For the2nd company PF will be applicable for all employees, ESIC only to employees drawing 10,000/- and less. Employees drawing 10,001/- and above ESIC will not be applicable.
18th November 2008 From India , Mumbai
By rule for the first firm PF and ESIC are applicable.But as both the firms are yours definitely you can put some employees to the other firm and escape both.But be careful that accept resignation from the employees and then appoint them as afresh employee in other company.
As far as written declaration is concerned it not valid legally.Legally you need to have provisions for PF and ESIC for the employees who are having wage less than 6500
18th November 2008 From India , Bhopal
18th November 2008 From India , Bangalore
As Far As I Know Esi Is Only Applicable For Those Who Are Below 10000 And Upto 10000 And Not Above.the Employees Above 10k Mark Are Exempted From Both Pf And Esi.
Alex As Your 1st Firm Have Only 10 Employees Pf Is Not Applicable As Of Now.
19th November 2008 From India , Bhopal
Thanks for getting back.
So for the 1st firm as it is less than 10 ESI is applicable and PF is not.
For the 2nd firm as it is more than 10 both PF & ESI is applicable but only for those who draw less than 10K.
Am I right?
For S/w development companies, is the count 10 or 20?
19th November 2008 From India , Bangalore
ESI is Not applicable to your both the firms.
With Power rule is for factories not for commercial Establishments.
So ESI is applicable to the establishments having 20 coverable employees under the act. So you dont have 20 coverable employees in both the organisations. For ESI present wage ceiling is Rs.10000/-
For 2nd Firm you need to cover under PF Act, if you want to reduce the PF burden you need not cover the employees who are drawing above 10000/-
20th November 2008 From India , Hyderabad
this is arathi...
can u pls let me know, if a person is going on maternity leave and if she is covered under ESI, she will get half of her salary paid by ESI till 3 months and company also will pay her full salary for 3 months.
am i rite?
20th November 2008 From United States , Norwalk
If the wage/salary of an employee as working in a covered establishment and is covered under the Act even when his wage/salary exceeds Rs.6500 per month, then he will be entitled to remain covered upto Rs. 6500 per month. For instance, an employee who is a member and whose salary was Rs.6400 per month, he will continue to be a member for at least Rs.6500 per month even when his salary is increased as Rs.7000 per month. It the employer and employee both agree, there is no bar in enrolling such or any other employee as member under the Employees’ Provident Fund Scheme, 1952.
ASSOCHAM is organizing the workshop on Knowledge of Labour Laws Essential for Managers / Supervisors on 28-29 November 2008 at New Delhi. For further details, kindly conact: www.assocham.org
21st November 2008 From India , Delhi
ESI Limit is Rs.10,000
Employees Strength for coverable Companies is : 10 for Companies that use power for Production etc, else 20 for Shops and Estts
1. Company One does not have the Required Number of amployees in any case , So you need not worry.
2. For Company Two you need to Consider the following
a. If the Development of the product is the Result of using any Equipment that uses power then the Emp Strength for covering ESI is 10 (I.e if you have a software product which you develop, Mostly this is the case in most soft dev companies) , Else its 20
b. Make a count of Employees drawing 10000 and below (Above 10001 need not be counted) (As per your Data you presently have only 5 or so employees) , If the count is below 10 You need not worry about ESI at all.
Note: If you have contract employees , Like Security etc , they also will be counted as long as they work in the Company premises.
@Nagaraj H V , See if the place where your employees are working are in the ESI Coverable area List , This list is avaliable at ESI local offices and reagional office. May be avaliable in the net too. If the area is not in the list then you need not pay ESI (Employees anyway dont get coverage)
Note: Also if the establishment is covered then you are not allowed to take a letter from Employee that He/She does not want ESI ,etc and not give befit, This facility is not provided in the ESI act contraty to whats suggested by some others in the forum
23rd November 2008 From India , Bangalore
what is the minimum wages as applicable to karnataka state and central government for labours maintaining roads and buildings
what is minimum wages applicable to labours maintaining building and roads as applicable to karnataka and central government. also what is the esi and pf rules for the labours mentioned above
23rd November 2008 From India , Mangaluru
Thanks for the reply. I have got 2 points.
1. My auditor says that IT companies use power and so we will come under the "With power category" and so 10 will be the limit for ESI
2. He also says that there is no rule saying that employees who are drawing more than 10K need not pay PF.
Can you tell me if this is true?
24th November 2008 From India , Bangalore
yes he is right there is no rule how has more then 10k salary.
i am taking more then 20k but i have to pay pf amount then how can 10k salaryed person will not come under this act. he 100% come s under this act. for more detail you can call me on 9990686878
24th November 2008 From India , Delhi
IF an person is covered under ESI Act 1948 Maternity benefits rules does not implies to employer and hence employer need not pay the maternity benfit salary.
ESI pays double the rate for 84 days on daily average salary basis as per form 5 data and additional one month more salary to IP in case of complication and additional rest prescribed by doctor subject to all certification provided by her.
I hope this shall fullfill your requirement
(Labour Law Consultas)
For R N Consultant
Voice: 098 33 606065
24th November 2008 From India , Mumbai
PF & ESI is Not applicable to Ist firm, there are less than 20 employees and also working without power.
For IInd firm, 1 employee is less than 6500, 4 employees is between 6500 to 10000 and others employes are getting more than 10000.
Here we will see, what are the basic+DA of all employees. If more than 10 employees's basic+DA is less than 6500 then it is required to cover under PF.
For ESI coverage - Here we will see if any washing allowance are giving to the employees and their salary without W.A. is less then 10000 and also total employees (counted more than 20 without power) or (counted more than 10 with power) then ESI registration is required otherwise not.
Rajeev Kumar Saxena
25th November 2008 From India , Bangalore
As per PF Act, for new coverage we need not enroll the employees who are drawing more than 6500/- . In the same line even for covered establishment if a employee joins on salary above 6500 need not be covered as per statute. Once the employee enrolled as member in the PF he should continue as a member even his salary crosses over 6500/- & his contributions can be limited upto 6500/- only. I am sure that the opinion given by the audior may not be correct.
26th November 2008 From India , Hyderabad
Thanks for explaination, i was also looking for this clarity on applicability.
we are also an software organisatioin having 19 employees with 8 people drawing salary less than Rs. 10000/-
The ESI act says, the organisation will get covered if you are having more than10 employees and using power. As an sofware organisation we also use power for lighting and Computers.
My doubt is, what is the interpretation of the phrase with the use of power.
Second doubt is about the coverable empoyees, the act says the moment have 10 employees the company gets covered, the act does not mention that the applicability is based on number of coverable employees.
do you have any support material such as supreme court case laws to support your interpretation
26th November 2008 From India , Madras
I would like to know more about the ESI Rule when it says that the ESI is not applicable for the employee who is drawing above Rs. 10000/- Per month but I want to know this Rs. 10000/- should be Fixed gross or total gross including incentives.
eg . The Total gross of employee is 11000/- per month out of which Rs. 9750/- is fixed gross & Rs. 1250/- incentives. then the employee will be eligible for ESI or not?
Pls help me in this.
26th November 2008 From India , Mumbai
You are right , we cant see in act the concept of coverable employees. In the year 1997 Delhi High Court has given judgement in this regard and subsequently The Supreme Court of India commending the views of Delhi High Court in MM Suri & Associates VS ESIC 1999 and it was reported in LLJ. I dont have the judgement copy but I read it fully long back. If you can get the copy of the judgement pl send me the soft copy to my email id:
With Power was used in the act is meant for only facatories, so I am not sure this software industries will fall on this phrase or not. My personal opinion after studying the various factors software companies will come into the category of Establishments so for those organisations ESI will attract only if they have more that 20 coverable employees.
If you are paying incentives on monthly basis for ESI the employee gross earnings are 11000/- So you need not cover thos employees. If you are paying incentives on quarterly basis then you need to be covered such employees.
27th November 2008 From India , Hyderabad
ESI Wage ceiling is upto 10,000. The employees who are drawing upto 10,000 er hasto register in ESIC pay the contributions accordingly.
For Provient Fund if any employee baisc exceeds 6,500/- then no need to continue the pf contributions. Ofcourse, that is the management decision whether they r willing to continue or not. But if basic is less than 6,500 employer to continue the pf deductions.
We have got 2 firms (separate) and the employee details are as follows
1. IT Training firm
Total no: of employees is 8. Of this 7 are drawing less than 6500. Will ESI and PF be applicable?
2. S/w dev firm
Total no: of employees is 21. Of this 1 is less than 6500 and 4 are drawing between 6500 and 10000 and the rest all above 10000. Should we register for ESI and PF?
Some points regarding this.
a) The rule says 20 for not using power. IT firms use power. So is the no: 10 applicable for both the firms (for ESI & PF)?
b) If 20 is the count then can I put 2-3 from the s/w to the IT training firm rolls and escape both ESI and PF registration for the time being?
c) I heard that some firms take a written declaration from the employees saying that they do not need both ESI and PF. Is that valid?
Thanks in advance.
29th November 2008 From India , Visakhapatnam
But in case of PF gets applicable if you have total 20 employees working in your organisation irrespective of their salaries. hence if you have 21 employees you get statutory covered under the PF act and you will need to apply for the PF Code Number.
Else transfer some employees to other comany and bring down your employee strenght to less than 20.
30th November 2008 From India , Mumbai
ESI Rule for Registration:
1. Firm should have 10 employees drawing up to Rs. 10,000 if power is used in the Process.
2. Firm should have 20 employees drawing up to Rs. 10,000 if power is not used in the Process.
Since both your firms are not cinfirming to the above conditions ESI is not applicable. There is no provisition for voluntary coverage in ESI.
PF Rule for Registration:
1. Firm should have 20 employees for Registartion. Salary is not relevent. Only head count of employees is considered.
PF is not applicable to your IT training Firm ( Only 8 employees).
PF is applicable to your S/W dev. form (21 employees)
PF Act provides for voluntary Coverage also. If you wish to Register your IT Training Firm it is possible under voluntary coverage provisions.
You may also bear in mind that there are provisions in the PF act to club both the firms and treat as one unit and implement PF in both firms if in any way they are inter connected. i.e. Common Management. Inter changebility of employees, etc.
Power: Power means power used in the process of development of products. ie. Manufacturing Process.-Factory. this is revelent only in case of ESI
As IT training division does not develop any products and only training persons, may not fall under the category of factory.
S/w. dev. firm is a factory. With ten Employees drawing upto Rs. 10,000/- will attrct ESI Coverage. as only 5 employees are drawing up to Rs. 10,000/- ESI is not applicable.
You may transfer employees from S/w dev. to IT trg. and escape coverage from both ie.e ESI and PF. But you should take care of the provisions regarding clubbing of the units.
Written declarations/conssent letters are use less and irrelevant. it does not help in any way.
1st December 2008 From India , Mumbai
I have a firm who has 25 employees on its roll, working with different organisations for providing cleaning and pantry services on contract bases and drawing less than 6500 salary. Out of 25 employees 12 are deployed with an educational institute where ESI is said to be not applicable. So far I have got only EPF code for the said firm. Now rest of the 13 employees are to be covered under ESI Scheme. So, I require your valuable suggestion on this. Can I apply for ESIC code with same employees as minimum requirement is of 20 ? Eagerly awaiting for your reply.
Thanks & regards !
4th December 2008 From India , Lucknow
The earned gross (Includes all earnings like incentive, bonus, special pay etc) should be less than or equal to 10,000.
Employee has to contribute 1.75% of earned gross deducted from net pay
Employer has to contribute 4.75% of earned gross of employee.
If ESI has been deducted in the month of April then it should continue
to be deducted till September irrespective of earned gross. In the month
of October if the earned gross is more than 10,000 then ESI should not
Ex: Employee A has got a gross earning of Rs. 9000 in the month of April
and so ESI is deducted. In the month of May his earning has increased to
11,000 ESI should be deducted thereafter also till September
irrespective of his earned gross. In the month of October his earned
gross is 12,000 then ESI should not be deducted
Therefore there is a two cycle period for deduction. April to September
and October to March:confused:
Hello Mr Balaji
1. PF is deducted 12% of your earned Basic
2. ESI should be deducted on The earned gross (Includes all earnings like incentive, bonus, special pay etc) which should be less than or equal to 10,000.
Employee has to contribute 1.75% of earned gross deducted from net pay
Employer has to contribute 4.75% of earned gross of employee
12th December 2008 From India , Bangalore
If any employee is covered under ESI ACT, then in case of Maternity, she will get half of her salary paid by ESI till 3 months only, but company is not bound to pay full salary, she will get all benefits from ESI itself, in fact.
15th December 2008 From India , Gurgaon
1.Your firm has 25 employees.
2.You are engaged in the business of rendering Cleaning and pantry servicesto various clients.
3.Clients coverage status under ESI is irrelevant.
4.Your firm stands covered under the provisions of the ESI Act.
5. You must comply and pay contributions in respect of all your employees irrespective of the place where they work.
16th December 2008 From India , Mumbai
Pl note the following reply to your query.
ESI is not applicable to both the firm.
PF is application to the firm 2 and 1 is optional irrespective of amount of salary disbursement.
For PF Registration and upkeeping of statutory requirements please avail our service. The outsourcing of HR admin & legal service will be cost effective
You are most welcome to be called any time for any qurries. We are pleased to serve you..!!
You are most welcome to call
SELVAN/VISU at 0448154246/9841029534/9444327172
28th December 2008 From India , Madras
16th January 2009 From India , Ahmadabad
companies need to register for PF if they have more than 10 employees and if the employees Basic+DA is less than 6500 then minimum contribution from both employee and employer's end would be 12% of B+DA compulsorily.
If the B+DA is more than 6500 then both the Employee and Employer has the option of opting out of it, provided the employee has joined the organisation where the employees B+DA is greater than 6500 from the beginning of his employment.
If the B+DA is more than 6500 then employee has to pay 12% of his actual B+DA while the contribution from the employer's end can be restricted to Rs- 780/- or 12% of B+DA. listed above are the options that you can choose from.
As far as ESI is concerned employee is eligible for ESI if his gross salary is less than Rs- 10000/- and the company should register if they have more than 10 employees in this category.
Hope this clears your doubts
28th January 2009 From India , Bangalore
Our company is a pvt ltd concern which is into exhibition stall construction (temporary construction).since 2006 we have taken EPF for our permanent employees.But recently we have received a notice from PF dept. that we have to include our temporary workers for the stall construction also under the PFcoverage .can you please tell us whether PF is applicable for such temporary workers ????
12th February 2009 From India , Ernakulam
Thanks & Regards
hi to all,
i have joined newly as HR in an engineering pvt ltd,basically i am fresher to this field,i required details of offer letter,esi,pf,absenteeism,administration details and all,please guide me..
Thanks & Regards
15th July 2009 From India , Bangalore
I require a clarification regarding ESI and PF.
One query has to me that a proprietary concern(in construction field) having its shops and establishment in 2004-05, Vat registration the same year, but there is no registration done for ESI and PF.
As per their consultant, they say that "since the concern had contract labours till 2009-10 and only 10 staffs working for the proprietary concern, no need for registration of ESI and PF".
As per the act, if we have contract labours, the contractor has to pay ESI and PF otherwise it is the liability of the Employer only--- Please give me the explanation.
Also another consultant says that, we have to calculate the total contract labour + wages paid from 2004-05 to 2009-10 and we have to pay with penalty to ESI and PF office then only the concern will not be under trouble.
Could somebody explain about this with previous cases in the similar way.
Thanks and regards,
14th May 2010 From India , Bangalore
You need to be registered under epf and esic if your total employee including out sourced contractor employee working under the individual firm is more than 20.
EPF is also applicable to employee drawing a salary higher than 6500 or above if your firm is not deducting epf then get form 11 signed from the employee and keep for your records, How ever the company can be rigid on employer contribution on a basic of 6500 irespective of salary above 6500, Example if an employee's basic salary is 7000 and he is demanding epf then you are liable to give epf on the maximum of 6500 not on 7000' but remeber you must have form 11 dully signed by employee seeking exemption under PF other wise your liability exists, PF is not calculated on gross drawing, it is always calculated on basic salary and basic salary should not be below minimum wages of particular catogery of that state.
Liability of ESIC is on gross salary and if any employee is drawing gross salary above 15000PM then he is excempted
23rd January 2013 From India , Mumbai