ESI is applicable to factories employing 10 workers and other establishments employing 20.
Those drawing salary not more than Rs 10000 are covered.
The rate of employees' contribution is 1.75 % of salary and the employer's contribution is 4.75%
The salary is the sum paid in a month and all payments which are paid in regular intervals of not exceeding two months are considered. As such, Travelling Allowance is exluded from salary.
If you want to escape from ESI, you have to frame a salary structure above Rs 10000. BUT WHEN THE SALARY CEILING IS AGAIN REVISED BY THE GOVT. YOUR EMPLOYEES BECOME COVERED AND AT THAT TIME THE CONTRIBUTION PAYABLE WILL ALSO BE VERY HIGH.
For an employer it is always desirable to have ESI coverage because many compensation payable by the employer under the Workmen's Compensation Act, Maternity Benefit Act are taken on shoulder by the ESI Corporation aganist this 4.75% contribution payable by the employer to the ESIC.
Regards,
Madhu.T.K