Respected friends,
Kindly advise me. Whether State Government of Tamil Nadu, or Central Government has extended the provisions of ESI Act to shops, establishments and offices in TamilNadu. My friend has started office in Chennai in July 2010 employing 20persons with salary below Rs 10000 per month. If applicable, kindly give the notification no
with regards
sr laksminarasimman
From India, Madras
Kindly advise me. Whether State Government of Tamil Nadu, or Central Government has extended the provisions of ESI Act to shops, establishments and offices in TamilNadu. My friend has started office in Chennai in July 2010 employing 20persons with salary below Rs 10000 per month. If applicable, kindly give the notification no
with regards
sr laksminarasimman
From India, Madras
Dear Hamid Sir
As you said, we had approached the ESI authorities at Chennai for coverage of our establishment which is onto Mobile tower supply and erection business (16 persons were drawing salaries less than 15001/- pm whereas the total strength was 76). However they said that our estt cannot be covered as the strength of the coverable employees was below 20. Also the said ammendment was applicable only to factories and not to establishments. Is this true ???
Further they state that -- even otherwise, since mobile tower erection is not confined to a particular location and it also the state that "tower erection" is analogous to civil construction work, hence only the count of office staff would be reckoned for the purpose of coverage and not the field technicians/field engineers. They have rejected the application.
I have gone through the Act its rules and regulations. However I am unable to find any such clause in support of their contention. Your clarification would be of immense help to me, Thank u
ramesh
From India, Madras
1As you said, we had approached the ESI authorities at Chennai for coverage of our establishment which is onto Mobile tower supply and erection business (16 persons were drawing salaries less than 15001/- pm whereas the total strength was 76). However they said that our estt cannot be covered as the strength of the coverable employees was below 20. Also the said ammendment was applicable only to factories and not to establishments. Is this true ???
Further they state that -- even otherwise, since mobile tower erection is not confined to a particular location and it also the state that "tower erection" is analogous to civil construction work, hence only the count of office staff would be reckoned for the purpose of coverage and not the field technicians/field engineers. They have rejected the application.
I have gone through the Act its rules and regulations. However I am unable to find any such clause in support of their contention. Your clarification would be of immense help to me, Thank u
ramesh
From India, Madras
Dear Mr.O.Abdul Hameed Sir, Your reply is fantastic. Your reply demonstrates your knowledge. Pls. do reply all ESI doubts in future also Sir. Thanks & Regards R. Swaminathan
From India, Madras
From India, Madras
Mr Ramesh
It is true that recent amendment effective from 1.6.2010 under the gazettee notification 1084 dt 1.6.2010, dealt only with Factory. In fact years back the definition of factory covered only where "10 or more person emplyed", but a subsequent amendment, due to some oversight said "10 or more person employed for wages". Wage had a definition in the act and ceiling of wage for purpose of ESI act was fixed from to time by Govt. SC in Suris case accepted the submission of some employer that definition "10 or more employed for wage" restrict the employees for this purpose to those drawing below the ceiling lime, then at Rs 10000. This was against the stand of the department and hence to rectify this judgement the amendment was brought this year and hence now rom 1.6.2010, the original position is reverted namely all employees irrespective of wage ceiling will be counted to decide the coverage.
The stand of ESIC Tamil Nadu that this amendment apply to factory only is correct but the Suri Case of SC in any case did not apply to Establishment since the notification of State Government did not say "20 or more person employed for wage", but for the purpose of establishment (shop etc) the definition was always "Person employed " and not "Person employed for Wage". The following is the definition of established cut annd pasted from one of the web site of ESIC.
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.
Please note that word establishment is not defined in ESI Act. Hence the notification of State Government alone to be followed. All state government notification under Sec 1 (5) talked only as "20 or more persons".
Hence no amendmnet is required for establishment and the original position of the Corporation that total number of person, irrespective of their wage need to be taken to decide coverage, but for actual registration and paymet of contribution, only those drawing within the ceiling are to be considered.
Now coming to the question whether your business is establishment/Shop, I feel that it is a Shop, and all employees within the state, irrespectivde of their frequent move or place of work (some times in non implemented area) should be considered in view of the latest SC judgements. In Souther Agency Rajamundry Case (29.11.200) SC held that Shop to be a place where any commercial activity take place. In amany judgement involving Tranport undertaking (like South easterm Tranport case, Transport Corporation case) etc, courts have ruled that employee working in different location and under control of a head office or regional office etc should be counted together to arrive at the figure of 20. In fact as per these definition even a factory is a shop, but once the manufacturing activity takes place it will be shop and if there is no manufacturing activity but only other economic or commercial activity with 20 person employed, it will be shop.
About tower erection, I do not think that to be civil work (involving bricks, cement, sand etc) but primarily a fabrication work involving steel tresses, weldng, cutting, joining etc, though a small part (platform) may have a civil component. I think ESIC has covered many such establisment.
Where there are 20 person employed, in more than one location within the same state which has issued notification under Sec 1 (5), and all of them are controlled by one single unit having controlling office (may be regional office, head office etc) and where work is taken on commercial consideration as a business activity, it has to be covered under ESI Act. Failure by you will be denial of social security benefit to your workers and failing by ESIC will be failure to provide statutory protection to a segment.
Please address ESIC appropriately.
O. Abdul Hameed
Formerly Addl.Commissiner ESIC
From India, Coimbatore
It is true that recent amendment effective from 1.6.2010 under the gazettee notification 1084 dt 1.6.2010, dealt only with Factory. In fact years back the definition of factory covered only where "10 or more person emplyed", but a subsequent amendment, due to some oversight said "10 or more person employed for wages". Wage had a definition in the act and ceiling of wage for purpose of ESI act was fixed from to time by Govt. SC in Suris case accepted the submission of some employer that definition "10 or more employed for wage" restrict the employees for this purpose to those drawing below the ceiling lime, then at Rs 10000. This was against the stand of the department and hence to rectify this judgement the amendment was brought this year and hence now rom 1.6.2010, the original position is reverted namely all employees irrespective of wage ceiling will be counted to decide the coverage.
The stand of ESIC Tamil Nadu that this amendment apply to factory only is correct but the Suri Case of SC in any case did not apply to Establishment since the notification of State Government did not say "20 or more person employed for wage", but for the purpose of establishment (shop etc) the definition was always "Person employed " and not "Person employed for Wage". The following is the definition of established cut annd pasted from one of the web site of ESIC.
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.
Please note that word establishment is not defined in ESI Act. Hence the notification of State Government alone to be followed. All state government notification under Sec 1 (5) talked only as "20 or more persons".
Hence no amendmnet is required for establishment and the original position of the Corporation that total number of person, irrespective of their wage need to be taken to decide coverage, but for actual registration and paymet of contribution, only those drawing within the ceiling are to be considered.
Now coming to the question whether your business is establishment/Shop, I feel that it is a Shop, and all employees within the state, irrespectivde of their frequent move or place of work (some times in non implemented area) should be considered in view of the latest SC judgements. In Souther Agency Rajamundry Case (29.11.200) SC held that Shop to be a place where any commercial activity take place. In amany judgement involving Tranport undertaking (like South easterm Tranport case, Transport Corporation case) etc, courts have ruled that employee working in different location and under control of a head office or regional office etc should be counted together to arrive at the figure of 20. In fact as per these definition even a factory is a shop, but once the manufacturing activity takes place it will be shop and if there is no manufacturing activity but only other economic or commercial activity with 20 person employed, it will be shop.
About tower erection, I do not think that to be civil work (involving bricks, cement, sand etc) but primarily a fabrication work involving steel tresses, weldng, cutting, joining etc, though a small part (platform) may have a civil component. I think ESIC has covered many such establisment.
Where there are 20 person employed, in more than one location within the same state which has issued notification under Sec 1 (5), and all of them are controlled by one single unit having controlling office (may be regional office, head office etc) and where work is taken on commercial consideration as a business activity, it has to be covered under ESI Act. Failure by you will be denial of social security benefit to your workers and failing by ESIC will be failure to provide statutory protection to a segment.
Please address ESIC appropriately.
O. Abdul Hameed
Formerly Addl.Commissiner ESIC
From India, Coimbatore
Hello
State Government of Tamil Nadu has issued notification u/s 1 (5) of ESI Act several years back, may be around 1977 or so, covering Shops employing 20 or more person, in areas specified and notified. Whole of Chennai is notified. Send registration form to Regional Office at Sterling road.
O.Abdul Hameed
Formerly addl Commissioner ESIC
From India, Coimbatore
State Government of Tamil Nadu has issued notification u/s 1 (5) of ESI Act several years back, may be around 1977 or so, covering Shops employing 20 or more person, in areas specified and notified. Whole of Chennai is notified. Send registration form to Regional Office at Sterling road.
O.Abdul Hameed
Formerly addl Commissioner ESIC
From India, Coimbatore
Swaminathan
Happy to be useful. I am not a regular visitor here. If your need any specific help you can contact me
. By the way I am not a consultant and hence no fee involved. I am working as a CEO of a large Hospital now.
O.Abdul Hameed
From India, Coimbatore
Happy to be useful. I am not a regular visitor here. If your need any specific help you can contact me
O.Abdul Hameed
From India, Coimbatore
Dear Ashok,
The workmen compensation act is applicable to those sectors where ESI is not applicable or to those employees who are not covered under any medical scheme.
you can refer workman compensation act ,1923 for better understanding.
Kind regards
yogesh jalota
From India, Jalandhar
The workmen compensation act is applicable to those sectors where ESI is not applicable or to those employees who are not covered under any medical scheme.
you can refer workman compensation act ,1923 for better understanding.
Kind regards
yogesh jalota
From India, Jalandhar
I express my thanks to Mr.Hamid for his clarifications.We are very fortunate having Mr Hamid as a member of our citehr community.His clarifications on applicability and other provisions of ESI Act has enriched our professional knowledge.Like Mr.Swaminathan I also expect that Mr Hamid will continue giving his valuable guidance/clarification on matters relating to ESI Act to our community members as he is an expert on the subject.
One more thing I want to bring to the notice of all community members that there is no such Act entitled as the Workmen’s Compensation Act now.It is now replaced as ‘The Employee’s Compensation Act” due to the recent amendment made in 2009.By virtue of this amendment for words”workman/workmen” ,wherever they occur in the Principal Act the words”employee/employees” shall be substituted.This Act is applicable to all employees of factory/Mines/Shops /Industrial establishments may it be a Pvt Ltd. or Ltd. or Pvt. Sector organization as detailed under Schedule –II of the E.C.Act. provided ESI Act is not applicable to it. Further as per the newly amended Act, the minimum compensation payable to an employee/legal heir of an employee( of deceased employee) in case of accident arising out of and/or in course of employment.are as follows:-
i)In case of fatal accident-Rs.1.20 lakh
ii)In case of permanent total disablement-Rs.1.40 lakhs
However the lower the age of the injured employee.the higher the compensation amount at same monthly wage rate. Example:-
-wage rate is Rs.8000/- p.m.(this is the max monthly wage rate allowed vide Central Govt. L& E. Deptt notification dtd.31.5.2010)
-Age (a)for Min.18 years(an adult employee) at the time of accident
-Factor as per Schedule IV of the Act-226.38
-Amount of compensation payable- 8000* 60% *226.38=Rs.10,86,624.00
(b) for Max 58 years(normal retirement age)
-Factor as per Schedule IV of the Act-124.70
-Amount of Compensation payable-8000*60%*124.70=Rs.5,98,560.00
S.K.Hota
Bhubaneswar(Orissa)
From India, Calcutta
One more thing I want to bring to the notice of all community members that there is no such Act entitled as the Workmen’s Compensation Act now.It is now replaced as ‘The Employee’s Compensation Act” due to the recent amendment made in 2009.By virtue of this amendment for words”workman/workmen” ,wherever they occur in the Principal Act the words”employee/employees” shall be substituted.This Act is applicable to all employees of factory/Mines/Shops /Industrial establishments may it be a Pvt Ltd. or Ltd. or Pvt. Sector organization as detailed under Schedule –II of the E.C.Act. provided ESI Act is not applicable to it. Further as per the newly amended Act, the minimum compensation payable to an employee/legal heir of an employee( of deceased employee) in case of accident arising out of and/or in course of employment.are as follows:-
i)In case of fatal accident-Rs.1.20 lakh
ii)In case of permanent total disablement-Rs.1.40 lakhs
However the lower the age of the injured employee.the higher the compensation amount at same monthly wage rate. Example:-
-wage rate is Rs.8000/- p.m.(this is the max monthly wage rate allowed vide Central Govt. L& E. Deptt notification dtd.31.5.2010)
-Age (a)for Min.18 years(an adult employee) at the time of accident
-Factor as per Schedule IV of the Act-226.38
-Amount of compensation payable- 8000* 60% *226.38=Rs.10,86,624.00
(b) for Max 58 years(normal retirement age)
-Factor as per Schedule IV of the Act-124.70
-Amount of Compensation payable-8000*60%*124.70=Rs.5,98,560.00
S.K.Hota
Bhubaneswar(Orissa)
From India, Calcutta
Sir,
With due respect to your seniority and experience.
I would like to know how do I cross check about this. As per the notification only limit of salary has gone up 10K to 15K, the notification is silent about change in cretetia of no. of employees to be covered.
Querry is:
Whether the ESI registration is mandatory if there is a total 20 no. or more of employees in the company whose salary is below 15K.
Or
ESI registration is mandatory in a company if total no. of employees are (for example) 50 and only 5 are getting salary below 15K.
Kindly help.
From India, New Delhi
With due respect to your seniority and experience.
I would like to know how do I cross check about this. As per the notification only limit of salary has gone up 10K to 15K, the notification is silent about change in cretetia of no. of employees to be covered.
Querry is:
Whether the ESI registration is mandatory if there is a total 20 no. or more of employees in the company whose salary is below 15K.
Or
ESI registration is mandatory in a company if total no. of employees are (for example) 50 and only 5 are getting salary below 15K.
Kindly help.
From India, New Delhi
Dear Mr Kapoor
The blogs like this wll not replace original reading of the law and judgements on the subject. Please do not think that you will get fully educated on HR management and labour law compliance from these blogs.
All that you get here is limited clarification and for that if the personal clarifying on legal issues should have legal background.
The notification is only an order implementing an amendment to certain provision of the law. You need to go through the law as a whole, as amended after the notification.
Please refer to Section 1 (4), read with Sectin 2 (9) and Section 38 of ESI Act. The notification merely increased the threshold limit of wae ceiling for the purpose of "Employee" from 10000 to 15000, and changed the the terms "Person employed for wage" to just "person employed". I have replied on this issue earlier here. Hence in case of a factory (that is a unit having manufacturing activity, as definied in factory act) if the number of employee (irrespective of his wage level) is above 10 (whether with power or without power), it is compulsory to register under ESI act and it is compulsory to pay contribution and submit return and isure "employees" where the monthly wage is Rs. 15000 and below.
O.Abdul Hameed
Formerly Additional Commissioner ESIC
From India, Coimbatore
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