Hi All,
My confusion is regarding ESI eligibility. Ours is an architectural firm where total no of regular, permanent employee is 37 (excluding directors). But employees getting gross salary upto 10,000/- is only 15, (10,000 is the upper limit of being eligible for ESI registration). . Rest of the employees are above that slab.
As per legal consultant only companies where eligible employee (i.e. 10,000 or below that) are 20 or more, are eligible to get the registration. As of now we are not liable for ESI submission as total no of “eligible” employees is only 15.
Please confirm or suggest, is it legally correct? We will not come under any legal offence?
P.S: We don't have any production/manufacturing unit but our main work is related to computers (“with aid of power”) so, again I was a bit confused that in traditional terms can we come under industries with aid of power?
Kindly reply as soon as possible as we have already started with salary deduction in account of ESI.
:?::icon4:
From India, Pune
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My confusion is regarding ESI eligibility. Ours is an architectural firm where total no of regular, permanent employee is 37 (excluding directors). But employees getting gross salary upto 10,000/- is only 15, (10,000 is the upper limit of being eligible for ESI registration). . Rest of the employees are above that slab.
As per legal consultant only companies where eligible employee (i.e. 10,000 or below that) are 20 or more, are eligible to get the registration. As of now we are not liable for ESI submission as total no of “eligible” employees is only 15.
Please confirm or suggest, is it legally correct? We will not come under any legal offence?
P.S: We don't have any production/manufacturing unit but our main work is related to computers (“with aid of power”) so, again I was a bit confused that in traditional terms can we come under industries with aid of power?
Kindly reply as soon as possible as we have already started with salary deduction in account of ESI.
:?::icon4:
From India, Pune
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All the employees, whether drawing a salary less than $10,000 or not, are taken into consideration for counting the strength of the organization. So, it is better to apply for ESI registration as early as possible.
From India, Dehra Dun
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1From India, Dehra Dun
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Hi Arun,
Thank you for your response. We have started with the registration, but then we got to know about this criterion from one of the legal consultants we approached. So far, I have consulted many people, and the answers I received are from both sides.
I really need some consensus from seniors to proceed because any incorrect information will portray a negative image of the company in front of its employees.
Rashmi
From India, Pune
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Thank you for your response. We have started with the registration, but then we got to know about this criterion from one of the legal consultants we approached. So far, I have consulted many people, and the answers I received are from both sides.
I really need some consensus from seniors to proceed because any incorrect information will portray a negative image of the company in front of its employees.
Rashmi
From India, Pune
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Dear R. Singh, Your company is not eligible for ESI registration – and there will be no ESI deductions form salaries. Regards Pankaj Chandan
From India, New delhi
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From India, New delhi
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dear mr pankaj has rightly said after the judgement of supreme court ,which was given to this forum.i feel now it is eligible employee. rwegards j s malik
From India, Delhi
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From India, Delhi
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Dear R. Singh, Your legal consultant is absolutely right. You need not to go for registration under ESI Act. Regards. Pradip.S
From India, Mumbai
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From India, Mumbai
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Dear R. Singh,
As per the Factory Act, it is applicable to you. However, your firm is operating in a commercial/residential cum commercial area where all the facilities of medical help are available. Some state governments give exemption where eligible employees are less than 20.
But in an industrial area, it has to cover all employees where up to 20 persons are employed, even if few are eligible. Employees of covered units and establishments drawing wages up to Rs. 10,000/- per month (excluding remuneration for overtime) come under the purview of the ESI Act, 1948 for multi-dimensional social security benefits. Therefore, the ESI Act does not apply to you. You must have at least 20 eligible persons; however, this has to be declared to the State government or the local ESIC office.
It would be better if you submit an application to the ESI office and inquire about applicability. In most cases, we submit applications and obtain written notes from their office to avoid any other legal implications.
Best Regards,
Sajid Ansari
From India, Delhi
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As per the Factory Act, it is applicable to you. However, your firm is operating in a commercial/residential cum commercial area where all the facilities of medical help are available. Some state governments give exemption where eligible employees are less than 20.
But in an industrial area, it has to cover all employees where up to 20 persons are employed, even if few are eligible. Employees of covered units and establishments drawing wages up to Rs. 10,000/- per month (excluding remuneration for overtime) come under the purview of the ESI Act, 1948 for multi-dimensional social security benefits. Therefore, the ESI Act does not apply to you. You must have at least 20 eligible persons; however, this has to be declared to the State government or the local ESIC office.
It would be better if you submit an application to the ESI office and inquire about applicability. In most cases, we submit applications and obtain written notes from their office to avoid any other legal implications.
Best Regards,
Sajid Ansari
From India, Delhi
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Hi All, Thanks to all of you for your valuable help and guidance. Sajid, your suggestion of getting legal permission to avoid complication, is good. Thanks again, Rashmi
From India, Pune
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From India, Pune
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Sir,
One thing I would like to clarify. On a methodical arrival of the law points based on your facts, firstly, architectural firms are not liable to register under the Factories Act. They should register under the Shops Act. Secondly, architectural firms are thus liable for ESI coverage. The scheme states very simply that eligibility for ESI coverage is: (a) if the entity is using electricity for its work, then it should have a minimum of 10 people for ESI implementation, OR, (b) if the entity is not using any power at all, then it should have a minimum of 20 people for ESI scheme implementation.
Over the years, the clarity on the required number of people has been affected by various court decisions and notifications, and thus the figures 10 or 20 represent eligible workers. Thus, eligibility of workers is determined by the salary. The current salary limit for ESI coverage is Rs. 10,000/-. So, in cases of establishments using power, they should have a minimum of 10 employees earning Rs. 10,000/- or less. Alternatively, if not using power, they should have a minimum of 20 employees earning Rs. 10,000/- or less.
Now, let's address the scenario of an establishment employing approximately 30 people in total, of which only about 8 employees earn Rs. 10,000/- or below. In such a case, they should submit the ESI registration form. In some regions, the ESI department has been known to send an Insurance Inspector to verify the records, and if found to be accurate, issue a certificate of non-coverage. In other regions, the department remains silent.
In the case of an establishment having only about 8 employees eligible for ESI but employing contract workers like security and housekeeping staff who are covered separately under ESI, the establishment will be assigned an ESI code number and required to comply for those 8 employees only. Over time, if no one is eligible, you will still be asked to submit "NIL" returns and comply.
This is the legal position.
Take care.
Regards
From India, Bangalore
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One thing I would like to clarify. On a methodical arrival of the law points based on your facts, firstly, architectural firms are not liable to register under the Factories Act. They should register under the Shops Act. Secondly, architectural firms are thus liable for ESI coverage. The scheme states very simply that eligibility for ESI coverage is: (a) if the entity is using electricity for its work, then it should have a minimum of 10 people for ESI implementation, OR, (b) if the entity is not using any power at all, then it should have a minimum of 20 people for ESI scheme implementation.
Over the years, the clarity on the required number of people has been affected by various court decisions and notifications, and thus the figures 10 or 20 represent eligible workers. Thus, eligibility of workers is determined by the salary. The current salary limit for ESI coverage is Rs. 10,000/-. So, in cases of establishments using power, they should have a minimum of 10 employees earning Rs. 10,000/- or less. Alternatively, if not using power, they should have a minimum of 20 employees earning Rs. 10,000/- or less.
Now, let's address the scenario of an establishment employing approximately 30 people in total, of which only about 8 employees earn Rs. 10,000/- or below. In such a case, they should submit the ESI registration form. In some regions, the ESI department has been known to send an Insurance Inspector to verify the records, and if found to be accurate, issue a certificate of non-coverage. In other regions, the department remains silent.
In the case of an establishment having only about 8 employees eligible for ESI but employing contract workers like security and housekeeping staff who are covered separately under ESI, the establishment will be assigned an ESI code number and required to comply for those 8 employees only. Over time, if no one is eligible, you will still be asked to submit "NIL" returns and comply.
This is the legal position.
Take care.
Regards
From India, Bangalore
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Dear Murali I have question, in our company we have only 1 person who’s salary is less than 10000/- so is that person is eligible for ESI deducation. Rgds
From India, Delhi
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From India, Delhi
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