No. of employees for ESIC registration ?

CMA. Subhash Kumar Jha (General Manager - Finance)   (8386 Points)

09 August 2010  

One segment of the ESIC act says :


The Act is applicable to the 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 theatre, road motor transport undertakings and newspaper establishment employing 20 or more persons.

Whereas the other segment says :

"Coverage of Employees : A monthly wage limit is prescribed by the Central Govt. for the purpose of coverage of employees/workers of the aforesaid factories or establishments. An employee has been defined under Section 2(9) of the Act and means any person employed for wages in or in connection with the work of a factory or establishment to which this Act applies. The wage ceiling is enhanced from time to time. The existing ceiling effective from 01.05.2010 is15,000/- per month"

Most of the opinion , even of professionals & legal experts are suggesting that the act clearly says that 20 or more employees is a pre requisite. But , the employee for this purpose has been defined in the 2nd segment as persons drawing upto Rs. 15000/- per month. So with this opinion, if an establishment is having total number of employees , say 30, will be covered under ESI act if less than 20 employees is drawing salary upto Rs. 15000/-

However I also got some opinion to the contradictory, which says, merely crossing the number 20, makes an establishment liable for ESIC registration.

I want a healthy discussion , with appropriate supportings, on this topic so that a clear conclusion can be achieved.