Information Required On ESIC Applicability

Hi,
I am working with a new start-up IT firm based in Noida. We are 14 employees currently and 5 out of them are drawing gross salary less than Rs.15,000 per month.
Please advise if we require to cover them under ESIC.
Regards,
Priya

Dear Priya,
If an organisation having minimum 10 employees in their payroll then their organisation will cover under ESI Act. In your case 14 employees working in which 9 employees are excluded as per ESI Act, but the 5 People will definitely attracted ESI since there gross salary is less than 15000.
Regards
Ratikanta Rath

dear madam,
There is a recent judgement wherein it is held that if the esi eligible employees are below 10 the act will not apply.

Hi Priya,
According to the info u hav given, there are total 14 nos and from which 9 are getting their salaries more than 15000.
In such case, as per my knowledge, ESIC provisions will be applicable to your organization, because total nos of employees are more than 10 nos. However, ESIC contributions will only be deducted from 5 employees.
You need to have the detailed record of the salaries paid to the employees, as it must be shown that they are getting the salaries than the prescribed limit of ESIC salary.
Also note, if the nos of employees increases who are getting the salary below 15000, you will be required to have the ESIC deductions as per act from those employees. So to avoid any legal default, I would like to suggest you to go for ESIC deductions.
Regards,
Atul S Malve
Manager- HR & Admin

Dear Atul,
It is applicable only if the no. of employees for whom the act is applicable goes upto 10 or more persons.
In Priya's case, although they have 14 employees, there are only 5 employees who are drawing less than Rs.15,000/- p.m. gross salary, therefore, the ESI Act will not be applicable to them till the time the number of employees drawing gross salary below Rs.15,000/- goes upto 10 numbers.
Hope this clarifies.
Regards,
Kuldeep Singh

Dear kuldeep
The ESI Act, (1948) applies to following categories of factories and establishments in the implemented areas:
* Non-seasonal factories using power and employing ten(10) or more persons
* Non-seasonal and non power using factories and establishments employing twenty (20) or more persons.
if you go through the 1st line u can easily see that it was mentioned employing 10 or more person, no where it is described 10 or more Coverage employees.
In case of Priya as she is saying her company current employee strength is 14 that means they are generating 14 employees payroll, and in there muster roll & statutory records also maintaing 14 employees records.
Regards
Ratikanta Rath

Dear Ratikanta,
That is true. But if you go and ask the ESI officials, you will be informed that the act is applicable only if the employees for whom the act is applicable goes upto 10 or more persons. The overall number of employees in the organisation is immaterial. The important thing is that the employees for whom the act is applicable should be 10 or more persons.
If you have labour law consultants, please consult with them.
Regards,
Kuldeep Singh

Dear Kuldeep,
If u have any amendment copy or circular of ESIC dept. in connection to your views and provide us for information we will be grateful to you. since in Law always there are loop hole, even in a particular law different state esic enforcement officer also give different views since they are also unaware about this. So kindly provide any circular copy if u have.
Regards
Ratikanta Rath

I do not have any circular to this affect. May be some other member of this group can help us.
I was handling multiple companies in one of my assignments and in one of such companies, the number of employees had exceeded 10. So we approached the ESI officials to enroll the employees as per the act. The then Deputy Director of ESI informed that the condition of 10 numbers is for employees on whom the act is applicable i.e. who are drawing monthly gross salary of less than Rs.15,000/- This was the time I realised about it.
Regards,
Kuldeep Singh

Dear all
Actually similar issue was raised in one of my client company in Pune wherein the coverable employee strength was below 10, the ESI held that act was inapplicable.