Confused About ESI/PF Rules for Small Businesses? Need Help with Employee Plans!

I request anyone to please help me sort out my query. Currently, we have six employees in our organization. Will we have to implement ESI/PF in our organization? We further plan to recruit seven more employees for our operations.

Plan A
As per Plan A, we are going to call and hire 7 people for job orders that should be performed in our company. Depending upon the orders, we shall pay them accordingly. In such a case, must ESI/PF be implemented?

Plan B
If we recruit 7 people as temporary employees and pay them a monthly salary of Rs. 4000 each, our organization's employee strength will increase to 13 employees (Permanent Employees: Existing 6 Employees + 7 planned temporary employees). In this case, will we have to implement ESI/PF in our organization?

In the above three cases, for which plan do I have to implement ESI/PF in my organization? If not, why not? Please explain this and help me out, dear seniors. Hope you all will help me. It's urgent.

Thanks & Regards,
Dhanasekar.

Until you reach the limit of 20 employees in your organization, it is not necessary to register under the EPF/ESIC.

Hi Pragnaa,

Thanks for your advice. I have a doubt. Recently, a few of my well-wishers said that if the employee strength is 10 or more, then one should implement ESI in a company. And for EPF, if the employee count is 20 or more, then EPF should be implemented. Is it true? Please advise me.

Thanks & regards,
Dhanasekar.

Applicability of the Act

Under Section 2(12), the Act is applicable to non-seasonal factories employing 10 or more persons.

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.

Further, 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/UTs.

*Note: 14 State Governments/UTs have reduced the threshold limit for coverage of shops and other establishments from 20 to 10 or more persons. Remaining State Governments/UTs are in the process of reducing the same.

The existing wage limit for coverage under the Act is Rs. 15,000/- per month (w.e.f. 01/05/2010).

Thank you for your prompt response.

Non-Seasonal Factories

Which companies fall under non-seasonal factories? Could you provide me with an example?

Tamil Nadu State Government Coverage

Also, I wanted to mention that we have a company in Chennai. Does the Tamil Nadu State government fall under the threshold limit for coverage of establishments from 20 to 10 or more persons?

Thank you,

Dhanasekar

Please provide the details about your organization, and I will let you know the status of applicability.

Can anyone tell me if PF withdrawal is only applicable if an employee worked for more than 6 months? Are employees who worked only 2 months not eligible for PF withdrawal? Kindly provide any available information.

Regards,
Vinod
Kerala

Can anyone tell me if we have an employee working in our organization, above 60 years old, and his PF and EPF amounts are remitted every month, is it necessary to remit his contribution? Is he still under the purview of the act? Any options, kindly let me know your valuable suggestions.

Regards,
Vinod
Calicut

For ESI Coverage, 14 state governments/UTs have reduced the threshold limit for coverage of shops and other establishments from 20 to 10 or more persons. The remaining state governments/UTs are in the process of reducing the same.

Which are these 14 states? Can someone explain, please?