ESI - Info Needed

Dear All,
I work in HR department for a software development organization with the employee strength of 75 employees. We donot want to have ESI for our organization. But, with 4-5 recent hires we are giving them the fixed compensation of Rs 8,500pm (which is Rs 1,02,000 pa) plus a performance pay of Rs 20,000 pa, payable annually.
As per ESI rules, any amount above Rs 10,000 is exempted from ESI. I wanted to find out can we show the performance pay in the monthly salary, but is paid at the end of the year? Is that right to do so?
Else, what is the other alternative to avoid ESI hassle?
Please help.
Regards,
Shilpi

give that amount(performence salary) monthly.so per month it is 1666 then you add this amount to 8500 it goes to 10166.so his gross salary per month is 10166 so no need to pay ESI amount.but Management is not accepted to pay performance amount monthly it is only paid after see his performance.so better to pay ESI on 8500 gross

If you Give this Performance Pay on fix basis every month 1666/- then total salary will be 10166/- so that emplyoee is not covered under the act. but if your give that performance pay verius means you give as per his performance (not in everymonth) then whether his salary exeed 10000/- heance he is coverable under the act.

Thank you both for your inputs!!
Also, is there a rule that if there are less than 10 employees falling under Rs 10,000pm then ESI is not applicable?
Look forward to your response.
Regards,
Shilpi

dear shilpi
your organisation has 75 employess than what is the doubt for not to be covered under ESIC.we have discussed this point earlier in forum also. For factories it is compulsory to have ESI CODE ,it means if you are a factory than you have to take ESI code.In establishment ,minimum number is 20 to become eligible for ESI.there is no count of eligible employee ,less than 10 k ,it is total employee.
so take ESI CODE to avoid further intrest and penality.
tks
j s malik

yes there is a rule of minimum number of employees to be below which ESIC is not applicable. Just check whether it is 10 or 20. According to me its 10
Regards,
Harshad

Hi Shilpi,
Performance pay is dependable on the individual's performance which technically cannot be clubed with the individual's salary for the whole period during his/her stay in the company. Since theire salary is less than 10 k and your co's strength are more that 20 there are no other option but to register their names with the ESIC to avoid further interest and penalty as advised by Mr. J.S. Malik.
Regards,
Sunit Saha

Shilpi,
Your company strenght is more than 20 you have to register in ESIC. The employees paying the amount on Performance basis is depends on performace. So, The salary paying is less than Rs.10,000/- pm.
Regards,
K V Satish Kumar

Dear Shilpi,
A Person getting more wages than the limit prescribed by the Central Goverment (i.e. 10000/- Gross / Month) under S.2 (9) (b) would not be an employee within the meaning of S 2(9).
M.M. Suri & Associates Pvt. Ltd. Vs. ESI Corporation 1997 II CLR Pg. 106 (Del HC)
So this can be intereptted that if your new 4-5 recruits are the only employees who are covered than u no need to take the ESIC Code.
But, sure you take a profesional help also.
Regards,
Sandeep Kulkarni

Dear, for cover any establishment under esi act, there should be 10 or more COVERABLE EMPLOYEE reqire fore those esablishment which is using POWER for any mfg. prosses OR 20 COVERABLE EMPLOYEE for those esablishment which is not using POWER in their mfg. prosses. In ur case u have 75 employee and all are exampted under esi act then u r not reqire to register under the act. All are different in PROVIDENT FUND ACT. they reqire 20 employee 4 registration. Whether all r coverable or not. U have to register.
Posted via Mobile Device