Is ESIC & PF Registration Necessary for Small Businesses with Fewer Than 20 Employees?

Hello,

Can anyone tell me if Registration with ESIC & PF is necessary? I just want to know the amount of registration for ESIC & PF.

One more thing, if a person does not have 20 employees, will they be able to register with ESIC & PF? Because otherwise, big clients may not give work without such registrations.

Regards,
Hanish

You can register by hiring a single employee as well. Above 20, it becomes compulsory; below 20, it is our desire.

Regards,

Roshan S

Hello,

Thank you for the reply. It is indeed a very informative piece.

I would like to know more about the registration fees associated with these organizations.

Regards

Dear All,

Greetings!

Kindly advise on the procedures one can follow for PF withdrawal. Is it true that if one has not completed 6 months in the organization, he/she is not eligible to withdraw the PF amount? Also, please provide guidance on the contributions for the pension scheme from the PF.

Looking forward to your response.

Thanks,
Pooja

You have to fill the Form 19 and 10 C. Along with the forms, please attach a bank statement to which you want to credit the amount and one canceled check leaf of the same.

Yes, we cannot withdraw the pension part if we have not completed 6 months of contribution. Let me explain this clearly. Employee contribution is 12%. Employer contribution is 12%, which is split like this: PF part is 3.67% and Pension part is 8.33%. If an employee has not completed 6 months, he cannot withdraw the pension part, but he can go for the PF part.

Very well explained, Roshan. Can you also tell me how we can check our PF amount status, i.e., the total amount till date in PF account?

Regards,
Deepa

Can anyone tell me where to get the ESIC Code in Thane District?

Office Address:
Phone Number:
Whom to meet:

As Roshan said, below 20, it is voluntary in respect of PF only. Further, I would like to add that in respect of ESI, there is no such "voluntary" scheme of coverage. Only upon reaching the prescribed strength (10 for factory/IT and 20 for shop/establishment/ITES), the company is coverable.

Hi Yedhulaprakash,

I work in Mumbai. I would like to know the gross salary limit above which the employee need not be covered under ESIC.

Emereen

Dear Emereen,

The gross salary of rupees 10,000/- is the limit to cover an employee under ESIC. Above this amount, one will be exempted from being covered.

Regards,
Amit Seth.

Hello Pooja,

Here are the details that you asked for. I hope they will help you understand the requirements.

The formalities for ESI state that you must have a staff of at least 20 employees, regardless of whether they earn a salary exceeding 10000/- or less. The maximum ceiling for ESI contribution is up to 10000/- Gross/Month only. Employees earning 10001/- or more are exempt from ESI contributions.

The employer must register the factory or establishment with the ESI Corporation within 15 days of the ESI Act's applicability. The registration declaration should be submitted in Form 01, along with a separate sheet listing the establishment's name and address, number of employees, nature of duties, and the name, designation, and address of the manager overseeing these employees for offices located elsewhere. Upon approval of the application, the ESI regional office will assign a code number to the employer, after which employee registration with ESI can proceed. Employees must complete a declaration form, FORM 1, specifying their gender, which must be countersigned by the employer. A return of declaration in Form 3 must be prepared separately for male and female employees within 10 days of declaration submission. Subsequently, each employee will receive a temporary identification number.

Similarly, for the PF Act, a minimum of 20 employees is required. Employers subject to the Employee Provident Fund Act must submit Form 5A (in duplicate) to the commissioner within 15 days of scheme applicability, detailing all branches and departments, as well as the owners, directors, partners, or any other individuals controlling its affairs. Upon receiving Form 5A, the commissioner will review the information and, upon satisfaction, assign an Establishment Code No.

I hope this clarifies the procedures for you.

Regards,

Amit Seth.

Hi Everybody,

I'm a fresh entrant in the HR field. Can any of you let me know the ESI Act's applicability to trainees kept for 6-12 months in a company before they are confirmed?

Jyoti

Hello Jyoti,

If these candidates are on the company payroll or in their manpower, then they would definitely come under ESI applicability. Once any person joins the organization, they become eligible to be covered under PF and ESI applicability.

However, if these candidates have been hired as trainees, then these Acts wouldn't be applicable to them. Trainees who are being paid a stipend are not covered under ESI and PF.

Regards,
Amit Seth.

I think there is a mistake in the information given by Mr. Yedhulaprakash. The pension fund account number is 10, not account number 2. Account number 2 is for administrative charges, i.e., 1.10% of the PF Fund. Please refer to paragraphs F and G of the PF documentation.

Ashutosh Verma

Hi Amit,

How are you? Could you please tell me about the salary calculation?

Is ESI and PF the same for all companies, or does it depend on the company's policies?

Regards,
Anu

Hi Anu,

I am doing well.

The contents of the salary break-up may be as below; you can prepare it according to your own suitability. HRA would be 50 or 60% of basic. 50% in metro areas and 40% in other cities are exempted from taxes.

- Basic
- HRA
- CCA - 825/- is exempted from tax
- Other Allowance
- Mobile Reimbursement
- Medical Reimbursement of 1250/month is exempted from tax
- Gross Per Month = Sum of all the above.
- Gross Per Annum = 12*Gross/Month
- PF Contribution = 12% of Basic/Annum
- ESI Contribution = 4.75% of Gross/Annum
- Medical = The mediclaim facility provided to an employee who is not covered under ESI as the maximum ceiling for ESI is 10000/Month. Getting more than this will be covered under Mediclaim or it depends on company policy.
- Ex-Gratia/Bonus = A fixed amount as Bonus
- Annual Fixed Gross Cost = Gross/Annum + Ex-gratia
- Annual Total Cost = AFGC + PF + ESIC

Annual total cost is also called CTC.

Apart from this, Food coupons, Holiday package, and Furnishing items are included in their CTC.

Yes, ESI and PF applicability remain the same with all companies, as these are Acts and one can't go beyond the rules of Acts.

Hope this helps you to clear your queries to some extent.

Regards,

Amit Seth.

Dear, could you please explain the breakdown of the employee and employer contributions for PF along with the relevant forms used for that?

Thanks

The minimum number of employees required is 10 to be covered under PF as well as ESI applicability. ESIC is not applicable above 10000/-. EPF is not applicable above 6500/-. If the employer wants to provide the EPF facility, they can do so.

Dear Mr. Anand,

One may apply for Voluntary PF registration even after reaching the manpower strength of 10, but the actual manpower required is 20.

In the case of ESIC registration, the minimum number of employees should be 20 covered employees (with a salary less than Rs. 10,000/-). However, if there is power usage, the number of covered employees should be 10.

Regards,
Amit Seth.

Hi,

Can anyone tell me what the contributions of the employer and employee are in ESI and PF contributions?

Hello,

The rate of contribution in PF is 12% of the basic salary from both the employee and employer sides. In the case of ESIC, the contribution is made on the gross salary, and the rates of contributions are as follows:

Employee Contribution - 1.75% of Gross Salary
Employer's Contribution - 4.75% of Gross Salary

The ceiling for the ESIC coverage is a gross salary of Rs. 15,000 per month.

Regards,
Amit Seth.

Hi, can anyone tell me what the contributions of the employer and employee are in ESI and PF contributions?