Dear Experts,
I have a case where one of our employees is working with us part-time. He is simultaneously working in other reputed organizations where he has no ESI and PF benefits. He would like us to extend ESI and PF benefits from our organization as he is not taking any benefits from his regular employer.
Now, please help us with the following:
1) Can we extend ESI and PF benefits to such part-time employees?
2) He is earning more than ₹15,000 from his main employer, but from our organization, he is taking a lump sum of ₹6,000.
3) We are aware of the above facts; what are the legal obligations for us as the employer?
4) What are the legal obligations for him as the employee?
5) We would like him to continue working with us. Kindly help with the above questions and advise on how we should proceed legally.
Regards
From India, Delhi
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5I have a case where one of our employees is working with us part-time. He is simultaneously working in other reputed organizations where he has no ESI and PF benefits. He would like us to extend ESI and PF benefits from our organization as he is not taking any benefits from his regular employer.
Now, please help us with the following:
1) Can we extend ESI and PF benefits to such part-time employees?
2) He is earning more than ₹15,000 from his main employer, but from our organization, he is taking a lump sum of ₹6,000.
3) We are aware of the above facts; what are the legal obligations for us as the employer?
4) What are the legal obligations for him as the employee?
5) We would like him to continue working with us. Kindly help with the above questions and advise on how we should proceed legally.
Regards
From India, Delhi
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Hi,
All categories of employees covered under this act, whether they are regular, casual, badli, temporary contract, or part-time. If they are on your payroll, you should deduct PF & ESI. If the employee is earning 6000/-, then it is mandatory to deduct ESI as well as PF. You may bring the employee on the company payroll through an appointment letter.
From India, Mumbai
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All categories of employees covered under this act, whether they are regular, casual, badli, temporary contract, or part-time. If they are on your payroll, you should deduct PF & ESI. If the employee is earning 6000/-, then it is mandatory to deduct ESI as well as PF. You may bring the employee on the company payroll through an appointment letter.
From India, Mumbai
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Dear Aditya,
Thank you for the reply. Specifically, I am concerned about the legal issues for both the employer and employee:
i) Because he is working in two organizations, are we under any legal obligation to extend ESI benefits to an employee who is earning more than 15K? Does this fall under misrepresentation of facts and attract any penalties for both the employer and the employee?
Regards
From India, Delhi
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Thank you for the reply. Specifically, I am concerned about the legal issues for both the employer and employee:
i) Because he is working in two organizations, are we under any legal obligation to extend ESI benefits to an employee who is earning more than 15K? Does this fall under misrepresentation of facts and attract any penalties for both the employer and the employee?
Regards
From India, Delhi
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Hi,
1. Two companies work considers differently, concerning you. You need to pay INR 6000/-(ESI and PF) if he is receiving a salary from your end; then he will be your employee, and you need to contribute from your end.
2. If you follow this rule, it will be considered a legal process within your organization. Don't be concerned about his other payments; that is the responsibility of the respective organization, not yours.
From India, Mumbai
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1. Two companies work considers differently, concerning you. You need to pay INR 6000/-(ESI and PF) if he is receiving a salary from your end; then he will be your employee, and you need to contribute from your end.
2. If you follow this rule, it will be considered a legal process within your organization. Don't be concerned about his other payments; that is the responsibility of the respective organization, not yours.
From India, Mumbai
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Dear Sir(s),
While submitting a declaration form in respect of any employee for coverage under the ESI Act, both the employee and the employer sign/verify the same. The employee is required to disclose correct facts in the said declaration form. In case it is later found that the person designated as an "employee" under the said Act is actually a regular employee of another firm/concern and is not covered under the said Act, it will result in misrepresentation or the wrong submission of facts, which is an offense for both the employee and the employer punishable under section 84 of the said Act. The benefits received falsely by such an employee, to which he was not entitled, are recoverable under section 70 of the said Act.
ESIC, in a number of instructions, has stated that part-time persons working in several units are not covered under the said Act. However, this fact needs to be proven based on documents/records. For example, if an Accountant is maintaining accounts for multiple firms, works without fixed hours, and also does the work at his own office or residence, then in such circumstances, the said person may not be covered under the said Act, in my opinion. However, if he is providing accountancy services to only one or two firms while working at their premises, the decision may differ, and he will be coverable provided his salary from both units does not exceed the coverable limit. Hence, each case should be decided based on the specific facts of that case. As per the example provided in this discussion, the employee is already earning wages exceeding the coverable limit from one firm/unit and is definitely not coverable under the said Act.
Kindly also refer to the provisions of Regulations 38 & 39 of the ESI (General) Regulations, 1950, framed under the said Act, which, I believe, will be helpful in this matter. However, I would also recommend confirming in writing from the appropriate ESIC office before making a decision on this matter to avoid any erroneous coverage of an employee.
From India, Noida
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While submitting a declaration form in respect of any employee for coverage under the ESI Act, both the employee and the employer sign/verify the same. The employee is required to disclose correct facts in the said declaration form. In case it is later found that the person designated as an "employee" under the said Act is actually a regular employee of another firm/concern and is not covered under the said Act, it will result in misrepresentation or the wrong submission of facts, which is an offense for both the employee and the employer punishable under section 84 of the said Act. The benefits received falsely by such an employee, to which he was not entitled, are recoverable under section 70 of the said Act.
ESIC, in a number of instructions, has stated that part-time persons working in several units are not covered under the said Act. However, this fact needs to be proven based on documents/records. For example, if an Accountant is maintaining accounts for multiple firms, works without fixed hours, and also does the work at his own office or residence, then in such circumstances, the said person may not be covered under the said Act, in my opinion. However, if he is providing accountancy services to only one or two firms while working at their premises, the decision may differ, and he will be coverable provided his salary from both units does not exceed the coverable limit. Hence, each case should be decided based on the specific facts of that case. As per the example provided in this discussion, the employee is already earning wages exceeding the coverable limit from one firm/unit and is definitely not coverable under the said Act.
Kindly also refer to the provisions of Regulations 38 & 39 of the ESI (General) Regulations, 1950, framed under the said Act, which, I believe, will be helpful in this matter. However, I would also recommend confirming in writing from the appropriate ESIC office before making a decision on this matter to avoid any erroneous coverage of an employee.
From India, Noida
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The issue raises some interesting questions about the eligibility of an employee under different employments for ESI benefits. On one hand, the Act seems to determine the eligibility of an employee with reference to the applicability of the Act to that establishment under Sec.1(4) & (5) and the wages drawn by the employee under Sec.2(22) read with Rule 50. If so, the employee is not eligible for ESI in respect of employment under one employer because he is drawing wages of more than Rs. 15,000/- per month, while he becomes eligible for the same in respect of employment under a different employer. If you go by Sec.38, the Act fixes the liability on the employer to cover all persons employed in insurable employment. If the coverage is only employer-wise and establishment-wise, the second employer needs to cover such a part-employee. However, it raises another question - whether an employee who prima facie becomes ineligible for ESI benefits under one employer can simultaneously become eligible for the same under a different employer. The issue would have been resolved if both employments could be clubbed to determine the wage limit. It is not the case, which makes the case further intriguing.
However, Reg.38 provides some answer to the problem. It states that where an employee is ordinarily employed by two or more employers in a wage period, the employers of such an employee may, if they think fit, submit to the Corporation a scheme for the payment of the contributions in respect of such an employee, and the Corporation, if it is satisfied that the scheme is such as will secure the due payment of the contributions, approve such a scheme subject to such terms and conditions as it may think necessary.
Provided that if no such scheme is submitted by the employers, the Corporation may specify that any one of such employers shall be treated as the employer for the purpose of provisions of the Act.
There is a catch in this provision also as it is not known whether the provision is applicable only in the case of an employee becoming eligible for ESI benefits under both the employers unlike in the instant case. Nevertheless, Reg.38 opens the door to resolve the doubt by enabling the employers to refer the case to ESI jointly so that the Corporation can determine whether the employee is eligible for ESI benefits and if so who shall contribute.
Hope this helps.
B. Saikumar
HR & IR Advisor
From India, Mumbai
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However, Reg.38 provides some answer to the problem. It states that where an employee is ordinarily employed by two or more employers in a wage period, the employers of such an employee may, if they think fit, submit to the Corporation a scheme for the payment of the contributions in respect of such an employee, and the Corporation, if it is satisfied that the scheme is such as will secure the due payment of the contributions, approve such a scheme subject to such terms and conditions as it may think necessary.
Provided that if no such scheme is submitted by the employers, the Corporation may specify that any one of such employers shall be treated as the employer for the purpose of provisions of the Act.
There is a catch in this provision also as it is not known whether the provision is applicable only in the case of an employee becoming eligible for ESI benefits under both the employers unlike in the instant case. Nevertheless, Reg.38 opens the door to resolve the doubt by enabling the employers to refer the case to ESI jointly so that the Corporation can determine whether the employee is eligible for ESI benefits and if so who shall contribute.
Hope this helps.
B. Saikumar
HR & IR Advisor
From India, Mumbai
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Dear Experts,
Thank you for your valued inputs. I am a little confused about what to do.
1) I spoke to an ESI inspector, who again did not provide a firm answer. He agrees that the employee is eligible for ESI, but the misrepresentation of facts depends on the sole discretion of the ESI inspector. If he wants to put the organization in litigations, he can simply mark his objection, and then it is the responsibility of the employer to seek clarification from the courts.
2) As an employer, we cannot refer the case to ESI jointly.
I am hopeful to receive more inputs and clarity. Kindly refer this thread to other experts who can assist.
Regards
From India, Delhi
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Thank you for your valued inputs. I am a little confused about what to do.
1) I spoke to an ESI inspector, who again did not provide a firm answer. He agrees that the employee is eligible for ESI, but the misrepresentation of facts depends on the sole discretion of the ESI inspector. If he wants to put the organization in litigations, he can simply mark his objection, and then it is the responsibility of the employer to seek clarification from the courts.
2) As an employer, we cannot refer the case to ESI jointly.
I am hopeful to receive more inputs and clarity. Kindly refer this thread to other experts who can assist.
Regards
From India, Delhi
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If it is not possible to refer the case jointly to ESI, you can refer it individually as the Act itself hints at such a reference in case of doubt. Other views are welcome.
B. Saikumar
HR & IR Advisor, Navi Mumbai
From India, Mumbai
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B. Saikumar
HR & IR Advisor, Navi Mumbai
From India, Mumbai
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Dear M.I.L.
Instead of writing such a wrong position as mentioned above, namely, "misrepresentation of facts depends on the sole discretion of the ESI inspector" and "then it's the responsibility of the employer to get clarification from courts," it is always better to comply with the provisions of Acts and rules/regulations framed thereunder properly. Violation of Acts and rules/regulations comes to the knowledge of authorities through various means, including the working of Branch Office ESIC.
The prosecution of the employer and employee is sanctioned by the higher authorities, and in such situations, the ESI Inspector, in my opinion, will be of no help.
Even if the ESI Inspector has assured you that he will not point out any errors at your/your company level, in my opinion, it is still not proper to violate the provisions of the said Act and rules/regulations framed thereunder.
From India, Noida
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Instead of writing such a wrong position as mentioned above, namely, "misrepresentation of facts depends on the sole discretion of the ESI inspector" and "then it's the responsibility of the employer to get clarification from courts," it is always better to comply with the provisions of Acts and rules/regulations framed thereunder properly. Violation of Acts and rules/regulations comes to the knowledge of authorities through various means, including the working of Branch Office ESIC.
The prosecution of the employer and employee is sanctioned by the higher authorities, and in such situations, the ESI Inspector, in my opinion, will be of no help.
Even if the ESI Inspector has assured you that he will not point out any errors at your/your company level, in my opinion, it is still not proper to violate the provisions of the said Act and rules/regulations framed thereunder.
From India, Noida
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