Salary breakup for startup - Want to understand how would PF, ESIC work for us?

Dear HRs,

I have recently joined a new startup wherein 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 is above 15k, but there are some who have it less than 15k as their basic. So, is there any mandate in terms of labor or wages act wherein basic salary guidelines are mentioned?

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

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

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

In respect of employees who are not managers per function, it is better 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 notified, you may choose to pay the wages applicable to an industry almost similar to yours. Rs 15,000 per month would be fair. There will not be a much complicated breakup but a basic wage and a dearness allowance (Special allowance in Maharashtra) are the components required. The dearness allowance should change depending on the cost of living index, which will also be available on the website.

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

@Madhu T.K., thank you for the relevant information. I also wanted to understand if ESIC is implemented for employees with a gross salary of 21000, 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 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.

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.

@Kavipune,

Thanks for your valuable input.