Navigating Salary Breakup and Benefits in a Startup: How Do PF and ESIC Apply to Us in Mumbai?

Dear HRs, I have recently joined a new startup where there are only 10 employees as of now, and nothing is in place. I am currently working on the salary breakup structure. There are employees whose basic salary is above 15k, but some have it less than 15k. Is there any mandate in terms of labor or wages act where basic salary guidelines are mentioned?

Details to understand this better:
State: Mumbai
Industry: Ecommerce

I want to understand how PF and ESIC would work for us because we have not yet implemented them. Please help me with your valuable inputs.

Understanding ESI and EPF Implementation

You need not implement ESI and EPF in your organization immediately. These Acts will automatically apply when the number of persons employed exceeds 10 for ESI and 20 for EPF.

Minimum Wages and Salary Structure

For employees who are not managers, it is advisable to pay a salary at least equal to the notified minimum wages. This information is available on the official website of the labor department. If your industry, e-commerce, is not specifically notified, you may choose to pay wages applicable to a similar industry. A salary of Rs 15,000 per month would be fair. The salary structure need not be complicated; it should include a basic wage and a dearness allowance (Special allowance in Maharashtra). The dearness allowance should vary according to the cost of living index, which is also available on the website.

ESI Registration Process

Since you have ten employees, you should proceed with ESI registration now. Once registration is obtained, register those employees under ESI whose salaries do not exceed Rs 21,000. These processes are online and simple.

Thank you, @Madhu T.K., for the relevant information. I also wanted to understand if ESIC is implemented for employees with a gross salary of 21,000, net salary, or basic salary?

Coverage is to be given to employees whose Gross Wages are not more than Rs 21,000. Only washing allowance (provided you have issued uniforms to your employees and that also at a reasonable rate) and conveyance allowance can be excluded from the gross salary.

Hi, Basic salary should always be 40% to 50% of the total CTC, excluding any incentive portions. If the gross salary is less, then please plan to retain it at Rs. 15,000 and adjust other components accordingly. Also, ensure compliance with the respective State Government Minimum wage rules.

PF and ESIC Guidelines
Currently, PF basic salary is fixed at Rs. 15,000 per month, and ESIC is fixed for a gross of Rs. 21,000 per month. PF registration will be done once the employee count reaches 20, and ESIC registration will be done when the employee count reaches 10.