I am working in a software company with 13 employees and want to start PF and ESIC in our organization. Please suggest whether we are eligible or not. If yes, then what are the rules and guidelines for that, and also how to register our organization for such facilities. I am waiting for your valuable response.
Regards,
Mona
From India, Bhopal
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Regards,
Mona
From India, Bhopal
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Hi, ESI is not applicable to you but PF will be applicable . approach to the PF office in your area they will guide you in this regard. Regards Rajeev Dixit
From India, Bangalore
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113From India, Bangalore
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P.F. is applicable to an establishment if it employs 20 or more persons, and hence P.F. is not applicable to you. ESI is applicable to establishments employing 10 or more persons. Previously, establishments employing 20 or more were the only ones covered by states. However, many states have issued notifications bringing establishments employing ten or more under the purview of ESI. Please check whether the M.P. State has issued any such notification.
Regards,
B. Saikumar
HR & Labour Law Advisor
From India, Mumbai
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Regards,
B. Saikumar
HR & Labour Law Advisor
From India, Mumbai
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All units conducting any manufacturing process on their premises are considered "factories" and are covered if they employ 10 or more persons under section 1(4) of the ESI Act, 1948, read with section 2(12) of the same Act.
Therefore, a software company engaging in a manufacturing process on its premises is also covered under the ESI Act, 1948 if it employs 10 or more persons.
Regards,
Harsh Kumar Mehta
From India, Noida
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Therefore, a software company engaging in a manufacturing process on its premises is also covered under the ESI Act, 1948 if it employs 10 or more persons.
Regards,
Harsh Kumar Mehta
From India, Noida
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In addition to my above post, I would like to add that as far as ESI is concerned, it is now immaterial whether it is a factory or establishment in terms of coverage. The threshold limit for coverage has been reduced from 20 employees to 10 in almost all states, even for establishments other than factories. As a consequence, both factories and other establishments employing ten or more persons are covered under ESI.
Regarding the P.F. Act
I would like to refer to clause (a) of Sub-sec. (3) of Sec. (1) of the P.F. Act 1952, which deals with the application of the Act to factories. It states that the P.F. Act applies to every establishment which is a factory specified under Schedule (1) appended to the Act and employs twenty or more persons.
Clause (b) of Sub-sec. (1) of Sec. (1) deals with the application of the P.F. Act to establishments other than factories and states that the P.F. Act is applicable to establishments employing twenty or more persons.
Furthermore, the Government of India, in its notification dated 27th July 2006, extended the application of the P.F. Act to establishments that are software companies, provided they employ 20 or more persons.
Summary of Coverage Requirements
1) Concerning the coverage of ESI, whether a unit is a factory or establishment (other than a factory), it shall employ 10 or more persons.
2) Regarding the coverage of P.F., a unit, whether it is a factory or establishment, shall employ 20 or more persons to be covered under the P.F. Act.
Regards,
B. Saikumar
HR & Labour Law Advisor
From India, Mumbai
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Regarding the P.F. Act
I would like to refer to clause (a) of Sub-sec. (3) of Sec. (1) of the P.F. Act 1952, which deals with the application of the Act to factories. It states that the P.F. Act applies to every establishment which is a factory specified under Schedule (1) appended to the Act and employs twenty or more persons.
Clause (b) of Sub-sec. (1) of Sec. (1) deals with the application of the P.F. Act to establishments other than factories and states that the P.F. Act is applicable to establishments employing twenty or more persons.
Furthermore, the Government of India, in its notification dated 27th July 2006, extended the application of the P.F. Act to establishments that are software companies, provided they employ 20 or more persons.
Summary of Coverage Requirements
1) Concerning the coverage of ESI, whether a unit is a factory or establishment (other than a factory), it shall employ 10 or more persons.
2) Regarding the coverage of P.F., a unit, whether it is a factory or establishment, shall employ 20 or more persons to be covered under the P.F. Act.
Regards,
B. Saikumar
HR & Labour Law Advisor
From India, Mumbai
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PF is not applicable at present as pe pf at-52 and for ESI - Not Applicable at present, but better to approach near by regional office or branch ofiice
From India, Varanasi
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From India, Varanasi
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Thank you for showing interest in the remarks expressed by me. I may, however, submit that the remarks as mentioned by me earlier are correct on account of the following reasons:
1. Coverage/non-coverage of a factory/establishment depends on the particular facts of that unit. If there is a manufacturing process (including in an IT software unit) and 10 persons are employed for wages, then it is definitely a "factory."
2. Only those establishments are coverable under the ESI Act which either fall under section 1(4) of the ESI Act (as a factory) or for which a notification under section 1(5) is issued by the appropriate Government. It is always better for the employer to furnish correct facts to the appropriate Regional Office of ESIC and seek clarification on such issues.
I hope you will continue to correct or guide me regarding my remarks in these columns.
With regards,
Harsh Kumar Mehta
From India, Noida
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1. Coverage/non-coverage of a factory/establishment depends on the particular facts of that unit. If there is a manufacturing process (including in an IT software unit) and 10 persons are employed for wages, then it is definitely a "factory."
2. Only those establishments are coverable under the ESI Act which either fall under section 1(4) of the ESI Act (as a factory) or for which a notification under section 1(5) is issued by the appropriate Government. It is always better for the employer to furnish correct facts to the appropriate Regional Office of ESIC and seek clarification on such issues.
I hope you will continue to correct or guide me regarding my remarks in these columns.
With regards,
Harsh Kumar Mehta
From India, Noida
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What I want to convey simply is that in view of the amendment of the definition of a factory under the ESI Act and the notifications issued by almost all State Governments under Sec. (1)(5) of the ESI Act bringing other establishments (specified in the notification) employing 10 or more persons under coverage, a unit, whether a factory or establishment, now comes to be covered under ESI if it employs 10 or more persons. We express the same idea, probably in different ways. There is no difference of opinion. Thanks for sharing your response.
Regards,
B. Saikumar
From India, Mumbai
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Regards,
B. Saikumar
From India, Mumbai
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I have come across a query about ESIC. If an establishment has 15 employees, out of which 14 employees have a gross salary above 15,000 and only one is below 15,000, is it necessary for that establishment to get registered at this stage? Also, I would like to know the registration process of ESIC with details of fees applicable.
Thanks,
Bijay.
From India, Vadodara
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Thanks,
Bijay.
From India, Vadodara
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Yes, it needs to be covered since it employs 10 persons (as per your State notification) irrespective of the wage limit. For registration, you need to fill the forms in terms of Sec. 2A read with Reg. 10-B to get an ESI code. Please go through the relevant section and regulations as well as the ESI website.
Regards,
B. Saikumar
From India, Mumbai
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Regards,
B. Saikumar
From India, Mumbai
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As per the amended provisions of the ESI Act, in the situation referred to by you, if it is a factory, it needs to be covered under the Act, and contribution is payable for that one employee who is within the coverable wage ceiling.
If it is an establishment, then the situation is different. It depends upon the notifications issued—extending coverage for 10 & above employees—and also whether the notification speaks about "wages" for those employees or simply only employees. Please check the relevant notification issued by the appropriate state government.
Regards,
S. Sankaralingam
Retd. Sr. Dy. Director, ESIC
Advocate & Labour Law Consultant
Email: [Email Removed For Privacy Reasons]
From India, Chennai
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If it is an establishment, then the situation is different. It depends upon the notifications issued—extending coverage for 10 & above employees—and also whether the notification speaks about "wages" for those employees or simply only employees. Please check the relevant notification issued by the appropriate state government.
Regards,
S. Sankaralingam
Retd. Sr. Dy. Director, ESIC
Advocate & Labour Law Consultant
Email: [Email Removed For Privacy Reasons]
From India, Chennai
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Dear Mona ji,
I endorse the interaction by Saikumar ji and Sankaralingam ji and would like to give a specific answer to your query.
You are in the software industry operating in Bhopal with a total of 13 employees, including contract employees.
As regards to PF:
PF is not applicable to you. It is applicable once you reach 20 employees on any day, including contract employees.
As regards to ESI:
ESI is applicable to you. The state of MP has issued a notification bringing down the threshold limit to 10 persons, regardless of salary.
As per my knowledge, there are only three states in which the threshold limit has not been reduced to 10, namely Maharashtra, Assam, and HP. However, the ESI scheme will apply to those earning a gross salary of less than Rs. 15,000 per month.
I hope this clarifies any ambiguity.
Best regards,
From India, Mumbai
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I endorse the interaction by Saikumar ji and Sankaralingam ji and would like to give a specific answer to your query.
You are in the software industry operating in Bhopal with a total of 13 employees, including contract employees.
As regards to PF:
PF is not applicable to you. It is applicable once you reach 20 employees on any day, including contract employees.
As regards to ESI:
ESI is applicable to you. The state of MP has issued a notification bringing down the threshold limit to 10 persons, regardless of salary.
As per my knowledge, there are only three states in which the threshold limit has not been reduced to 10, namely Maharashtra, Assam, and HP. However, the ESI scheme will apply to those earning a gross salary of less than Rs. 15,000 per month.
I hope this clarifies any ambiguity.
Best regards,
From India, Mumbai
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The state of Tamil Nadu and the U.T. of Puducherry have also brought down the limit to ten employees. However, whether it refers to a total of 10 or ten coverable employees depends on the notification. If the notification has omitted the word "wages," which was included in the original notification for 20 employees and above, then it is considered to be a total of 10 employees. Otherwise, it would be 10 coverable employees. Please clarify this point.
Regards,
S. Sankaralingam Retd. Sr. Dy. Director, ESIC
From India, Chennai
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Regards,
S. Sankaralingam Retd. Sr. Dy. Director, ESIC
From India, Chennai
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