How Do I Insure My New Employee and Is ESIC an Option for My Startup?

Dear Members,

In January 2020, I started my own startup registered as a private company. Last month, I onboarded a new employee to handle my on-field operations and business development. Now, I wish to get insurance for this new recruit since he is on the road, traveling on his bike most of the time while looking for potential clients. I care about his precious health and life.

Questions regarding employee insurance

I have some questions regarding this:

1. Can someone please guide me on how I should take insurance for him?
2. How should I add this insurance cost to CTC?
3. Is ESIC applicable to my business?
4. If not applicable, can I voluntarily apply to ESIC?

Thank you.

Business Type and Employee Insurance

First of all, what is your business type?

Secondly, all employees need to be covered under ESIC if the salary is up to 21k. Additional health insurance can be taken.

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Dear Devendra, here are my views:

1. Can someone please guide me on how I should take insurance for him? You may approach TPAs (easily available on Google). They will guide you on the best-suited plan based on the strength and nature of your company.

2. How should I add this insurance cost in CTC? Whatever the approximate annual premium is, you may enter it as "Deferred Benefits" in the CTC structure. However, it would be attractive to employees if you provide it over and above CTC (being a new startup).

3. Is ESIC applicable to my business? Yes, if there are 10 or more employees whose wage limit (monthly gross) is less than or equal to ₹21,000.

4. If not applicable, can I voluntarily apply to ESIC? It's a statutory payment and needs to be strictly followed as per the applicability and eligibility.

Please note: If employees are covered under ESIC, additional medical insurance is not required for them. However, you may choose to provide it voluntarily. It's up to you!

All the best for your new beginning.

Regards,
Piyush

Dear members,

Thank you for your contributions and kind advice. I would like to clear some doubts.

1. My startup is a private company registered under Startup India.
2. I have 3 employees only (2 owners including me, and 1 new recruit). The new recruit receives approximately 35K gross salary per month.
3. Since there are fewer employees, I feel ESIC is not applicable to me.

Guidance on Statutory Compliance Acts

Can someone please guide me on which other statutory compliance acts are applicable to my startup right now?

Regards!

Dear Devendra, at the moment, you are not covered under the PF or ESI Acts, and you are also paying a salary more than the Minimum Wages Act. Please check your coverage under The Professional Tax. Currently, the best options to provide him Social Security/Welfare are as follows:

1. PPF: Open a Public Provident Fund Account for him and deposit Rs. 1800/- into his account towards the employer's contribution to PF until your organization comes under the purview of the ESI PF Acts. This is the statutory limit at 12% of the maximum coverage ceiling of INR 15000/-. This is suggested because you have shown your concern to extend the benefit. This amount, of course, you can consider as part of the CTC.

2. Since the employee is required to travel extensively, cover him under a Group Personal Accident Policy for a minimum of 5L.

3. Also, cover him under Term Life Insurance for 10L. (Under the Employees' Compensation Act, the compensation payable to an employee/workman for a fatal accident is Rs. 16,97,850/- if the employee's age is 18 years and the salary is Rs. 15,000/- per month). Here, you can discuss with the employee and come to a conclusion on how much % of the premium you will bear and how much the employee will bear. The ratio could be 50:50 or 75:25, with the least being for the employee.

I hope this temporary arrangement will fulfill your requirements until your organization is covered under the respective Acts.

Thanks & Regards with Best Wishes,

May God give you all success in your Good Karma.

Suresh