Is the ESI Act Applicable to Service Sector Pvt Ltd Companies with 12 Employees in Andhra Pradesh?

Applicability of the ESI Act

Please let me know the applicability of the ESI Act. Recently, I approached the ESI Corporation, and they said it is applicable where 10 or more employees are employed. They also showed me a gazette notification issued in 2011, stating that Private Limited companies in the service sector have to register under the shop category.

However, I have doubts because, as per the AP Shops and Establishment Act, a shop is defined, and it mentions that a shop will exclude commercial establishments. Service sector private limited companies are registering as commercial establishments under the AP Shops and Establishment Act.

Please let me know if the ESI Act is applicable to Pvt Ltd companies in the service sector where the number of employees is 12.

As per my knowledge, any organization that employs 10 or more individuals must enroll with ESI and PF. ESI and PF are applicable throughout India and do not change from state to state.

As per my knowledge, any organization that employs 10 or more individuals must enroll with ESI and PF. ESI and PF are applicable throughout India and do not vary from state to state.

Dear Jeevarathnam ji,

With due respect to you, I would like to correct you. PF is applicable when you have 20 or more employees, not 10 or more.

Dear Makthyar,

Applicability of the ESI Act in Andhra Pradesh

The applicability of the ESI Act in Andhra Pradesh is for establishments with 10 or more employees, irrespective of the salary amount.

Clarification on Commercial Establishment vs. Shop under APS&E Act 1988

Another doubt you have is whether a Private Limited company in the service sector is considered a commercial establishment or a shop under the APS&E Act 1988.

Section 2(5) and Section 2(21) of the APS&E Act 1988 define the terms "commercial establishment" and "shop" respectively, as given verbatim below:

- **Section 2(5):** A commercial establishment means an establishment that carries on any trade, business, profession, or any work in connection with or incidental or ancillary to any such trade, business, or profession. It also includes a clerical department of a factory or an industrial undertaking, a commercial or trading or banking or insurance establishment, and establishments under the management and control of a cooperative society. It further includes establishments falling outside the scope of the Factories Act, 1948, and any other establishments declared to be a commercial establishment by the Government except a shop.

- **Section 2(21):** A shop means any premises where any trade or business is conducted, or services are rendered to customers. It includes a shop run by a Cooperative Society, an office, a storeroom, godown, warehouse, or workplace used in connection with such trade or business. It also includes other establishments declared to be a shop by the Government but excludes commercial establishments.

After reading both definitions, I am confused and unable to interpret whether a company engaged in the service industry is a commercial establishment or a shop.

My general assumption is that a company engaged in the service industry is a commercial establishment and not a shop.

I invite other members to comment on this.

Thank you.

The provisions of the ESI Act, 1948, are applicable to any establishment where 10 or more employees are employed.

Regards,
Lokanadha Babu Narra, Manager-HR

The provisions of the ESI Act of 1948 are applicable to any establishment where 10 or more employees are employed.

Dear The Mother,

The threshold limit of coverage, which is currently set at 20, has not been reduced to 10 by many states to date.

ESI Act Applicability to Commercial Establishments

Please go through this attachment and guide me on whether the ESI Act is applicable to commercial establishments or not. Please refer to the 3rd page of the attachment where you can find that the ESI Act is applicable to shops only, not to commercial establishments employing 10 or more.

I am waiting for your feedback and advice on this.

Regards,
makthyar

Dear All,

Kindly suggest to me whether mediclaim can replace ESI as per the Act.