Navigating PF and ESI: How Do I Ensure Proper Coverage for My Growing Team?

Dear Sir,

I am running a business that started with 6 employees, but now it has grown to 13 permanent staff and 15 temporary staff. Should PF and ESI be covered? If so, how many employees are required for ESI coverage and PF coverage? Are only permanent staff covered under PF and ESI? What is the gross salary for ESI and PF coverage? Should age be a factor in considering employee coverage?

One of my well-wishers provided me with the following details:

- Employer contribution for PF: 12% or a maximum of Rs. 780 of basic, whichever is lesser.
- PF: 8.33% for employees' family pension fund, 3.67% for employees' PF, and 0.50% of basic or up to a maximum of Rs. 6500 for admin charges.
- Additionally, there are admin charges of 1.10% of basic and inspection charges of 0.01% of basic.
- Employee contribution for PF is 12% of basic.

For ESI, the employer contributes 4.75% of basic, while employees contribute 1.75% of basic. It is noted that temporary staff often leave the job and are not stable.

Kindly advise me on the above. Thank you.

Thanks and regards,
Dhanasekar

I am providing my understanding of PF & ESI to answer your queries.

For ESI:

1. Applicable to all factories (including Government) other than seasonal factories, which means those working less than 7 months in a year.

2. Employees who are drawing up to 15,000 Rupees per month (excluding Overtime Wages) are eligible to become ESI members.

3. All workers, including temporary workers, are eligible to become members of ESI.

4. If the temporary workers are employed through contractors, and if the contractor fails to pay the ESI, then it is the Principal Employer's duty to pay it and deduct it from the contractor's payment.

For PF:

1. Applicable to all establishments engaged in an industry specified in Schedule-01 where 20 or more workmen are employed.

2. PF will be deducted from all members at 12% of the Basic wages and Dearness allowances, which limits up to 15,000 Rupees.

3. Employers also pay an equal amount of contribution for respective employees.

4. All workers, including temporary workers employed in the Schedule 1 industries, are eligible to become members of PF & EPS.

Please find the attachment.

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Dear Mr. Dhanasekar,

Since it is clarified that you have to take ESI-EPF Registration for your employees, please seek advice from a consultant. He will explain all the points in detail and assist with the registration process. Additionally, he will ensure proper record-keeping of statutory deductions and compliances.

Coverage Under PF-ESI

Coverage under PF-ESI not only leads to inclusion under the Bonus Act, Gratuity Act, and Maternity Act, but also makes these Acts a vital part of the statutory compliances once you are covered. While different Acts may be applicable to non-PF-ESI covered establishments, being covered under PF-ESI amplifies their significance.

The consultant will advise you on the additional financial charges to your business and guide you on the proper procedures to ensure your employees can benefit seamlessly in times of need.

Please let me know if you need any further assistance.

Best Regards

Coverage Under PF and ESI Act

Your company is invariably covered under the PF & ESI Act. PF coverage is applicable when you employ 20 or more persons, whereas ESI coverage is required once you employ 10 persons.

There have been many changes in the EPF Act. Currently, the salary limit is enhanced to ₹15,000. As such, the PF contributions payable are ₹1,800 from the employee's share and ₹1,800 from the management's share. Administration charges have also increased, with a minimum payment of ₹500 and ₹200 in account numbers 2 and 22.

For any further clarifications, please visit our website at pfqueries.com.

Regards.

Hi Kumar,

Thank you for sharing your valuable information. The attached presentation file is very useful to me. Recently, I went through another PowerPoint (PPT) file on ESI, where when the basic + DA is ₹10,000 or less, ESI can be covered. Similarly, PF can be covered for a person whose basic + DA is up to ₹15,000.

I would also appreciate your advice regarding other allowances.

Thanks and regards,
M. Dhanasekar

Hi Kumar,

Thank you for your valuable information and advice. The attached file you provided is very useful for me. I also reviewed another PowerPoint file regarding ESI and PF coverage. ESI coverage applies to employees whose basic salary + DA is less than or equal to Rs. 10,000.

It is noted that temporary staff often leave their positions and may not be as stable in their roles.

I kindly request your advice as soon as possible.

Thanks and regards,

M. Dhanasekar