Understanding Employee PF and ESI for New Financial Businesses: How Do You Categorize?

If a new business has been set up and it's a financial business, it means the company is involved in selling debentures in the market and then investing the same funds into other businesses like FMCG, etc. How do we determine the category under which the company falls for calculating employee PF and ESI?

It is very simple to judge the applicability of the ESI as well as the PF Act to your company. If you are engaging and employing 10 or more employees in your company, you are required to get registration with the ESI Authorities. It is immaterial how much the salary of the employees deployed in your company is. Even if the employees are earning more than Rs 15,000 per month, your establishment is still required to be registered with the ESI Authority. If you are employing more than 10 employees, kindly log in to esic.in, and you can complete the online registration process.

Provident Fund Applicability

Regarding the question of provident fund applicability, in accordance with the provisions of section 1(3), if you are employing 20 employees, whether direct or indirect, you must register with the Regional PF Office of your area by completing a simple application in the Coverage proforma. You need to attach the required documents, such as your legal setup documents, PAN of your company, Service Tax Number of your company (if applicable), TAN of the Company, Residential Proof of the Promoters, Directors, list of employees, 1st Sale Bill/Invoice, 1st Purchase bill equipment, etc.

The specimen of the Coverage proforma under EPF and MP Act, 1952, and Form no. 01 under the ESI Act are attached herewith for your ready reference.

Regards,
R B Rao
Advocate

The applicability of PF and ESI does not depend on whether your business is new or old, in manufacturing or commercial, or making a profit or a loss. The applicability of PF and ESI depends on the number of employees engaged by you directly or otherwise, i.e., through contact. Whether such employees are permanent, temporary, casual, contractual, or on a contract basis, and whether they are daily rated, monthly rated, or piece-rated, all these things are not material. Shri. RB Yadav, Advocate, has rightly replied to your query. The only thing I wish to add is that for coverage of ESI, you need to refer to the notification of your State Govt. regarding section 1(5).

Regards

If a new business has been set up and it's a financial business, it means the company is involved in selling debentures in the market and then investing the funds into other businesses like FMCG, etc. How do we determine the category under which the company will fall for calculating employee PF and ESI?

Dear Sir, thank you for your guidance. I would appreciate it if you could please provide a step-by-step procedure for creating or establishing PF & ESI in a limited company. The company I am working with is 2 years old, but to date, the company has no PF ESI code nor has contributed any amount to it. The company provides offer letters to the employees but does not provide any appointment letters.

In this scenario, what actions should I take to guide the company on the right track so that I can get the company registered under both acts, and establish rules for the company and its employees to ensure the smooth and legal operation of the company.

Regards,
Prachi Desai