Dear Saikumar ji,
Greetings of the day - Sunday!
With due respect to you, I wish to draw your kind attention that, based on Supreme Court Judgment ESIC Vs MM Suri Associates, New Delhi, (1998) it was decided by the Corporation to considere only coverable employees under section 2(9) for coverage of factory or establishment under ESI. This decision was made applicable in 1998. And now there is a amendment also in section 2(9) in 2010.
From India, Mumbai
2556Greetings of the day - Sunday!
With due respect to you, I wish to draw your kind attention that, based on Supreme Court Judgment ESIC Vs MM Suri Associates, New Delhi, (1998) it was decided by the Corporation to considere only coverable employees under section 2(9) for coverage of factory or establishment under ESI. This decision was made applicable in 1998. And now there is a amendment also in section 2(9) in 2010.
From India, Mumbai
Dear Yogesh
It is compulsory for you to get registered with the ESI Authority if you are employing with 10 employees (direct and indirect) and required to be get registered under the provision of section 1 (3) of the EPF and MP Act, if you are employing with 20 and more employees (direct and indirect). In accordance with the provisions stipulated in ESI as well as in EPF Act, you are yourself required to get registered with the concern Office of your area if the provisions of the act are applicable to your establishment. In case of non-registration, on later on stage if the concern Authority will conduct survey and if you will found not covered under the ESI and EPF Act, you will be covered with the retrospective effect from that date when you have minimum number of employees as per requirement of the ESI and EPF and MP Act. So go for the registration of your establishment to the SRO/RO of your area.
Thanks
Regards
R B Yadav
Advocate
From India, Mumbai
It is compulsory for you to get registered with the ESI Authority if you are employing with 10 employees (direct and indirect) and required to be get registered under the provision of section 1 (3) of the EPF and MP Act, if you are employing with 20 and more employees (direct and indirect). In accordance with the provisions stipulated in ESI as well as in EPF Act, you are yourself required to get registered with the concern Office of your area if the provisions of the act are applicable to your establishment. In case of non-registration, on later on stage if the concern Authority will conduct survey and if you will found not covered under the ESI and EPF Act, you will be covered with the retrospective effect from that date when you have minimum number of employees as per requirement of the ESI and EPF and MP Act. So go for the registration of your establishment to the SRO/RO of your area.
Thanks
Regards
R B Yadav
Advocate
From India, Mumbai
Dear keshav ji
Greetings.My view is based on the following interpretation.
Sec.1(4) of ESI Act states that the ESI Act in the first instance is applicable to all factories other than seasonal factories. Now, Sec.2(12) defines a facto y as under:
“ factory ” means any premises including the precincts thereof whereon ten or more persons are employed or were employed on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on or is ordinarily so carried on, but does not include a mine subject to the operation of the Mines Act, 1952 (35 of 1952), or a railway running shed ;]
Thus sec.1(4) read with Sec.2(12) unfolds that the ESI Act is applicable to factories where in ten or more persons are merely employed and it does not say that they shall be employed 'for wages'. It is enough if ten or more ppersons aremerely working in a manufacturing process, it attracts ESI Act. Since the definition does not refer to employment on wages, there is no need to link the definition of factory to the definition of employee under Sec.2(9) which prescribes a wage limit.Accordingly, all persons employed in a factory irrespective whether they are drawing coverable wage or not, need to be counted for computing ten or more persons employed in a factory.
You are right. M.M Suri's case was governing the field on the issue of number of persons employed in afcatory being restricted to only those drawing coverable wage. But after the amendment of definition of Factory in 2010, it no longer does.
B.Saikumar
Hr & Labour Law Advisor
Mumbai
From India, Mumbai
Greetings.My view is based on the following interpretation.
Sec.1(4) of ESI Act states that the ESI Act in the first instance is applicable to all factories other than seasonal factories. Now, Sec.2(12) defines a facto y as under:
“ factory ” means any premises including the precincts thereof whereon ten or more persons are employed or were employed on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on or is ordinarily so carried on, but does not include a mine subject to the operation of the Mines Act, 1952 (35 of 1952), or a railway running shed ;]
Thus sec.1(4) read with Sec.2(12) unfolds that the ESI Act is applicable to factories where in ten or more persons are merely employed and it does not say that they shall be employed 'for wages'. It is enough if ten or more ppersons aremerely working in a manufacturing process, it attracts ESI Act. Since the definition does not refer to employment on wages, there is no need to link the definition of factory to the definition of employee under Sec.2(9) which prescribes a wage limit.Accordingly, all persons employed in a factory irrespective whether they are drawing coverable wage or not, need to be counted for computing ten or more persons employed in a factory.
You are right. M.M Suri's case was governing the field on the issue of number of persons employed in afcatory being restricted to only those drawing coverable wage. But after the amendment of definition of Factory in 2010, it no longer does.
B.Saikumar
Hr & Labour Law Advisor
Mumbai
From India, Mumbai
Dear Yogesh Ji,
You should registered your establishment under EPF act 1952, and need to submit the contribution of Rs. 7/- i.e. Rs. 5 for A/c 2 & Rs. 2 for A/c 22 on monthly basis.
If any employee will fall in this category the you should imply the rules as per the act.
For ESI you should do voluntary registration and no need to submit any challan if even single employee will fall in esic category then you will provide the benefit to employee or employees.
By this nobody can challenge for statutory compliance purpose on behalf of EPF & ESIC.
Regards
Sunil Sharma
From India, New Delhi
You should registered your establishment under EPF act 1952, and need to submit the contribution of Rs. 7/- i.e. Rs. 5 for A/c 2 & Rs. 2 for A/c 22 on monthly basis.
If any employee will fall in this category the you should imply the rules as per the act.
For ESI you should do voluntary registration and no need to submit any challan if even single employee will fall in esic category then you will provide the benefit to employee or employees.
By this nobody can challenge for statutory compliance purpose on behalf of EPF & ESIC.
Regards
Sunil Sharma
From India, New Delhi
Dear Sunil ji,
Can you please tell the provision under ESI for voluntary registration?
To my knowledge, under ESI there is no provision of voluntary registration and it is mandatory when you reach 10 / 20 coverable employees.
From India, Mumbai
Can you please tell the provision under ESI for voluntary registration?
To my knowledge, under ESI there is no provision of voluntary registration and it is mandatory when you reach 10 / 20 coverable employees.
From India, Mumbai
Dear Keshav Sir,
You are absolutely right that there is no provision for voluntary coverage under ESIC.
But whenever inspection will happened then concerned E.O. will consider your exempted employees to covered your establishment under ESIC as per new definition which is mentioned below with example:
NEW DEFINITION:-
Sec 2 (12) "factory" means any premises including the precincts thereof whereon ten or more persons are employed or were employed on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on or is ordinarily so carried on, but does not include a mine subject to the operation of the Mines Act, 1952 or a railway running shed;’.
On comparing the both the following implications of the amendment comes out:-
• Now the units where manufacturing activities are performed by 10 or more PERSONS has been brought under the ambit of the Act, irrespective of use of POWER and irrespective of the fact that 10 or more coverable employees are engaged or not.
• The definition of the "Factory" has been amended to bring the small units within the ambit of the Act. Earlier the ESI Act was applicable to units employing 10 or more persons manufacturing with aid of "POWER"- Now the word POWER has been ommitted. Thus, every unit manufacturing and employing 10 or more persons has been brough under the ambit of the ESI Act.
• Secondly, one hidden amendment has been made in the Act-The uncovered employees would also be counted for the purpose of applicability of the ESI Act. Earlier the unit employing 10 or more workers and doing manufacturing process, would still be out of the purview of the Act, if there are Persons drawing salary above the prescribe limit. Let me explain with an example-
Suppose in a unit there were 12 employees and using Power to manufacture. Out of the said 12 employees
3 employees were drawing salary above the prescribed limit of Rs. 10000/-(or 15000/-). The ESI Act would
not be applicable on the said unit, since the strength of the coverable employees is less than 10.
But now, the ESI Corpn. has very smartly omitted the words " for wages" in the new definition of the
"Factory", bringing all the units employing 10 or more Persons and engaged in manufacturing process
within its ambit
From India, New Delhi
You are absolutely right that there is no provision for voluntary coverage under ESIC.
But whenever inspection will happened then concerned E.O. will consider your exempted employees to covered your establishment under ESIC as per new definition which is mentioned below with example:
NEW DEFINITION:-
Sec 2 (12) "factory" means any premises including the precincts thereof whereon ten or more persons are employed or were employed on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on or is ordinarily so carried on, but does not include a mine subject to the operation of the Mines Act, 1952 or a railway running shed;’.
On comparing the both the following implications of the amendment comes out:-
• Now the units where manufacturing activities are performed by 10 or more PERSONS has been brought under the ambit of the Act, irrespective of use of POWER and irrespective of the fact that 10 or more coverable employees are engaged or not.
• The definition of the "Factory" has been amended to bring the small units within the ambit of the Act. Earlier the ESI Act was applicable to units employing 10 or more persons manufacturing with aid of "POWER"- Now the word POWER has been ommitted. Thus, every unit manufacturing and employing 10 or more persons has been brough under the ambit of the ESI Act.
• Secondly, one hidden amendment has been made in the Act-The uncovered employees would also be counted for the purpose of applicability of the ESI Act. Earlier the unit employing 10 or more workers and doing manufacturing process, would still be out of the purview of the Act, if there are Persons drawing salary above the prescribe limit. Let me explain with an example-
Suppose in a unit there were 12 employees and using Power to manufacture. Out of the said 12 employees
3 employees were drawing salary above the prescribed limit of Rs. 10000/-(or 15000/-). The ESI Act would
not be applicable on the said unit, since the strength of the coverable employees is less than 10.
But now, the ESI Corpn. has very smartly omitted the words " for wages" in the new definition of the
"Factory", bringing all the units employing 10 or more Persons and engaged in manufacturing process
within its ambit
From India, New Delhi
Dear Keshav Sir,
IF company is having the same situtation which is explained by Mr. Yogesh and using contract labour in that case what will you do?
If contractor will fail to deposit the ESIC contribution then who will deposit it, and where?
Regards
Sunil Sharma
From India, New Delhi
IF company is having the same situtation which is explained by Mr. Yogesh and using contract labour in that case what will you do?
If contractor will fail to deposit the ESIC contribution then who will deposit it, and where?
Regards
Sunil Sharma
From India, New Delhi
Dear All,
As rightly said by Saikumar ji and by some other members also, effective from 01.06.2010, factory within the purview of section 2(12) would get covered under ESI where 10 or more persons with out any reference to the quantum of wages. But according to section 1(5) the coverage of establishment to which appropriate Govt. is State, 20 coverable employees are taken into account irrespective of whether they are regular, temporary, casual, contract, daily rated, piece rated etc. Whereas for coverage of establishment to which appropriate Govt. is Central, 20 coverable employees to be taken into account belonging to category "casual & contract" only.
In case of contractor, there must be 20 coverable employees. The question of having requisite number of employees in the premises does not arise since the establishment need not have any premises.
The threshold limit of coverage of 20 is reduced to 10 by many States.
From India, Mumbai
As rightly said by Saikumar ji and by some other members also, effective from 01.06.2010, factory within the purview of section 2(12) would get covered under ESI where 10 or more persons with out any reference to the quantum of wages. But according to section 1(5) the coverage of establishment to which appropriate Govt. is State, 20 coverable employees are taken into account irrespective of whether they are regular, temporary, casual, contract, daily rated, piece rated etc. Whereas for coverage of establishment to which appropriate Govt. is Central, 20 coverable employees to be taken into account belonging to category "casual & contract" only.
In case of contractor, there must be 20 coverable employees. The question of having requisite number of employees in the premises does not arise since the establishment need not have any premises.
The threshold limit of coverage of 20 is reduced to 10 by many States.
From India, Mumbai
Dear keshav ji
Even while extending the applicability of the ESI Act to establishments by virtue of notification under Sec.1(5), the appropriate governments in some cases have followed the language of the amended definition of factory under Sec.2(12) in the notifications. For example the Central Government vide it's notification dated 23rd March 2011 covered all the shops, hotels and transport servcies etc located in National Capital Territory if they merely employ ten or more persons. Here also the notification does not say that the persons shall be employed for wages.Thus in this case also, establishments are covered, in my view,if the number of employees is ten or more, irrespective whether they draw wages Rs.15000/- or less p.m. Similar notification was issued by the Gujarat State also.It implies that some states have followed the example of central amendment while issuing notifications under Sec1(5).However the State of Maharastra has not amended the notification and therefore, as per the existing notification, establishments are covered provided the number of coverable employees is 20 or more.However members can verify with ESIC.
B.Saikumar
HR & labour Law Advisor
Mumbai
From India, Mumbai
Even while extending the applicability of the ESI Act to establishments by virtue of notification under Sec.1(5), the appropriate governments in some cases have followed the language of the amended definition of factory under Sec.2(12) in the notifications. For example the Central Government vide it's notification dated 23rd March 2011 covered all the shops, hotels and transport servcies etc located in National Capital Territory if they merely employ ten or more persons. Here also the notification does not say that the persons shall be employed for wages.Thus in this case also, establishments are covered, in my view,if the number of employees is ten or more, irrespective whether they draw wages Rs.15000/- or less p.m. Similar notification was issued by the Gujarat State also.It implies that some states have followed the example of central amendment while issuing notifications under Sec1(5).However the State of Maharastra has not amended the notification and therefore, as per the existing notification, establishments are covered provided the number of coverable employees is 20 or more.However members can verify with ESIC.
B.Saikumar
HR & labour Law Advisor
Mumbai
From India, Mumbai
Hi , We are a private Ltd company involved in stock broking at Mumbai.We have employees more than 20 who are drawing basic salary less than 15,000 and we have registered them under PF . My query is whether we need to register them under ESIC as well . ESIC act nowhere says that commercial establishments like us have to enrol . Can anyone please provide the relevant clause or notification from maharashtra government if we are covered
From India, Mumbai
From India, Mumbai
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