can anyone explain the definition of wages in the ESI Act? Are all allowances included in wages, and is remuneration considered as part of wages or excluded? What are the different types of remuneration, and is washing allowance included?

I know my discussion may be confusing. Please help me clarify.

Thank you.

Subject - ESI wages

Hi guys, as per the ESI, a person earning less than Rs. 15,000 wages is eligible for ESI. Can anyone explain the definition of wages in the ESI Act? When calculating ESI, are all the allowances included in wages, and is remuneration included or excluded? What are the types of remuneration, and is washing allowance included or not? I know my discussion may be confusing... Please help me.

Any allowance that forms part of the salary paid to employees every month needs to be taken into consideration for coverage. Regarding PF contributions by employers, including the share for the pension fund, it is not taken into calculation.

However, some companies pay the washing allowance separately. If this allowance is paid, it does not need to be considered in the calculation of ESI contributions.

Regards.