ESIC Mandate Clarification Required For Manufacturing Company

Dear All,

I need clarification on a point related to ESIC deduction. The rule that ESIC is mandatory for people having a gross salary less than or equal to 15k is well understood. However, I am uncertain about whether ESIC is required for employees of a Manufacturing company who are covered under accidental insurance. Does the necessity of ESIC depend on the factory location in any way? I would appreciate it if you could shed some light on this matter.

Regards, Shubhada

Dear, if an employee has less than or equal to a salary of Rs. 15,000/- (gross), they must be covered under ESIC. If there is no facility of an ESIC dispensary/hospital, then they must be covered under Workmen Compensation.

On the other hand, you have insured the employee only for accidental insurance, which does not include health insurance and compensation for their absent days. ESIC covers all circumstances and provides optimum benefits to employees.

Dear Shubhada,

For your kind information, the ESI limit has been revised to ₹21,000 wef 01 Jan 2017 from ₹15,000. If any employee is drawing less than the ceiling limit and if your area is covered under ESI limits, then yes, they are required to be covered for ESI irrespective of any health or insurance policies they may have.

Thank you.

1. Sir, coverage under the ESI Act, 1948, and rules/regulations framed thereunder is compulsory provided that the area where the factory/establishment is located is declared/notified as a covered implemented area under section 1(3) of the said Act. The Mumbai area is an implemented area under section 1(3), and if you have any doubt, you can contact the nearest ESIC office for clarification.

2. The fact that the employer has taken out a commercial accident insurance policy from any insurance company is an irrelevant fact so far as coverage under the said Act is concerned.

No mediclaim policy would be more beneficial than the facilities offered by ESIC. You cannot have coverage for your existing diseases under any policy. However, this is possible with ESI. You cannot enroll your aged parents in any mediclaim policy, but ESIC allows it and provides medical benefits to employees' parents irrespective of their age. Therefore, coverage under ESI is mandatory both from a legal perspective and for the benefit of employees and employers.

Madhu.T.K

Now, the salary limit is increased to $21,000 for ESI with effect from January 1, 2017.