ESI Applicability in factory

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This discussion clarifies the applicability of the Employees' State Insurance (ESI) Act in factories. The ESI Act applies if a factory employs 10 or more people, regardless of individual wage levels. However, only employees earning below Rs 21,000 per month are eligible to be beneficiaries under the scheme.

CA Jasbir Singh

CA Jasbir Singh (Querist)

07 August 2021 If a factory employed total 15 persons ( Wages of 8 persons =25000, and 7 persons =15000 each). is ESI act applies? Please give solution with reference to act only.

CMA Poornima Madhava

CMA Poornima Madhava (Expert)

07 August 2021 As I understand, since the criterion w.r.t. no. of employees has crossed the threshold limit (i.e. >=10), the act will apply to the organization irrespective of the wages of individual employees. However, only those employees who are within the threshold limit (w.r.t. wages) would be covered as beneficiaries under the act.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

08 August 2021 The ESI scheme is applicable to all factories and other establishments as defined in the Act with 10 or more persons employed in such establishment and the beneficiaries' monthly wage does not exceed Rs 21,000 are covered under the scheme

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