ESI applicability for new companies

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This discussion clarifies the applicability of ESI (Employee State Insurance) provisions for newly incorporated companies. While ESI typically applies once an employee threshold is met, new companies registered via the MCA portal may have specific rules. The core question is whether compliance is mandatory within the initial 6 months or only after reaching the employee threshold, even if it's below 10 employees.

Vishal Kirthic

Vishal Kirthic (Querist)

11 June 2020 Hi everyone,
We have incorporated a company recently and we have received an email from ESIC along with login credentials, wherein it is mentioned that status has to be updated in ESIC website within 4 weeks. In the website, there is a message stating “New companies registered through MCA portal w.e.f.15.02.2020 need not comply with provisions of ESI act till they reach threshold of ESI coverage or initial 6 months whichever is earlier”. Is a company required to comply with ESI provisions despite the fact that the number of employees has not crossed 10? Can anyone provide clarity on this?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

11 June 2020 ESI provisions not applicable in case of companies where number of employees not crossed 10.

Vishal Kirthic

Vishal Kirthic (Querist)

11 June 2020 Thanks for your reply. But, when we login and update that the company has not yet reached threshold limit, it is asking us to enter the grace period which should be within 6 months from the date of registration and it is a compulsory field. Therefore, it is indirectly implying that the company has to comply with ESIC provisions atleast within 6 months whether or not threshold limit is exceeded. Please throw some light on this.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

11 June 2020 You have to comply with ESI provisions only when threshold limit exceeded.

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