Is My Real Estate Company Required to Register for ESI with Only 16 Employees Under the Salary Slab?

Dear Friends,

I appreciate your responses, but my question is still pending. Suppose in a company the total employee strength is 140, out of which only 16 employees are getting a salary less than 10,000/-, and the rest are above the slab. The company is registered under the Shops & Establishments Act. It is a real estate company.

In this case, is the company liable to take an ESI code, or does it need to do so when it reaches 20 coverable employees?

I hope all of you have a clear picture of ESI.

Thanks,
Subhash Baloni

Applicability is based on the number of employees. Hence, an organization with 140 employees will be covered under the ESI. If only 16 are drawing a salary (as per ESI Act definition), then only 16 are covered employees, and the rest are exempted employees. Against them, the employer need not contribute to ESI.

About the coverage of the establishment, the Act does not say anything about how much salary the organization gives, but only the number of employees is concerned.

Regards,
Madhu.T.K

Dear Friend,

According to the recent amendment, you need not take ESI code.

Dear Mr. Siva, kindly give your view.

Vasanth

Dear Vasu,

I could not find any new interpretation to the particular section dealing with applicability. There may be establishments not covered because of being in an uncovered area or due to some reasons exempted by the State Government by notification.

Regards,
Madhu.T.K

As per the Employees' State Insurance (ESI) Act, the applicability is for 20 or more employees, with a salary/wages of 10,000 or less. This means the applicability is based on two tiers: first on the establishment and then on the employee.

If an establishment has 20 or more employees, they need to register themselves regardless of the salary/wages. The contribution is then based on the salary. Even if none of them are earning 10,000 or less, the establishment still needs to register. In that case, the contribution is not mandatory, but if they choose to contribute, there are no restrictions. I hope it is clear now.

If there are still any questions, please feel free to ask.

Regards,
Deepak Singh
Email: dks.ica@gmail.com

Hi All,

The application of ESI to any establishment is once 20 or more persons are employed, irrespective of the salary drawn by them. Hence, you have to take the registration under the ESI Act.

However, the eligibility for contributing to ESI and receiving benefits is only for those who are earning less than ₹10,000 per month.

Hi All,

Though the company is registered under the Shops & Establishment Act, it has to be registered under ESIC because the number of employees is more than 20, even though out of 140 employees, only 16 are drawing a salary less than Rs. 10,000/-.

In the absence of an ESI Code, if you fail to remit ESIC at 6.75%, it attracts penalties/statutory obligations as per the ESIC Act.

Thanks & Regards,
Bhavya

I am enclosing a text from the webpage of ESIC. Some links and addresses are also there in the text. You may open the webpage and go through about the act. You may find the answer.

Dear Friend,

The applicability of ESI is based on the number of employees, i.e., 20 or more. However, the contribution is based on the salary structure, and applicability and contribution are different things. Therefore, if an establishment has 20 or more employees, the ESI Act will be applicable irrespective of the salary or wages drawn by the employee.

Regards,
Deepak Singh
Email: dks.ica@gmail.com

Dear Friend,

As you mentioned, as per the recent amendment, the ESI code is not required even if the number of employees is more than 20, but if they are receiving a salary less than 10,000. It's really surprising. Can you please clarify the contents or reference of the amendment so that I can update myself? Because as per the Act, the applicability of the ESI Act is based on the number of employees; then the contribution question will arise. For that, we have to consider the salary/wages of the employee. If the salary/wages are less than or equal to 10,000, then only they are liable to contribute. If none of them are receiving salary/wages in that range, in that case, the contribution will be NIL, but still, the ESI Act will be applicable.

Regards,
Deepak Singh
dks.ica@gmail.com

Yes, Mr. Deepak is correct. The applicability is based on the number of employees (20 or 20+ on any working day) and not on the salary. Contributing to ESI is based on the salary limit.

Please let me know if you need further clarification or information.

Hi,

As per the latest amendment in the ESI rules, at least 20 employees must be drawing up to Rs. 10,000/pm, and only then the establishment is coverable. Suppose you have 30 employees, but fewer than 20 employees are drawing a salary of less than Rs. 10,000/pm, you are not coverable.

Thanks,

Sanjeev Kwatra
Email: sunilsanjeev@hotmail.com

Hi All,

Wage Ceiling: Every employee drawing wages up to Rs. per month is required to be insured under the Act.

Applicability: Section 2(9) 'employee' under ESI means any person who is engaged/employed for wages/salary in connection with the work of the establishment to which this Act applies. However, it does not include any person whose wages (excluding OT) exceed the limit prescribed by the Central Govt. (which is 10000 pm now).

Section 2(12): 'establishment' under ESI means any premises whereon 20 or more persons are employed or were employed for wages. If you combine both, you understand that if the total employees are 25 but out of which 14 are drawing gross more than 10000 pm, then only 11 employees come under ESIS, and the criteria for 20 employees does not fulfill. Hence, on the above grounds, it is not covered.

Thanks & regards,
Sayed Iqbal
Excel Consultancy Services
iqbal@excelconsultancyservices.co.in

Dear Friend,

Both sections are independent, and we cannot consolidate them for our expression because the Act does not mention that both conditions are cumulative; they are independent. There are two independent conditions: 20 or more employees and 10,000 or less. The first condition is the coverage of the establishment, and the second one is for contribution. Therefore, if no one is earning 10,000 or less but there are 20 or more employees, then registration is still required; however, the contribution will be nil.

Regards,
Deepak Singh

This establishment is not covered under the ESI Act. You may also confirm the same from the ESIC office.

Sanjeev Kwatra

Section 2(9) and 2(12) - Meaning of the words 'employee' and 'factory' - A person getting more wages than the limit prescribed by the Central Government under Section 2(9)(b) would not be an employee within the meaning of Section 2(9). Therefore, where thirteen out of twenty-four persons working with a company were getting more wages than the said prescribed limit, the company would not be a factory within the meaning of Section 2(12), and the Act would not be applicable to the company.

Sayed Iqbal
Excel Consultancy Services
iqbal@excelconsultancyservices.co.in

Dear Subhash,

If you have 20 or more employees, you must adhere to the code, regardless of whether the employees fall under the slab or not; that is a secondary issue. You are describing the current status, but who knows what tomorrow may bring.

Krishna Mohan

Hi Sayed,

Could you provide more insight into this? If an organization is covered under the ESI Act, but later on, the number of employees reduces below the limit prescribed by the law, will it still be covered under the ESI Act?

Hi,

Once the establishment/factory is covered under the ESI Act, even if the total number of employees reduces below the prescribed limit, the establishment will continue to be covered under the Act, and ESI deductions must be made for all eligible employees.

Dear Subhash,

For ESI registration, there should be a minimum of 20 employees under ESI coverage salary. For your case, you do not need to take an ESI Code for the same.

Regards,
Jaimin B.

Dear All,

As per my knowledge, if any establishment is employing 20 or more employees, the establishment has to be covered under the ESI Act. However, if all the employees are receiving a salary of more than 10,000/-, then the ESI Act will not be applicable, as I believe.

In the above case, the total number of employees is 140, but the number of coverable employees is only 16 as they are earning a salary less than 10,000/-. Therefore, only these employees are covered under the ESI Act.

Ravi Gupta

Hi Everybody,

Kindly tell me the applicability of the ESI Act in the case of trainees in a manufacturing company.

Jyoti

Applicability of ESIC is not only concerned with the number of employees but also the type of industries. For establishments covered under the Shops & Establishments Act, the employee strength should be 20 or more. For establishments covered under the Factories Act, the employee strength should be 10 or more. Industries such as hotels, restaurants, cinema theaters, transport and logistics companies require a minimum of 10 employees for ESIC coverage. However, the scheme does not extend to hospitals, nursing homes, educational institutions, and construction companies.

Thanks and regards,
Sumit Kumar Saxena

Hi guys,

Just wondering why there is so much confusion. Please find below my comments:

1. A company is covered under ESI if the number of employees who receive an equivalent or less than Rs.10,000 is 20 or more.
2. Once you reach the limit of 20 employees who receive an equivalent or less than Rs.10,000, you have to register with ESI.
3. Once you register, you have to pay ESI contributions for employees who have been receiving an equivalent or less than Rs.10,000 in the past as arrears. In fact, interest/fine is also calculated and levied. The catch is that corporates do not get tax exemption for the interest/fine paid; it must be shown as an expenditure in the balance sheet.
4. You must continue to pay the ESI contributions even if an employee receives a raise and crosses the Rs.10,000 limit until the half-yearly returns (two half-yearly).

I hope the above points are clear. However, the ACT itself is quite confusing, and there are numerous practical difficulties in implementation.

Particularly in IT companies, very few employees claim anything from ESI, as the percentage of usage and claims is minimal. This is largely due to the fact that IT companies typically opt for comprehensive medical insurance coverage, allowing employees to access medical assistance from top-tier hospitals with high-quality services.

Regards,
Sohail

Dear Friends,

News for today: ESIC band has increased from 10,000 to 15,000 w.e.f. 1st April 2010. It means employees drawing a gross salary below 15,001/- will be eligible for ESI.

Kindly provide notification for the date of applicability when the limit stand increased from April 1, 2010.

Regards,

Amit

Hello,

ESIC slab has increased up to Rs. 15,000/- with effect from 01.05.2010. Can anyone confirm if this increase has been implemented or is it still under process?

Thank you.