ESI Coverage Confusion: Do We Need to Include Employees Earning Over 15k?

Hi All, ESI coverage is applicable to "an establishment employing more than 20 people." Does this mean 20 people with a salary less than or equal to 15k pm, or is this coverage irrespective of the salary? Our total strength is 70, and only two of them have salaries less than 15k pm. Do we have to cover them under ESI or not? Please help.

Supreme Court Decision on ESI Coverage

As per the Supreme Court's decision in the case of M/s M.M. Suri Associates (May 1998), only employees drawing wages within the wage ceiling limit are to be counted for the purpose of coverage of a factory or establishment. This decision has been accepted by ESIC.

However, to overcome the effect of this judgment, the ESIC has amended the definition of the factory under Section 2(12) with effect from 1st June 2010, eliminating the concept of wages and power. Now, any factory engaged in a manufacturing process and employing 10 or more persons attracts ESI. However, the coverage under the establishments is still with 20 coverable employees within the wage ceiling limits.

State Governments' Notifications

Many State Governments have issued preliminary notifications proposing to reduce the coverage limit to 10 persons on par with the definition of the factory. Once the final notification is issued by any State Government, the new provision will come into force.