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October 7, 2020

ESIC now applicable to certain establishments employing 10 (earlier 20) or more person in Maharashtra

by facelesscompliance in Compliance Law, Corporate Law

ESIC now applicable to certain establishments employing 10 (earlier 20) or more person in Maharashtra

Employment generation coupled with improving employability is the priority concern of the GovernmentGovernment has taken various steps for generating employment and providing several employment benefits in the country. On such benefit is the Employees State Insurance (ESI). The fund is managed by the Employees’ State Insurance Corporation (ESIC) according to rules and regulations stipulated in the ESI Act 1948.

What is the ESI Scheme?

ESI is a contributory fund that enables Indian employees to participate in a self-financed, healthcare insurance fund with contributions from both the employee and their employer.

The ESI Scheme is an integrated measure of Social Insurance embodied in the Employees’ State Insurance Act and it is designed to accomplish the task of protecting ’employees’ as defined in the Employees’ State Insurance Act, 1948 against the impact of incidences of sickness, maternity, disablement and death due to employment injury and to provide medical care to insured persons and their families.

Who is the ESI Scheme applicable to?

The ESI Scheme applies to factories and other establishment’s viz. Road Transport, Hotels, Restaurants, Cinemas, Newspaper, Shops, and Educational/Medical Institutions wherein 10 or more persons are employed. However, in some States threshold limit for coverage of establishments is still 20. Employees of the aforesaid categories of factories and establishments, drawing wages up to Rs.21,000 a month, are entitled to social security cover under the ESI Act.

ESI Corporation has extended the benefits of the ESI Scheme to the workers deployed on the construction sites located in the implemented areas under ESI Scheme w.e.f. 1st August, 2015.

What is the rate of contribution under ESI?

The rates of contribution, is a percentage of gross wages payable to the employees. Under the Employees’ State Insurance Act 1948 (the ESI Act) the rate of contribution has been reduced from 6.5% to 4% of the wages. 

  • Employee Deduction is 0.75% of gross pay
  • Employer Contribution is 3.25% of gross pay

What do you mean by gross salary?

For ESI calculation, the salary comprises of all the monthly payable amounts such as

  • Basic pay
  • Dearness allowance
  • City compensatory allowance
  • House Rent Allowance (HRA)
  • Incentives (including sales commissions)
  • Attendance and overtime payments
  • Meal allowance
  • Uniform allowance and
  • Any other special allowances.

The gross monthly salary, however, does not include Annual bonus (such as Diwali bonus), Retrenchment compensation, and Encashment of leave and gratuity

ESIC applicable to establishments employing 10 or more person in Maharashtra w.e.f. 01-Oct-2020.

The Government of Maharashtra in consultation with ESIC and with the approval of Central Government has extended the scope of the ESI Act to include the below mentioned class of establishments employing 10 or more person in Maharashtra w.e.f. 1st October, 2020.

  • Shops
  • Hotels
  • Restaurants
  • Road Motor Transport Establishments
  • Cinema including preview theatres
  • Newspaper establishments

Earlier the limit for the above-mentioned establishments was 20 employees. However, for a manufacturing unit with power ESI was already applicable on 10 employees.

Now the below mentioned benefits will be available to the above establishments employing 10 people or more:

  • Medical Benefit
  • Sickness Benefit
  • Maternity Benefit
  • Disablement Benefit
  • Dependants Benefit
  • Other Benefits

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