02 September 2013
I have 9 employees in my firm. Additional 3 persons(external - not considered as staff) are helping in marketing area. Currently payment is made to them by cheque. Whether ESI Applicable to them if their payment is below 15000/-. ( Also it is not treated as commission(no TDS is deducted).
02 September 2013
The ESI Act applies to non-seasonal factories or manufacturing units, shops & establishments, Private Medical & Educational Institutions employing 10 or more persons.
02 September 2013
Employee Section 2(9) of ESI Act
The term 'Employee' is defined under Section 2(9) as follows: Any person employed for wages in or in connection with work of a factory or establishment to which the Act applies. In order to qualify to be an employee, under ESI Act, a person should belong to any of the categories: Those who are directly employed for wages by the Principal Employer within the premises or outside in connection with work of the factory or establishment. Those employed for wages by or through an immediate employer in the premises of the factory or establishment in connection with the work thereof. Those employed for wages by or through an immediate employer in connection with the factory or establishment outside the premises of such factory or establishment under the supervision and control of the Principal Employer or his agent. Employees whose services are temporarily lent or let on hire to the Principal Employer by an immediate employer under a contract of service (employees of Security Contractors, Labour Contractors, House keeping contractors etc., come under this category). Employees employed directly by the Principal Employer in any part, department, branch situated in the same station or else where, in connection with administration of the factory or establishment for purchase of raw materials, sale or distribution of the products of the factory etc. Exclusions are
An apprentice engaged under the Apprentice Act, 1961 Any members of Navy, Army or Air Force and Any person whose wages (excluding overtime wages) exceed Rs 15,000/- per month.
02 September 2013
Broadly, all categories of employees, Regular, Casual, Badli, Temporary Contract etc., comes under the covered category. Employees engaged on loading, unloading, movement of raw-material, Gardening, Guest House Maintenance, watch and ward, House Keeping, cleaning, civil construction, repairs of building etc., erection, repairs and maintenance of machinery, plant, equipment furniture, fixtures etc., either engaged directly by the principal employer or through a contractor stand covered.
If the contractors' employees are engaged on any work of the factory or establishments out-side its premises, the factor of supervision of the Principal Employer or his agent is considered necessary for the purpose of such employees coverage. Even the paid Directors of a company are "employees" if they are in receipt of salary not exceeding Rs. 15,000/- per month. However, a proprietor and working partners receiving salary are excluded from the coverage. Part time employees employed on contract of service are also employees.
02 September 2013
The ESI Act, in the first instance, applies to all non-seasonal factories using power and employing ten or more persons, and, to non-power using manufacturing units and establishments employing 20 or more persons for wages and falling within the scope of an implemented geographical area.
As of now, employees of factories/ establishments, that fall within the ambit of coverage, and earning wages not exceeding Rs. 15,000/- per month are covered under the ESI Scheme (wef 1st May 2010).
In your case ESI is not applicable. Further now you can assess yourself.
02 September 2013
Please find below the details of component required to check the ESI eligibility and Liability of employee. It will help you to understand the ESI applicability process.
ESI applicability is two step process:
1. ESI eligibility criteria; 2. ESI deduction criteria.
ESI eligibility criteria: That is, when employee is covered by ESI?
Employee is covered when the following components is less than or equal to Rs. 15,000 a. Basic; b. HRA; c. Transport/Conveyance Allowance:
ESI deduction criteria: That is, at what amount ESI contribution/deduction is to be calculated?
The components are as under: a. Basic; b. HRA; c. Transport Allowance: d. Special/Conveyance Allowance
For both the above situations reimbursement will not be considered.
INFORMATION ON ESI:
For the purpose of getting ourselves registered with the ESI Department, we will need to get a form filled up from all employees covered under this scheme.
To know more regarding ESI benefits you are requested to visit the link given below:
As per law, the liability towards ESI is 6.50% of the total salary paid to an employee. The contribution payable to the government is shared as under:-
In other words, the maximum liability of ESI per employees is Rs. 975, out of which Rs. 263 shall be recovered from the employee and balance will be contributed by the Company.
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