Do I Need ESI Registration for My 16-Employee Service Center? Seeking Advice

Hello Seniors,

I am running a small service center in a rented shop with 16 employees. Please tell me whether I need to take ESI registration or not. Also, clarify if Section 1(5) of ESI will be applicable in my case.

Regards,
Pankaj

Determining ESI Coverage for Your Service Centre

Sir, please indicate whether electric power is being used in the service centre or not. What type of work is being done in the service centre? Is power, including gas cylinders, used in any process? If so, your establishment is coverable under Section 1(3) of the ESI Act, 1948, as a factory since you are employing 10 or more persons. Please see the definition of "factory" under the said Act.

However, in case no power is being used for the manufacturing process/repair/service, even then, when you are employing 10 or more persons, your establishment will be qualified for coverage as a "shop" under Section 1(5) of the said Act. I think the State of UP has already extended the operation of the said Act to such establishments employing 10 or more persons.

In my opinion, it will be more appropriate if you contact the nearest office of ESIC for further clarification on the issue, including the coverage of your service centre under the said Act. The employment of the number of persons and the use of electricity/power are questions of fact that are to be verified by the concerned officials of the said department, provided also that the area where the unit is located is an implemented area under Section 1(3) of the said Act.

Sir,

We do provide air conditioner repair services, hence electricity is being used. My doubt is, in my case, whether ESI will be applicable on having 10 employees or 20 employees.

Manufacturing Process and ESI Coverage

Sir, I think for the service and repair of air conditioners, you may be using electricity and gas cylinders for welding, cutting, washing, etc. work. Hence, such work will qualify to be called a manufacturing process and therefore coverable as a factory. Therefore, based on the number of persons, 10 or more, your unit is coverable under section 1(3) of the said Act.

ESI Act Coverage Limit

Currently, there is no rule or law of coverage under the ESI Act based on 20 or more persons. An amendment to the Act was made in 2010, reducing the coverage limit to 10 or more persons (Section 2(12)). Even concerning specific establishments (shops, as mentioned in my previous comments), almost all State Governments (except a few, including Maharashtra, to my knowledge) have reduced the coverage limit to 10 or more persons under section 1(5) of the said Act.

Sir,

One of the labor law consultants has advised that if section 1(5) is applicable to your establishment, then you need to be registered under ESI when you have 20 employees, not 10.

1. Sir, with due regards to the consultant whom you have referred, I may submit that I have already suggested you visit the appropriate office of ESIC and discuss the issue of coverage of your establishment.

2. However, I understand that through their notification dated 23.5.2013, the State Government of Uttar Pradesh had already reduced the criteria of coverage to ten or more persons. You can confirm the position from the Regional Office, ESIC of UP.

Dear Mehta Sir,

Thank you for your valuable input regarding my query on ESI. However, I have another question concerning the Uttar Pradesh Shop & Establishment Act. Could you please inform me if there is a website for the Uttar Pradesh Shop & Establishment Act where I can study the latest notifications and details of the act?

Thank you.