Organisations Exempted From Esic Coverage - XLS Download

Hi!

Good morning to everyone!

Can anyone please provide me with information and guidance on whether an organization commencing production in November 2007 can get an exemption from ESI for a certain period (such as a newly set up organization)? Are there any provisions for this exemption? If yes, what are the formalities involved?

We currently have one plant in Gujarat, and we are in the process of setting up a plant in the state of Uttarakhand. Our Gujarat plant is not covered under the ESIC Act. However, in Uttarakhand, the ESIC Act is applicable to our region.

Your guidance will be very much appreciated.

Regards,
Hiten

Hi!

Can anyone throw some light on the matter, please? I am waiting for your reply.

- Hiten

Dear Hiten,

You can't really do anything i.e. you can't claim any exemption. You will have to comply with the provisions.

Regards,
Nilendra

Hi,

There is no exemption for any factory in which the manufacturing process is done with the aid of power when the number of employees is 10 or more, and for factories in which the manufacturing process is done without the aid of power when the number of employees is 20 or more, and for all establishments if the number of employees is 20 or more. The ESI coverage applies from day one of the commencement of the factory or establishment.

S. Krishnamoorthy

Hi,

If you can prove that your factory has a seasonal business, your factory can be considered for exemption as defined under section 2(19a) from the applicability of the act.

With regards,
R. Shanti

Thank you, Shanti!

Our business is not seasonal. Now, the fact that is clear to me is that there is no exemption for this. In this situation, could you please provide me with more guidance on registration and information regarding those who exceed the prescribed limit of Rs. 10,000 per month?

Regards, - Hiten

Dear Hiten,

If your factory is not registered under the ESIC Act, then you have to apply through a letter addressed to the Regional Director with all the details of your factory. Make sure that your relevant records, like attendance and wages, will be maintained properly. After the receipt of your letter, they will inspect your factory and allocate you a code number.

If you are already covered, simply attach a list that shows the wage limits.

With regards,

R Shanti

There are some exemptions granted by the ESIC for which you can directly communicate with them in writing. As far as the Act is concerned, it may be doubtful to obtain the exemption, but you can still interact with them directly.

Hi!

Has anyone received exemptions as suggested by Mr. Nandkumar? Can anyone please share their experiences?

Mr. Nandkumar, could you please try to obtain some more information?

I am located in an area where ESIC is not applicable. The nearest district HQ is 110 km from me, where the ESIC office is situated. It will not be easy for me to go there and meet them personally.

- Hiten

Dear Hiten,

I am attaching a list where you can find out which forms you need to fill out. Secondly, please go through the rulebook, print these forms, fill them out, and submit them to the relevant authority. All these details can be found in the rulebook.

Regards,
Nilendra

Dear Hiten,

I am attaching a list where you will come to know what all forms you need to submit. Secondly, please go through the rule book for ESi Act and get the forms printed. Taxman's law book also provides this rule in a soft copy, so you can purchase that and download the forms. There you will also find details regarding the appropriate authority where the forms need to be submitted.

Regards, Nilendra

Dear Hiten,

Please find the answer to your question below.

The employer in respect of a factory or an establishment to which the Act applies for the first time and to which an employer's Code Number has not yet been allotted shall furnish to the appropriate Regional Office, not later than 15 days after the Act becomes applicable, a declaration of registration in writing in Form 01 and Form 01-A (Employers Registration Form).

Also, if you have already obtained the ESIC main code at your head office, then you only need to apply for the regional subcode.

Hope this clarifies your doubts.

Suresh Deshpande

Thank you, Nilendra & Suresh!

I will act accordingly for proper compliance with the Act. As a matter of fact, I am handling ESIC for the first time and I am away from the location. Your guidance is definitely proving helpful.

- Hiten

Dear Mr. Hiten Ji & Friends,

Regarding the coverage of ESIC, it depends on the area where the ESIC Office is situated. For example, the government may notify in their official gazette stating that depending upon the industries and the workers, the government may fix the official jurisdiction to cover the ESIC Act, whether it is a factory or establishment. ESIC may cover a factory or corporate office if the jurisdiction of the act is officially announced. All the employees whose salary/wages are Rs. 10,000 and below may be covered by the act.

For your immediate reference, I have enclosed some important notes that may be helpful for everyone.

Regards,
:) PBS KUMAR 9848499629

Dear Hiten,

My first suggestion is to go through the ESI rules and meet with the Regional Director of ESI to collect information and details about ESI. Then, you will see that your doubts will be cleared. It would be very risky for your company and your employees to operate without registration under the ESIC Act.

Silva

Hi Hiten,

I'll suggest that you should go through the official website of ESI, i.e. www.esic.nic.in.

Regards,
Govil Nanda

Mr. Hiten,

Any company or establishment that wants to seek exemption from ESIC must first provide facilities to employees that are superior to those offered by ESIC. Please refer to Sections 89, 90, and 91 in the ESIC Act for more information.

Regards,
Y. Venu Madhava Reddy

Hi! Good morning to everyone!

Can anyone please provide me with information and guidance on whether an organization commencing production in November 2007 can be exempt from ESI for a certain period (as a newly set-up organization)? Are there any provisions for this exemption? If so, what are the formalities involved?

We have an existing plant in Gujarat which is not covered under the ESIC Act. However, in Uttarakhand, the ESIC Act is applicable to our region.

Your guidance on this matter would be greatly appreciated.

Regards,
Hiten

Dear Hiten,

Those who are getting more than ₹10,000 as a gross salary will not be applicable under the ESIC act. The period of contribution starts from 1st April and 1st October of every year. If an employee is earning ₹9,000 in the month of April and their salary is increased in May to more than ₹10,000, they become eligible for deduction under ESIC until 30th September, at which point they will receive an exemption. If you have any queries or need more information, please feel free to email me at vv.dalvi@kirloskar.com.

Regards,
Vikram Dalvi

Thank you, Mr. Vikram, Mr. Reddy, Mr. Nanda, Mr. Silva, and all others. Your contributions are truly valuable. I will provide feedback to all of you about my experiences.

- Hiten

Just to add one point further, for the headcount purposes, whether it is 20/10, all employees including part-time or employees on contract such as housekeeping, security, etc., should be considered. On any day where the headcount exceeds the limit mentioned above, the organization must ensure compliance under the Act.

Hope this clarifies,

M.T.K.S.Vasan

Hi,

COVERAGE UNDER THE ESI ACT, 1948

The Act was originally applicable to non-seasonal factories using power and employing 20 or more persons; but it is now applicable to non-seasonal power-using factories employing 10 or more persons and non-power using factories employing 20 or more persons (those are drawing 10,000/- and below).

Under Section 1(5) of the Act, the Scheme has been extended to shops, hotels, restaurants, cinemas including preview theatre, road motor transport undertakings, and newspaper establishments employing 20 or more persons.

The existing wage limit for coverage under the Act is Rs. 10,000/- per month (effective from 1.10.2006).

Nagendra Hyderabad nagendra@ckarsystems.com

hi

COVERAGE UNDER THE ESI ACT, 1948

The Act was originally applicable to non-seasonal factories using power and employing 20 or more persons; but it is now applicable to non-seasonal power using factories employing 10 or more persons and non-power using factories employing 20 or more persons. (those are drowing 10000/- and below).

Under Section 1(5) of the Act, the Scheme has been extended to shops, hotels, restaurants, cinemas including preview theatre, road motor transport undertakings and newspaper establishment employing 20 or more persons.

The existing wage-limit for coverage under the Act, is Rs.10,000/- per month (with effect from 1.10.2006).

Contribution



E.S.I. Scheme being contributory in nature, all the employees in the factories or establishments to which the Act applies shall be insured in a manner provided by the Act. The contribution payable to the Corporation in respect of an employee shall comprise of employer’s contribution and employee’s contribution at a specified rate. The rates are revised from time to time. Currently, the employee’s contribution rate (w.e.f. 1.1.97) is 1.75% of the wages and that of employer’s is 4.75% of the wages paid/payable in respect of the employees in every wage period. Employees in receipt of a daily average wage upto Rs.50/- are exempted from payment of contribution. Employers will however contribute their own share in respect of these employees.

Collection of Contribution

An employer is liable to pay his contribution in respect of every employee and deduct employees contribution from wages bill and shall pay these contributions at the above specified rates to the Corporation within 21 days of the last day of the Calendar month in which the contributions fall due. The Corporation has authorized designated branches of the State Bank of India and some other banks to receive the payments on its behalf.

Contribution Period and Benefit Period

There are two contribution periods each of six months duration and two corresponding benefit periods also of six months duration as under.

Contribution period Corresponding Cash Benefit period

1st April to 30th Sept. 1st January of the following year to 30th June.

1st Oct. to 31st March 1st July to 31st December of the year following



Nagendra

Hyderabad

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Hi Hiten,

Please note that you need to submit FORM-1 (Employer Registration Form) to the regional ESIC Office within 15 days at your newly set-up plant to obtain the ESIC code for your organization. Upon receipt of Form-1, they will allot the code, and this code will always be used for any future correspondence.

Please find attached the Employer Registration Form (Form-1).

Regards,
Shashi Kant Upadhyay

Hi Hiten,

Thank you, Shashi!
I have started acting on it, but I am afraid I will not be able to meet the 15-day deadline. I hope there are no severe actions against this.
Thank you for your help!

Best regards,
Hiten

Dear Hiren,

There is a provision by which you can get an exemption under ESI. The rule is that you need to have a parallel scheme which should be as good as or better than the present ESI Scheme. The application along with the scheme is made to the Appropriate Government. They then decide whether to grant exemption or not.

The exemption is not given because it is a loss of revenue for ESI. So, if you can approach any High Office by using your contacts, then you can give it a try; else, just forget the idea and get registered under ESI.

Regards,
SC

Dear Hiten,

This is in reference to your query on ESIC. I would like to inform you that the ceiling limit of ESIC has been amended from Rs 7500 to Rs 10,000 per month recently.

If the area where your factory is situated is not covered under ESIC, then in that case, you can opt for Workmen Compensation policy to cover all the employees. By doing this, you can overcome the ESIC requirement.

Otherwise, ESIC will be compulsory for all employees earning a salary of Rs 10,000 per month.

I hope I have clarified your doubts.

Nandish

Dear Seniors,

We are into ITES (BPO) and have a workforce of 75+ employees. Is it necessary to be covered under the ESI Act? If not, what is the clause?

Need your input.

Regards, S. Mani

Hi

THANKS Nagendra and all my friends nd Seniors, who have provided valuable information regarding ESIC Registration, Its Applicability etc. Everybody spoke abt different org., under different Industries which shud get Registered under ESIC Act. But nobody spoke abt IT Organizations.

SO SENIORS ND FRIENDS PLZ HELP ME BY PROVIDING UR VALUABLE INPUTS 2 A QUERY OF MINE . MY QUERIES ARE:

1. Suppose a small sized Organization engaged in IT o r IT services, is not Registered under ESIC Act, then

(i) is it going 2 b penalizing 4 the organization???? In such a case are the employees

going to face any problem????

If am not mistaken even such organizations are also required 2 get Registered 4 ESI [plz correct me if am wrong].

I also have another query, in such a case where the organization is not registered under ESI, how far is the HR personnel responsible??

(ii) If it’s the organization heads who are not eager to Register [cause they are not keen to provide any sort of benefits 2 the employees, as that wud help them in cutting the cost/expenses made on the whole] ???? Under such a condition what shud the HR personnel do when his suggestions of getting Registered under ESI Act, is not heard by the Organization head.????

2. Second thing that I wud like 2 ask is that if any company is a proprietorship co., then is the ESI Registration compulsory for such a company also??

I wud really b thankful 2 all of u, if u wud spend a few minutes 2 clarify these doubts of mine with your valuable knowledge nd experience. I sincerely thank all of you in advance for sharing ur valuable knowledge & experience.

Thanks & Regards

Dear Nagendra,

Okay. What about trainees? Are they employees? Are they required to subscribe to ESI?

S. Krishnamoorthy

Hi,

The Employee State Insurance Act states that factories or establishments using power and employing 10 or more persons, as well as factories or establishments not using power and employing 20 or more persons, cannot take exemption from ESIC. You can verify this with the ESIC Officer to confirm if the area where you plan to start the factory is a notified area for ESIC. Based on this information, you can proceed accordingly.

However, it is advisable to obtain the Code number from ESIC as it is beneficial for both employers and employees.

Regards,
Priyanka

Yes, Priyanka!

We have decided to get ourselves registered for ESI and have already started the process for the same. Our intention was to have some time for our activities to regularize and achieve the break-even point first. We felt that if an exemption is granted, we could have some time to let our administration department concentrate on in-plant activities rather than liaising with government agencies. After some time, we can start with compliances.

As our location falls under ESI-covered areas, we have to comply with its requirements. Hence, we will abide by the statutory requirements.

Thanks.
- Hiten

Dear All,

Our question on whether IT/ITES/BPO is exempted has not been answered yet. Your advice please.

Mani

Hi,

To trainees, we also need to deduct ESI, as the act states. However, nobody practices this.

Regards, Priyanka

Hi Hiten,

There is no such provision in the ESI Act. If your factory is located in a covered area and has 10 employees earning less than Rs. 10,000, you must register your factory under ESIC.

Thanks,
Ilyas Hungund.

Dear friends,

I am a retired Addl Commissioner of ESI Corporation, having functioned as Regional Director in four large states and in various capacities at the Headquarters. I hope to clarify the question.

Krishnamoorthy's reply is fairly accurate.

Many parts of Uttarakhand, and other states, are not covered under the ESI Act. Hence, first find out whether the notification under Sec 1 (3) of the ESI Act has been issued for the revenue village(s) in which your factory is situated.

If the notification is issued, there is no exemption, and you should submit the registration form immediately. Those earning over 10,000 per month (excluding overtime wages) are to be covered. This should include casual, temporary, and contract workers as well. It is better to cover all employees since benefits such as accidents, death by accidents, and medical treatment are available from day one. Although the medical care may not always be quite satisfactory, in the case of a serious ailment or major accident, coverage under the scheme can be very useful, not only for employees but also for employers. It can help avoid heavy compensation payments and other criminal actions for negligence. If you need any further information, feel free to email me at oahamid@yahoo.com. I am currently working as a Group General Manager of a group of companies and will make time to reply if the query is serious.

Abdul Hameed
Group General Manager
Peekay Steel Castings
Formerly Addl. Commissioner ESIC

Dear Sir,

It is a privilege to have your views in the forum. I am grateful to you for sharing your knowledge and experience with us. I am sure we will benefit from you in the future also. Regarding my case, we have already initiated the registration process. As such, the contractual workmen were covered under the ESIC provisions and they are administered by the labor supply contractors. Hope this is fine.

Earlier, the chemists and junior staff members were drawing in the range of $6000 to $7000 and were exempted. But now we will cover them as per the statutory requirement. Kindly advise on the matter of contractual laborers.

Regards, Hiten

If there are 20 employees in an organization and employees' salaries are less than Rs10,000/-, then ESI is applicable in any case. It is exempted in those cases where an organization is providing more facilities than ESI, but prior approval of the concerned authority is necessary.

Regards,
Neeraj

The plant existing in Gujarat must not be in the municipal limit, while the plant in Uttarakhand is within the municipal limit.

Neeraj

Hello Hiten and Neeraj,

Whether you engage workers under a contractor or directly, it will be your (Principal Employers) responsibility to cover all such workers. The law, of course, allows you to recover the total contribution (employers and employees) from the bill of the contractor notwithstanding the terms of the contract. Contract employees can be covered under your own code number and insurance number series, or the contractor can get his own code number, provided he regularly employs 20 employees (assuming that he is only a labor supply contractor). In that case, you should obtain the Form 7A register from him every month, ensure that he paid the ESI dues, and obtain the six-monthly return, and also ensure that his return contains names of workers actually working in your unit. Some contractors merely comply for 20 employees, though they provide many more workers to various units, and yet give the same return for all the employees. Be careful about it.

If you do not recover ESI dues from the contractor's bill for a particular period, you can do it from a subsequent bill, but the liability will be yours.

Abdul Hameed

Hello Hiten,

Your presumption that merely because your unit is far away from the District HQ, you will not come under the ESI scheme is not correct. The ESI scheme is implemented piecemeal, including different revenue villages at different occasions. You can file an RTI notice to ESIC to obtain a list of notifications under Sec 1 (3) of the act issued for various revenue villages in the district where your unit is situated. You can also write a registered letter to your nearest Regional Office/Sub-regional office or Divisional office for this purpose. You may visit www.esic.nic.in to learn more.

Abdul Hameed Former Addl Commissioner ESIC

Dear Sir,

I would like to clarify the misunderstanding here:

I have not presumed that we are not covered by ESIC. In fact, I asked for details regarding exemption because the factory we have recently commissioned is in Uttarakhand, and ESI is applicable in the region where our factory is located.

I am presently located in Valsad, Gujarat, where ESIC is not applicable, and I don't have much knowledge and experience regarding ESIC. Hence, I requested opinions from other members.

As such, my post to which you are referring is about my current location (Gujarat) where I have to travel around 150 km to meet any ESIC official. I thank you for suggesting corresponding with ESIC authority.

However, as mentioned in my previous two posts, we have decided to register for ESIC, and the process is already initiated.

Once again, I confirm the original purpose of my post:

If there is some exemption available for new manufacturing units under ESI, we would like to avail them as we would like to have some time before we achieve the break-even point and help our administration department streamline the liaison work.

However, as there is no such exemption available, we have decided to comply with statutory requirements and apply for registration.

Hope I have cleared up any misunderstanding that was caused.

Thanks for your response and guidance again.

Regards,

Hiten

Dear Shri Hameed,

I am a retired Indian Postal Service Officer and founder-Director of a medium-sized BPO in Chennai.

We induct trainees almost every month as the attrition problem is acute here. These trainees are required to undergo practical and theoretical training, including hands-on training for six months. However, many leave in the middle.

We used to recover ESI contribution from these trainees. But a batch of trainees objected to the recovery, stating they are not employees but only learners and receive only a training allowance, not wages. Our legal cell agreed with it, and hence we stopped recovering ESI contribution from them.

Now, the ESI inspector who visited our office insists that trainees are not exempted. We pointed out to him that recently the Supreme Court has ruled in the case of EPF Mangalore and an industrial undertaking that "trainees" are not employees but are only learners, and no EPF recovery can be made. In another case of TELCO vs ESI, the SC has held that apprentices/trainees are not employees, and hence no ESI contribution is to be recovered from them.

I think this is a grey area. There is no mention of the word "trainees" in any of the ESIC Act or Rules. Under the Shops & Establishment Act and Standing Orders of our Company, "trainees" are not employees.

May I solicit your considered opinion on this question.

Regards,

S. Krishnamoorthy

Hi, I am working in a private hospital. They provide free medical treatment to all employees subject to limits based on their salary, but only within their hospital. If a particular treatment is not available in the hospital, the employee is required to pay for the treatment, and the hospital does not reimburse anything. Is that acceptable? Can the organization do that, or are there any laws regarding this?

Dear Sir,

I am a manager (accounts) of a Nursing Home where we provide OPD and IPD services. The Director has asked me why a nursing home employee is not covered under the ESI scheme. I have received the registration code/number from the ESI department.

Please clarify whether a Medical Unit like a Nursing Home employee is fully exempted under the ESI scheme.

Dear Sir,

Our employee is working at Magdalla/Kandla/Pipavav/Navlakhi/Bhavnagar/Dharamtar in Gujarat/Maharashtra port and jetty. I know that but I am not sure if it is exempted under the ESIC Act or not, and also exempted. So, how many places are exempted in the above jetty/port?

Kindly confirm, please.

Thank you,
Mani Soni