Navigating Shop and Establishments Act and ESI Requirements for Foreign Companies in India

Registration under the Shop and Establishments Act

Foreign companies (incorporated in another country) having branch offices in two states are required to register under the Shop and Establishments Act. What if this registration has not been done yet?

Employee State Insurance (ESI) Requirements

In the West Bengal office, the employee strength is 10 persons, but 2 individuals are above 65 years old. Is it mandatory to have ESI (Employee State Insurance)? In the branch office in another state, the employee strength is 3 persons. Could we potentially face any ESI-related issues?

Salary Structure and ESI/PF Implementation

If all employees' total salary is above 21k, but the basic salary is divided by 4, is it still mandatory for us to implement ESI or PF?

Please assist with these queries. Thank you.

Dear Colleague,

Shops Act Registration and Gratuity Act Compliance

From the given information:

1. Shops Act Registration and Opening Intimation under the Gratuity Act are mandatory for all companies operating in India as per the Labour Laws. Complete the compliances only when you reach the required numbers under each legislation separately. Kindly read the FAQ attached and then have a discussion with the respective Government Authorities before proceeding.

ESI Scheme Applicability

2. The ESI scheme is applicable to all factories and other establishments as defined in the ESI Act with 10 or more persons employed in such establishments, and the beneficiaries' monthly wage does not exceed Rs 21,000. To arrive at the number 10, you need to add all employees irrespective of age/salary level, etc. However, you need to cover only those employees who are within the salary limit mentioned in the ESI Act.

State-Governed Laws and Employee Count

3. In the case of State-governed Laws like the Shops Act, you may consider the number of employees separately for each branch.

Central Acts and Combined Employee Count

4. For Central Acts like PF/ESI, you may need to consider the number of employees employed in both branches together, as the branches belong to one company and one employer.

Hence, conduct an internal assessment of the number of employees in each branch separately for State Legislation and combined for Central Laws like PF/ESI, etc. Then, have a discussion with the respective Government Authorities before proceeding. Some Acts are applicable for 10 or more employees, and a few are for 20 or more employees. Hence, exercise caution.