ESI Coverage Dilemma: How to Handle Employees in Non-Implemented Areas?

ESI Coverage for Plantation and Branch Office Employees

Plantation is situated in an "ESI Non-Implemented" area. There are about 10 employees working and drawing a salary below the ESI coverage limit, i.e., Rs 21,000/- per month. The Plantation Branch Office is located in a city under an "ESI Implemented" area. There are 4 employees working and drawing a salary below Rs 21,000/-.

Should we obtain an ESI Code Number and cover only employees working in ESI Implemented areas? When determining 10 or more employees, do we have to take into consideration both plantation labor and branch office staff? Please clarify.

Employees working in an ESI-implemented area are to be necessarily covered under ESI. However, a minimum number of such workers should be 10 or more (verify if Plantation is brought under 10 instead of 21). In your case, with only 4 employees, ESI is not applicable, and you cannot register under ESI either.

For the count of eligibility strength, employees with a salary over 21,000 are included in the count. However, they are excluded when filing contributions.

Agreed with GLIDOR. However, only employees of ESI-notified areas need to be counted.

Understanding ESI Coverage for Plantation Employees

1. As far as I understand, employees working in plantations are not covered under the ESI Act, 1948, and the rules/regulations framed thereunder because the said plantations neither fall under the category of "factory" nor under the category of specific establishments as presently notified by the appropriate State Governments. Even the factories manufacturing tea, sugar, rubber, etc., have been declared as "seasonal factories" vide section 2(19A) of the said Act and are not covered under the said Act.

2. However, in my opinion, if there is a sales office/administrative office in any implemented area, then the same can be covered as a "shop" separately, provided the said Branch/Sales/Administrative Office employs 10 or more persons on any day (in a few States, the threshold limit has not been reduced from 20 or more persons). The coverage under the ESI Act, 1948, is based on the employment of "persons," which will include all employees regardless of the amount of their wages. However, once the coverage of a unit is established, only the employees receiving wages up to and including Rs. 21,000/- per month (excluding the amount of OT) will be required to be covered and to contribute.

3. To be sure, it will be appropriate if the office of ESIC, where the Branch/Administrative Office of the plantation is located, can be contacted to confirm the position of the coverage of the employees posted in the said Branch office(s) so that in the long run, the employer may be sure about their coverage position under the said Act.

4. As far as I understand, the employees working in plantations are covered under the provisions of the Plantation Labour Act, 1951, and the rules/regulations framed thereunder.

Regards