Esic - out of 20 employee, 3 employee are crossing the limit of 21000?

I have a query regarding ESIC. As per my knowledge, ESIC is applicable to companies where 20 or more employees are employed. However, I have been informed that if out of 20 employees, 3 employees exceed the limit of Rs. 21,000, then the company is not liable to register for ESIC.

Thank you.

To apply for ESIC, you need 20 or more employees who have a salary equal to or below 21000/-.

Your information is incorrect. There have been amendments to the ESI Act in this regard. Accordingly, a factory or an establishment located in the notified area employing 10 or more persons is covered by the ESI Act, regardless of whether the employees are drawing wages exceeding 21,000/- per month. Almost all states have amended the ESI Act to include establishments employing 10 or more persons under the purview of the Act.

B. Saikumar HR & Labour Relations Adviser.

Thanks for clearing my doubt related to ESIC.

Thank you for resolving my query regarding ESIC.

Dear Mr. B. Sai Kumar,

Do you have any notification for ESI Amendment, as you wrote? Please share it; it will be much appreciated.

Regards,
Chandra Prakash Singh

Dear Shri Chandra Prakash Singh,

I request you to go through Sec. (1) (4) and (5) of the ESI Act regarding the coverage of establishments.

Section 1(4) states that the Act shall apply, in the first instance, to all factories, including those belonging to the Government. What constitutes a factory under the ESI Act? Section 1(12) of the Act defines "factory" as any premises, including the precincts thereof, where ten or more persons are employed in the manufacturing process carried out on such premises. The definition of factory under Sec. 1(12) was amended in 2010 by an amending Act. The amended Section 1(12) can be found in the Act itself, making it clear that all factories employing 10 or more persons are covered.

Regarding non-factory establishments, such as commercial establishments, etc., the respective State Governments have issued notifications under Sec. 1(5) to reduce the threshold limit of coverage from 20 employees to 10 employees in establishments located in their respective States (excluding those under the control of the Central Government) under the purview of the ESI Act. This move aims to ensure uniform coverage across all states concerning the Act. Each State Government has issued such notifications. Therefore, it is advisable to check with your State's labor department or ESI office in your locality for these notifications.

B. Saikumar HR & Labour Relations Adviser