There are two major two social security schemes available to employees working in India, one is ESI which stands for Employees’ State Insurance and another is Provident Fund.
Employee State Insurance Scheme is a scheme launched by the Government of India to offer various benefits to workers. The benefit under this scheme includes medical, cash, maternity, disability and dependent benefits etc. to the insured employees. The contributions made by employers and employees fund these benefits. In other words, it provides certain benefits to employees in case of sickness, maternity and employment injury and to make provision for certain other matters in relation thereto.
APPLICABILITY
- (Whole of India
- Applicable to all factories other than seasonal factories and other establishments as the Central Government or the State Government with approval of the Central Government notify after giving one month’s notice of its intention of so doing by notification in the Official Gazette.
- *Applicable on non-seasonal factories having 10 or more employees.
Factory: means any premises including the precincts thereof
- whereon ten or more persons are employed or were employed on any day of the preceding twelve months, And in any part of which a manufacturing process is being carried on or is ordinarily so carried on, but does not include a mine subject to the operation of the Mines Act, 1952 (35 of 1952), or a railway running shed
- Number of employees: 10 or more
- The wage limit for coverage of an employee under the Act, is Rs. 21000/-, Further, the wage limit of an employee who is a person with disability is Rs. 25000/- (The employees below these limits are covered under this Act)
- All employees in factories or establishments to which this Act applies shall be insured in the manner provided by this Act.
ESTABLISHMENTS: Under Section 1(5) of the Act, the Scheme has been extended to shops, hotels, restaurants, cinemas including preview theatres, road-motor transport undertakings and newspaper establishments employing 10* or more persons. Further under section 1(5) of the Act, the Scheme has been extended to Private Medical and Educational institutions employing 10* or more persons in certain States/UTs.
*Note: However, the threshold for Coverage of establishments is still 20 Employees in Maharashtra and Chandigarh.
REGISTRATION OF FACTORIES AND ESTABLISHMENTS
The employer in respect of a factory or an establishment to which the Act applies for the first time and to which an Employer’s Code Number is not yet allotted, and the employer in respect of a factory or an establishment to which the Act previously applied but has ceased to apply for the time being, shall furnish to the appropriate Regional Office not later than 15 days after the Act becomes applicable, as the case may be, to the factory or establishment, a declaration of registration in writing in Form-01 and Form-01-A (hereinafter referred to as Employer’s Registration Form).
Whereas Provident Fund is a social security system that helps employees to save a short portion of their salary every month to build their retirement corpus. These monthly savings get accumulated every month and can be accessed as a lump sum amount at the time of retirement, or end of employment.
Employees Provident Fund is a scheme for the Indian Employees that is regulated under the Employee’s Provident Funds and Miscellaneous Provisions Act, 1952 and managed by the Employee’s Provident Fund Organization (EPFO). The EPFO is controlled by Ministry of Labour and Employment, Government of India.
APPLICABILITY
The provisions of Provident Fund are extended to the Whole of India and are applicable to every establishment which is a factory engaged in any industry as specified in the Act, in which 20 or more persons are employed to any other establishment employing 20 or more persons or class of such establishments which the Central Government may, by notification in the Official Gazette, specify in this behalf.
Further, an establishment to which this Act applies shall continue to be governed by the said Act unless the number of persons employed at any time falls below twenty.
In other words, all establishments that have employed 20 or more than 20 employees can apply for PF registration in India. In some cases, subject to the circumstances and the exemption establishments employing less than 20 are still eligible for PF registration. The Employee gets an amount that includes the self and employer’s contribution with interest on retirement or resignation.
Under the concerned Act, the employees are entitled to receive a pension, insurance or special benefits at specific occasions by contributing a nominal amount towards this fund. The contribution is being deposited from both employee and employer.
We, JKG Corporate Consultants LLP, help our clients to get themselves registered under the aforesaid acts, and also help them to comply with all the provisions mentioned therein the acts.
Disclaimer: [This article has been prepared on the basis of information available till date. But professionals are advised to study the laws and compliance].
