Esi exemption limit

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

16 December 2011 We have 11 employees, out of them 9 are paid salary below Rs. 15000/- and 2 are paid salary above Rs. 15000/-.

Are we liable for ESI.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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16 December 2011 Under Section 2(12) the Act is applicable to non-seasonal factories employing 10 or more persons.

Under Section 1(5) of the Act, the Scheme has been extended to shops, hotels, restaurants, cinemas including preview theatres, road-motor transport undertakings and newspaper establishments employing 20* or more persons.

Further under section 1(5) of the Act, the Scheme has been extended to Private Medical and Educational institutions employing 20* or more persons in certain States/UTs.

*Note: 14 State Govts. / UTs have reduced the threshold limit for coverage of shops and other establishments from 20 to 10 or more persons. Remaining State Governments/UTs are in the process of reducing the same.

The existing wage limit for coverage under the Act is Rs. 15,000/- per month ( w.e.f. 01/05/2010).

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Guest

Guest (Expert)

16 December 2011 Yes, ESI act is applicable since you are employing more than 10 people. Whether salary paid is higher or lower than 15000/- that does not make any difference for applicability of ESI.

However ESI to be deducted only for those employees whose basic salary is less than or equal to 15000/- per month.

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Abhishek Ranjan Singh

Abhishek Ranjan Singh (Expert)
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17 December 2011 @ Neha Please check it ESI to be deducted on basic salary less than or equal to Rs. 15000/- per month
or
It is deducted if Gross Salary (Basic+DA+HRA+Allowances)is less than or equal to Rs. 15000/- per month
(1.75% will be deduct from salary and and employer contribution will be 4.75%)

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Guest

Guest (Expert)

17 December 2011 Covered employees contribute 1.75% of the wages, whereas, the employers contribute 4.75% of the wages, payable to their employees.

Employees earning upto Rs.100/- a day are exempted from payment of their share of contribution.

“ wages ” means all remuneration paid or payable in cash to an employee, if the terms of the contract of employment, express or implied, were fulfilled and includes 1[any payment to an employee in respect of any period of authorised leave, lock-out, strike which is not illegal or layoff and] other additional remuneration, if any, 2[paid at intervals not exceeding two months], but
does not include —
(a) any contribution paid by the employer to any pension fund or provident fund, or under this Act ;
(b) any travelling allowance or the value of any travelling concession ;
(c) any sum paid to the person employed to defray special expenses entailed on him by the nature of his employ¬ment ; or
(d) any gratuity payable on discharge ;

Thanks for correcting me Abhishek Ji.

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Abhishek Ranjan Singh

Abhishek Ranjan Singh (Expert)
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17 December 2011 Welcome Neha Mam....:)
Please click on Thank user also

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Querist : Anonymous

Querist : Anonymous (Querist)

19 December 2011 Dear Abhishek & Neha,

The definitation of employee as per ESI Act is “Employee” means any person employed for wages in or in connection with the work of a factory or establishment to which this Act applies and —
(i) who is directly employed by the principal employer on any work of, or incidental or preliminary to or connected with the work of, the factory or establishment, whether such work is done by the employee in the factory or estab¬lishment or elsewhere ; or
(ii) who is employed by or through an immediate employer on the premises of the factory or establishment or under the supervision of the principal employer or his agent on work which is ordinarily part of the work of the factory or establishment or which is preliminary to the work carried on in or incidental to the purpose of the factory or establishment ; or
(iii) whose services are temporarily lent or let on hire to the principal employer by the person with whom the person whose services are so lent or let on hire has entered into a contract of service ; 2[and includes any person employed for wages on any work connected with the administra¬tion of the factory or establishment or any part, department or branch thereof or with the purchase of raw materials for, or the distribution or sale of the products of, the factory or establishment ;
1[or any person engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 (52 of 1961), 2[and includes such person engaged as apprentice whose training period is extended to any length of time]

but does not include] — ]

(a) any member of 3[the Indian] naval, military or air forces ; or
4[(b) any person so employed whose wages (excluding remu¬neration for overtime work) exceed 5[such wages as may be prescribed by the Central Government] :

Kindly note that the employee whoes salary is more than the prescribed limit (currently Rs. 15000/-) is not considered as employee in the difination of "employee" as per above ESI Act.

So, please clearfy that we having 11 employees out of which two of them are having gross salary more than Rs. 15,000/-and remaining 9 employees are having salary less than Rs. 15,000/-. Now ofcourse the number of employees are more than 10 but the two employees does not fall within the defination of "employee"

In the above senario does ESI Act applicable to us ?

Guest

Guest (Expert)

19 December 2011 ESI act is applicable to every FACTORY.

Defination of factory as per ESI Act is :

section 2[(12)
“ factory ” means any premises including the precincts thereof whereon ten or more persons are employed or were employed on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on or is ordinarily so carried on, but does not include a mine subject to the operation of the Mines Act, 1952 (35 of 1952), or a railway running shed ;]

1[(6) A factory or an establishment to which this Act applies shall continue to be governed by this Act notwithstanding that the number of persons employed therein at any time falls below the limit specified by or under this Act or the manufacturing process therein ceases to be carried on with the aid of power.]

Hence clearly in your case ESI act is applicable since for the purpose of applicability of this act if 10 or more ppl are employed this act shall be applicable.

However those employees whose gross wages are less than 15000/- per month are COVERED EMPLOYEES UNDER THE ACT.

Thanks.

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Abhishek Ranjan Singh

Abhishek Ranjan Singh (Expert)
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19 December 2011 I think Neha mam's reply is sufficient.

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Querist : Anonymous

Querist : Anonymous (Querist)

20 December 2011 Dear Neha Madam,

Kindly advise that if only one employe's salary is less than Rs. 15000/- per month and nine employees salary is more than Rs. 15000/- per month.

Is ESI Act applicable?

Guest

Guest (Expert)

20 December 2011 Yes, it is applicable.

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