Hi Everyone, Can anyone suggest me whether ESI is the best option or Mediclaim is the best option to the employees in a software company.
From India, Visakhapatnam
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1From India, Visakhapatnam
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Sir,
Coverage under the ESI Act, 1948, is compulsory and statutory. Non-compliance with the same is a punishable offense. The coverage is based on certain conditions as laid down in the said Act.
Therefore, your comparison of coverage under the ESI Act with mediclaim policies appears to be improper.
Software companies do not enjoy special privileges when it comes to the applicability of labor laws.
Thank you.
From India, Noida
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Coverage under the ESI Act, 1948, is compulsory and statutory. Non-compliance with the same is a punishable offense. The coverage is based on certain conditions as laid down in the said Act.
Therefore, your comparison of coverage under the ESI Act with mediclaim policies appears to be improper.
Software companies do not enjoy special privileges when it comes to the applicability of labor laws.
Thank you.
From India, Noida
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ESI is a mandate for employees having salary less than 15 thousand per month. However the company can give mediclaim facility to all employees. Hope it helps!
From India, Delhi
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From India, Delhi
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Hello members,
ESI is a government agency, and mediclaim is a private agency. We cannot ask the private agency to treat the patients as we require. ESI is a part of social security for industrial workers extended by the government.
From India, Visakhapatnam
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ESI is a government agency, and mediclaim is a private agency. We cannot ask the private agency to treat the patients as we require. ESI is a part of social security for industrial workers extended by the government.
From India, Visakhapatnam
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Hi,
My views are a bit different. ESI is undoubtedly a statutory compliance, and I don't wish to provide a lecture on ESI. But according to my view, both should be implemented for a software company.
See, I know very well about life in the IT/ITES sector, and I wish to join this sector as an HR Manager with priority. Though as per ESI, 1.75% of Basic+ DA should be paid by the employee and 4.75% by the employer. Though the ceiling may change from INR 6500 to INR 15000, it means for a larger section of employees, now ESIC will become mandatory.
But, again if you consider senior profiles, meaning those whose (Basic + DA > 15000), they generally don't prefer to use ESIC facilities. In most software companies, this remuneration structure is much different compared to many other domains. It's a status quo. It is also a fact that medical facilities in ESIC hospitals are substandard. Most government hospitals in India are not of AIIMS standard!
Under this situation, it's better to have a mixed bucket that can cater to the requirements of employees and employers:
1. Basic + DA <= 15000/6500 (Still, the ceiling of INR 15000 is not approved but may be approved) - Use ESIC option.
2. Basic + DA > 15000, I believe Mediclaim would be a better option.
By this statutory compliance is met too.
Employees' facilities:
1. They can select hospitals as per their requirements/status quo.
2. The scope of facilities is wide.
3. If the policy is of Insurance-cum-mediclaim nature, approved by IRDA, then still a deduction can be obtained under 80C of the Income Tax Act, 1961, right away. Moreover, the good news is due to the linearization policy of this current central government, it is expected that the Insurance bucket, facilities, and tax structure MAY be revised.
Tax Saver for employees. Additionally, the premium may be contributed by the employee and employer jointly.
Employers benefit:
1. Under certain circumstances, it can act as a tax saver - please consult with your Chartered Accountant or Company Secretary, as many factors are there which can't be discussed via this blog.
2. Retention of employees can be more, at least attraction of employees can be achieved, as this scheme is more attractive compared to ESI.
3. Certain group employees' policies are there which can be effectively used to cater to immediate medical relief not only in India but also abroad. And here FEMA, 1999, will not be applicable to the employer directly, and if the expenditure is under prescribed ceilings. The good news is the employer doesn't need to bear the heavy cost.
4. Statutory compliance is also met, since my bucket has more option to cater to the requirements.
Thanks and Regards
Sovik B
9051547598
From India, Mumbai
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My views are a bit different. ESI is undoubtedly a statutory compliance, and I don't wish to provide a lecture on ESI. But according to my view, both should be implemented for a software company.
See, I know very well about life in the IT/ITES sector, and I wish to join this sector as an HR Manager with priority. Though as per ESI, 1.75% of Basic+ DA should be paid by the employee and 4.75% by the employer. Though the ceiling may change from INR 6500 to INR 15000, it means for a larger section of employees, now ESIC will become mandatory.
But, again if you consider senior profiles, meaning those whose (Basic + DA > 15000), they generally don't prefer to use ESIC facilities. In most software companies, this remuneration structure is much different compared to many other domains. It's a status quo. It is also a fact that medical facilities in ESIC hospitals are substandard. Most government hospitals in India are not of AIIMS standard!
Under this situation, it's better to have a mixed bucket that can cater to the requirements of employees and employers:
1. Basic + DA <= 15000/6500 (Still, the ceiling of INR 15000 is not approved but may be approved) - Use ESIC option.
2. Basic + DA > 15000, I believe Mediclaim would be a better option.
By this statutory compliance is met too.
Employees' facilities:
1. They can select hospitals as per their requirements/status quo.
2. The scope of facilities is wide.
3. If the policy is of Insurance-cum-mediclaim nature, approved by IRDA, then still a deduction can be obtained under 80C of the Income Tax Act, 1961, right away. Moreover, the good news is due to the linearization policy of this current central government, it is expected that the Insurance bucket, facilities, and tax structure MAY be revised.
Tax Saver for employees. Additionally, the premium may be contributed by the employee and employer jointly.
Employers benefit:
1. Under certain circumstances, it can act as a tax saver - please consult with your Chartered Accountant or Company Secretary, as many factors are there which can't be discussed via this blog.
2. Retention of employees can be more, at least attraction of employees can be achieved, as this scheme is more attractive compared to ESI.
3. Certain group employees' policies are there which can be effectively used to cater to immediate medical relief not only in India but also abroad. And here FEMA, 1999, will not be applicable to the employer directly, and if the expenditure is under prescribed ceilings. The good news is the employer doesn't need to bear the heavy cost.
4. Statutory compliance is also met, since my bucket has more option to cater to the requirements.
Thanks and Regards
Sovik B
9051547598
From India, Mumbai
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Dear Geethanirmalkar,
I cannot understand the purpose of comparison between ESIC and Mediclaim policy. In fact, ESIC is a mandatory law to be implemented if the conditions are fulfilled and cannot be replaced with Mediclaim. The present ceilings are Rs. 15,000/- per month and not Rs. 6,500/- as referred to by someone in the thread.
P K Sharma
From India, Delhi
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I cannot understand the purpose of comparison between ESIC and Mediclaim policy. In fact, ESIC is a mandatory law to be implemented if the conditions are fulfilled and cannot be replaced with Mediclaim. The present ceilings are Rs. 15,000/- per month and not Rs. 6,500/- as referred to by someone in the thread.
P K Sharma
From India, Delhi
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1. Coverage under the ESI Act, 1948, is compulsory and statutory, and non-compliance with the same is a punishable offense. The coverage is based on certain conditions as laid down in the said Act.
2. Therefore, your comparison of coverage under the ESI Act with mediclaim policies appears to be improper.
3. Software companies do not enjoy special privileges concerning the applicability of labor laws.
Appreciate and validate the information by comparing both. I hope ESI is the best.
Attribution: https://www.citehr.com/498102-what-a...#ixzz35tpkoKS3.
From India, Hyderabad
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2. Therefore, your comparison of coverage under the ESI Act with mediclaim policies appears to be improper.
3. Software companies do not enjoy special privileges concerning the applicability of labor laws.
Appreciate and validate the information by comparing both. I hope ESI is the best.
Attribution: https://www.citehr.com/498102-what-a...#ixzz35tpkoKS3.
From India, Hyderabad
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ESI is a statute that needs to be followed. Mediclaim is a special benefit that a company provides to employees for tax exemption and welfare purposes. Apart from the salary limit, ESI does not have any limitations on the medical expenses to be incurred, but mediclaim has a certain coverage amount.
Everyone within the salary cap of 15k can avail of the benefit if they or the company is registered under the ESI policy. Individuals under ESIC coverage can receive treatments in the best hospitals in the country if referred by the concerned ESIC hospital and be treated by the best doctors in the country. It is not true that so-called blue-chip hospitals are only meant for Mediclaim policyholders.
From India, Kolkata
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Everyone within the salary cap of 15k can avail of the benefit if they or the company is registered under the ESI policy. Individuals under ESIC coverage can receive treatments in the best hospitals in the country if referred by the concerned ESIC hospital and be treated by the best doctors in the country. It is not true that so-called blue-chip hospitals are only meant for Mediclaim policyholders.
From India, Kolkata
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Hi, Apex Management,
I believe my views were not clear. You are correct that the current 'salary' ceiling for ESI mandate is INR 15000 because you have used the word 'SALARY'. I believe you have not noticed I have used the term 'Basic + DA' and not 'SALARY'.
FYI, wage under Sec2 (22) of the ESI ACT, 1948 means all remuneration paid or payable in cash to an employee if the terms of the contract of employment, express or implied, are fulfilled. It also includes any payment made by the employer in regards to during a lockout, strike which is not illegal, or layoff or period of authorized leave, and other additional remuneration, if any, paid at intervals not exceeding two months.
Then my friend, does salary mean only 'Basic + DA'? No, right. Then am I a fool to write all this in the thread. People fail to understand the meaning of what I wish to imply because in India, we follow the 'Mug Up Policy of knowledge'. That's why in India, there is still a policy: if you are not getting a job by your skills, use bribe or shortcuts or a reference from someone influential or only via B school campaigning. Do hell with such students, such HRs, and do hell with such colleges/B schools (corporate houses - only for profit) or HRs. Funny, right? But this is true. Without any disrespect or hard feelings, I just wish to say this is the practical picture of the market.
I have used the concept of 'Basic + DA' instead of using the words 'remuneration/salary/wage' for comparing ESI with Mediclaim, keeping in mind the laws of taxation. Please don't expect that I will teach the interpretation of statutes, deeds, documents, along with Taxation details, cash flow statement readings, etc. If people here don't understand the difference between penalty and fine, then how can I continue this discussion forward so that everyone can understand?
My friend, as per the ESI ACT, 1948, the coverage of this act is at present restricted to employees drawing wages not exceeding INR 15000 per month. Please refer to the bare act with rules if required. NOWHERE IS IT WRITTEN THAT BASIC + DA SHOULD BE UP TO INR 15000 or THAT WAGE/REMUNERATION/SALARY MEANS ONLY - BASIC + DA.
Now, the question to you is, can there be any punishment if any company doesn't provide ESI coverage to employees whose remuneration/wage/salary/commission is above INR 15000 or provide better facilities using a different option with equivalent features? If yes, then who is the adjudicating authority?
I have never seen any such types of rules, nor an ACT specifying details or CASE LAWS. If you have any such information, please share it with details; I would love to learn.
Employer(s) liabilities are limited to providing ESI Coverage to only those employees whose salary, remuneration, wage is <= 15000, if the employer is liable to follow the ESI ACT, 1948 under the prescribed criteria of the ACT.
FYI, if someone's BASIC + DA is >15000, then generally in a software company, that's too in Vishakhapatnam, remuneration would be around 30,000 - 50,000 per month - MINIMUM. That is around 3.6-6 lakhs per annum - MINIMUM. Now, do you understand why I used the concept of TAX, and why it's important to compare Mediclaim? HOW ARE STATUTORY COMPLIANCES BEING MET?
FYI, many Trade Unions are asking CG to introduce the concept of 'BASIC + DA' in the ACT instead of the word 'Wage'. The reason being in Mumbai, Chennai, Kerala, the remuneration standard is quite high, so is the cost of living; thus, more employees will be covered.
Please don't hesitate to ask questions; we can have a long discussion on labor laws, Income Tax Act, 1961, etc. But please don't advise anyone to mug up without understanding.
Thanks & Regards
Sovik B
MBA, Pursuing CA/CS
B.Sc- Mathematics Hons
Under University of Calcutta.
From India, Mumbai
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I believe my views were not clear. You are correct that the current 'salary' ceiling for ESI mandate is INR 15000 because you have used the word 'SALARY'. I believe you have not noticed I have used the term 'Basic + DA' and not 'SALARY'.
FYI, wage under Sec2 (22) of the ESI ACT, 1948 means all remuneration paid or payable in cash to an employee if the terms of the contract of employment, express or implied, are fulfilled. It also includes any payment made by the employer in regards to during a lockout, strike which is not illegal, or layoff or period of authorized leave, and other additional remuneration, if any, paid at intervals not exceeding two months.
Then my friend, does salary mean only 'Basic + DA'? No, right. Then am I a fool to write all this in the thread. People fail to understand the meaning of what I wish to imply because in India, we follow the 'Mug Up Policy of knowledge'. That's why in India, there is still a policy: if you are not getting a job by your skills, use bribe or shortcuts or a reference from someone influential or only via B school campaigning. Do hell with such students, such HRs, and do hell with such colleges/B schools (corporate houses - only for profit) or HRs. Funny, right? But this is true. Without any disrespect or hard feelings, I just wish to say this is the practical picture of the market.
I have used the concept of 'Basic + DA' instead of using the words 'remuneration/salary/wage' for comparing ESI with Mediclaim, keeping in mind the laws of taxation. Please don't expect that I will teach the interpretation of statutes, deeds, documents, along with Taxation details, cash flow statement readings, etc. If people here don't understand the difference between penalty and fine, then how can I continue this discussion forward so that everyone can understand?
My friend, as per the ESI ACT, 1948, the coverage of this act is at present restricted to employees drawing wages not exceeding INR 15000 per month. Please refer to the bare act with rules if required. NOWHERE IS IT WRITTEN THAT BASIC + DA SHOULD BE UP TO INR 15000 or THAT WAGE/REMUNERATION/SALARY MEANS ONLY - BASIC + DA.
Now, the question to you is, can there be any punishment if any company doesn't provide ESI coverage to employees whose remuneration/wage/salary/commission is above INR 15000 or provide better facilities using a different option with equivalent features? If yes, then who is the adjudicating authority?
I have never seen any such types of rules, nor an ACT specifying details or CASE LAWS. If you have any such information, please share it with details; I would love to learn.
Employer(s) liabilities are limited to providing ESI Coverage to only those employees whose salary, remuneration, wage is <= 15000, if the employer is liable to follow the ESI ACT, 1948 under the prescribed criteria of the ACT.
FYI, if someone's BASIC + DA is >15000, then generally in a software company, that's too in Vishakhapatnam, remuneration would be around 30,000 - 50,000 per month - MINIMUM. That is around 3.6-6 lakhs per annum - MINIMUM. Now, do you understand why I used the concept of TAX, and why it's important to compare Mediclaim? HOW ARE STATUTORY COMPLIANCES BEING MET?
FYI, many Trade Unions are asking CG to introduce the concept of 'BASIC + DA' in the ACT instead of the word 'Wage'. The reason being in Mumbai, Chennai, Kerala, the remuneration standard is quite high, so is the cost of living; thus, more employees will be covered.
Please don't hesitate to ask questions; we can have a long discussion on labor laws, Income Tax Act, 1961, etc. But please don't advise anyone to mug up without understanding.
Thanks & Regards
Sovik B
MBA, Pursuing CA/CS
B.Sc- Mathematics Hons
Under University of Calcutta.
From India, Mumbai
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Dear Sovik Bhattachaerjee,
I would like to convey that the definitions of wages/salary as given in various labor statutes are also known to me. However, I always stress the need to comment on the provisions of the laws first in these threads, as it is more important, and what is being opted for by the industries is additional guidelines.
For instance, if the EL provisions are for 1 day after every 20 working days, then it should be understood first. Further comments on prevailing situations/practices/positions in similar industries should be given. One can go above and beyond the provisions made in the act according to their needs. But as far as coverage/compliance under ESIC is concerned, one cannot opt voluntarily.
In this particular case, Geethanirmalkar asked about the advantages and disadvantages in comparison with ESIC and mediclaim for a software company, and I gave my view as follows:
"I cannot understand the purpose of comparison between ESIC and Mediclaim policy. In fact, ESIC is a mandatory law to be implemented if the conditions are fulfilled and cannot be replaced with Mediclaim. The present ceilings are Rs. 15,000/- per month and not Rs. 6,500/- as referred to by someone in the thread."
So, what wrong suggestion or comment has been passed on by me that was taken so hard by you? For your reference, I am providing an extract of your quote as follows:
"See, I know very well about life in the IT/ITES sector, and I wish to join this sector as an HR Manager with priority. Though as per ESI, 1.75% of Basic+DA should be paid by the employee and 4.75% by the employer. Though the ceiling may change from INR 6,500 to INR 15,000, meaning ESIC will now become mandatory for a larger section of employees."
"But, again, if you consider senior profiles, whose (Basic + DA > 15,000), they generally don't prefer to use ESIC facilities. In most software companies, this remuneration structure is much different compared to many other domains. It's a status quo. It's also a fact that medical facilities in ESIC hospitals are substandard. Most government hospitals in India are not of AIMS standard!"
In the above paragraph, you mentioned the "ceiling may change from 6,500 to 15,000," whereas the ceiling is already Rs. 15,000. Secondly, you stated that senior profiles whose remunerations are greater than Rs. 15,000 generally don't prefer to use ESIC facilities. However, a person earning above Rs. 15,000 is an excluded employee and cannot benefit from ESIC.
The site provides a platform where we can share and discuss our views, and many new HR professionals are benefiting daily. It is essential that we quote the relevant provisions of the applicable laws on the queries first, and then add our suggestions, which may be more helpful.
P.K. Sharma
From India, Delhi
Acknowledge(0)Amend(0)
I would like to convey that the definitions of wages/salary as given in various labor statutes are also known to me. However, I always stress the need to comment on the provisions of the laws first in these threads, as it is more important, and what is being opted for by the industries is additional guidelines.
For instance, if the EL provisions are for 1 day after every 20 working days, then it should be understood first. Further comments on prevailing situations/practices/positions in similar industries should be given. One can go above and beyond the provisions made in the act according to their needs. But as far as coverage/compliance under ESIC is concerned, one cannot opt voluntarily.
In this particular case, Geethanirmalkar asked about the advantages and disadvantages in comparison with ESIC and mediclaim for a software company, and I gave my view as follows:
"I cannot understand the purpose of comparison between ESIC and Mediclaim policy. In fact, ESIC is a mandatory law to be implemented if the conditions are fulfilled and cannot be replaced with Mediclaim. The present ceilings are Rs. 15,000/- per month and not Rs. 6,500/- as referred to by someone in the thread."
So, what wrong suggestion or comment has been passed on by me that was taken so hard by you? For your reference, I am providing an extract of your quote as follows:
"See, I know very well about life in the IT/ITES sector, and I wish to join this sector as an HR Manager with priority. Though as per ESI, 1.75% of Basic+DA should be paid by the employee and 4.75% by the employer. Though the ceiling may change from INR 6,500 to INR 15,000, meaning ESIC will now become mandatory for a larger section of employees."
"But, again, if you consider senior profiles, whose (Basic + DA > 15,000), they generally don't prefer to use ESIC facilities. In most software companies, this remuneration structure is much different compared to many other domains. It's a status quo. It's also a fact that medical facilities in ESIC hospitals are substandard. Most government hospitals in India are not of AIMS standard!"
In the above paragraph, you mentioned the "ceiling may change from 6,500 to 15,000," whereas the ceiling is already Rs. 15,000. Secondly, you stated that senior profiles whose remunerations are greater than Rs. 15,000 generally don't prefer to use ESIC facilities. However, a person earning above Rs. 15,000 is an excluded employee and cannot benefit from ESIC.
The site provides a platform where we can share and discuss our views, and many new HR professionals are benefiting daily. It is essential that we quote the relevant provisions of the applicable laws on the queries first, and then add our suggestions, which may be more helpful.
P.K. Sharma
From India, Delhi
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