Dear All
There is a great difference between "the Construction company" and "all other company" with regard to ESI.
Suppose your company's core activity is construction (like DLF, Parsvnath etc) then you need to pay ESI only for ur office staff alone and not for the construction workers like masons etc. They have to be covered under WC Act.
How ever, if your company is not a "construction company" (i.e) you are a manufacturing co or a service company. Let us say you are engaging the services of a construction company/contractor for construction/extension of a facility at your factory/office. then you have to pay ESI even for the construction workers.
Many HR managers are of the opinion that if the construction company they engage for construction has to be covered under ESI and should have a code number. Then they feel that they are absolved of the ESI liability because they think that the company would pay ESI in respect of its construction labourers. This is a absolutely false notion. The construction company can neither register its labourers under ESI nor pay any contributions in respect of them. Under the ESI Act they are only bound to cover their office(adminstrative) staff and not the labourers.
The contribution is taxable in the hands of the the client (principal employer) who is engaging the construction company. Because, every person engaged for wages directly or through a contractor inside the premises of the company nis coverable under ESI as per SEc 2(9) of the ESI Act.
Hence HR managers are cautioned that, specially in case of civil construction contractors, even if they have independent code numbers under ESI, you are advised to deduct contribution on the wage element out of the total payment made to the contractor. Because once the work is over, he is gone and you cannot catch hold of him.Then you have to pay from your pocket.
The statutory authorities usually assume 1/3 OF THE TOTAL BILL VALUE AS WAGE ELEMENT and deduct 6.5% on that wage element. Practically speaking 2% of the entire bill value can be deducted from the construction contractor/company befor releasing the payment (like TDS). Then the amount must be remitted under your ESI code and not under the construction contractor's code.
Prevention is definitely better that cure.
Regards
Ramesh
Regards
From India, Madras
1There is a great difference between "the Construction company" and "all other company" with regard to ESI.
Suppose your company's core activity is construction (like DLF, Parsvnath etc) then you need to pay ESI only for ur office staff alone and not for the construction workers like masons etc. They have to be covered under WC Act.
How ever, if your company is not a "construction company" (i.e) you are a manufacturing co or a service company. Let us say you are engaging the services of a construction company/contractor for construction/extension of a facility at your factory/office. then you have to pay ESI even for the construction workers.
Many HR managers are of the opinion that if the construction company they engage for construction has to be covered under ESI and should have a code number. Then they feel that they are absolved of the ESI liability because they think that the company would pay ESI in respect of its construction labourers. This is a absolutely false notion. The construction company can neither register its labourers under ESI nor pay any contributions in respect of them. Under the ESI Act they are only bound to cover their office(adminstrative) staff and not the labourers.
The contribution is taxable in the hands of the the client (principal employer) who is engaging the construction company. Because, every person engaged for wages directly or through a contractor inside the premises of the company nis coverable under ESI as per SEc 2(9) of the ESI Act.
Hence HR managers are cautioned that, specially in case of civil construction contractors, even if they have independent code numbers under ESI, you are advised to deduct contribution on the wage element out of the total payment made to the contractor. Because once the work is over, he is gone and you cannot catch hold of him.Then you have to pay from your pocket.
The statutory authorities usually assume 1/3 OF THE TOTAL BILL VALUE AS WAGE ELEMENT and deduct 6.5% on that wage element. Practically speaking 2% of the entire bill value can be deducted from the construction contractor/company befor releasing the payment (like TDS). Then the amount must be remitted under your ESI code and not under the construction contractor's code.
Prevention is definitely better that cure.
Regards
Ramesh
Regards
From India, Madras
dear ikhan
as per ur ppt i come to know that there is lot of discripencies in drafting
like as adm.chg. in esic which you have mention 1.16 per cent is not applicable.
and as per my knowledge you mention employer exemption from esic cont. when a worker per day wage is less then 50 rs. it is not mention in esic act.
so pls take care of all this type of issues in your post as it creat confusion
pls put things when you confirm abt the same and mention the refrence also for the same
From India, New Delhi
as per ur ppt i come to know that there is lot of discripencies in drafting
like as adm.chg. in esic which you have mention 1.16 per cent is not applicable.
and as per my knowledge you mention employer exemption from esic cont. when a worker per day wage is less then 50 rs. it is not mention in esic act.
so pls take care of all this type of issues in your post as it creat confusion
pls put things when you confirm abt the same and mention the refrence also for the same
From India, New Delhi
well the rule was recently amended and Rs. 15,000/- pm is the new limit for people to be covered under ESI.
And it is very important for an organization to do it cause it can cause a hard legal action.
If you face attrition problem then what you can do is hire a contractor and route your daily workers from that party, this is what my organization practice. you can google or search Cite HR for the same
I hope you do well
Nikki
From India, Delhi
And it is very important for an organization to do it cause it can cause a hard legal action.
If you face attrition problem then what you can do is hire a contractor and route your daily workers from that party, this is what my organization practice. you can google or search Cite HR for the same
I hope you do well
Nikki
From India, Delhi
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