9870310368 9599553498

Learning

Learning » Compliances » Labour Compliance » ESI Registration » Why ESI Registration is Mandatory?

SP Services

Why ESI Registration is Mandatory?

Narendra Kumar

| Updated: Jul 22, 2017 | Category: ESI Registration

ESI Registration

Employee State Insurance (ESI) is a self-financing social security plan and health insurance scheme for Indian workers. It is governed by the ESI Act 1948. Funds under ESI are managed by the ESI Corporation which comes under the Ministry of Labour And Employment.

ESI Registration is required to get mandatorily done when the employers are having more than 10 employees but it applies to employees with low earnings. As per the act, all employees whose earnings are INR 15000 or less per month, it is required for them to contribute 1.75% of their pay towards the ESI and 4.75% by the company towards ESI. This scheme provides various benefits related to medical benefit & cash benefit to the employees and their families such as a large network of hospitals, dispensaries all over the country for effective medical treatment. Medical treatment includes surgical treatment, the supply of drugs, ambulance services in addition to this it also provides sick pay benefits. This scheme improves the morale of workers. It provides social protection to the employees in the business.

Contribution

Employee’s Contribution 1.75% of the compensation
Employer’s Contribution 4.75% of the Compensation

Collection of the Contribution

The employer is liable to pay a contribution of employees and deduct a contribution of employees from their wages and have to pay these contributions to the ESI Corporation on the specified rates within 21 days from the last day of the month.
The Corporation has the designated branches of the banks to receive the payments.

Contribution Period and Cash Benefit Period

Contribution Period Cash Benefit Period
1st April to 30th September 1st January of the following year to 30th June
1st October to 31st March 1st July to 31st December

Limit

As per the act, the existing limit is Rs. 15000/ Per Month. ESI contribution is required for all the employees earning up to 15000 Per Month.

All those employees who are earning more than 21000 Per Month are exempted from the ESI contribution.

The ceiling for an employee with a disability is Rs. 25000/ – Per Month.

Penal Provisions in Case of Delay

Period of Delay Rates
Less than 2 months 5%
2 to 4 Months 10%
4 to 6 Months 15%
6 Months and above 25%

Record Maintenance

The employer is required to maintain the following registers:

  1. Employee’s Register in Form 6;
  2. Accident Register in Form 11;
  3. Inspection Book.

For the immediate employer, it is required to maintain a register of employees to the principal employer.

Narendra Kumar

Experienced Finance and Legal Professional with 12+ Years of Experience in Legal, Finance, Fintech, Blockchain, and Revenue Management.

Business Plan Consultant


Request A Call Back

Are you human?: 6 + 1 =

Categories

Startup CFO

Trending Articles

Hey I'm Suman. Let's Talk!