Definition of factory falls under the ESI Act of 1948 if:

There are ten or more employees working in premises or its surroundings for the past twelve months.

The classification criteria are as follows:

o    The premises must be used for manufacturing purposes.

o    The manufacturing process must involve the use of power.

o    There must be a minimum of ten employees who have worked for the past twelve months.

Exemptions:

Mines and railway running sheds are exempt from being classified as factories.

What is the term Establishment under the ESI act refer?

• According to the ESI Act, an establishment refers to a workplace where ten or more employees are engaged in wage-based activities.
• This term encompasses not only factories but also a range of other entities like hotels, restaurants, and boarding houses.
• Furthermore, establishments like cinemas, theatres, and places of public amusement also come under this definition.
• Shops, commercial establishments, and places of business are also covered by the ESI Act.
• Additionally, educational institutions and medical institutions are included within the scope of this definition as well.
• Lastly, transport undertakings and warehousing establishments are deemed as establishments under the ESI Act.

Important Considerations Regarding Establishment Definition under the ESI Act:

Here are some crucial factors to consider when determining the definition of establishment under the ESI Act:

1. Economic Activity: The premises must be utilized for carrying out some form of economic activity.
2. Minimum Employee Count: There must be a minimum of ten employees working on the premises, receiving wages.
3. Duration of Employment: The employees should have worked on the premises for at least 240 days within the preceding 12 months.

If the premises satisfy all these conditions, they will be recognized as an establishment under the ESI Act. Moreover, the Act includes provisions for extending its coverage to establishments with less than ten employees. Such extensions are implemented through notifications in the Official Gazette, issued either by the Central Government or the State Government depending on the situation.

Why ESI Registration is beneficial?
ESI New Registration guarantees numerous advantages for employees to enjoy:

• Dependent Benefits: In the event of an employee's demise while employed, their dependents will be granted 90% of their monthly salary.
• Funeral Expenses: An amount of ₹10,000 is allocated for funeral expenses to be given to the family of the deceased employee.
• Confinement Expenses: Under the ESI scheme, if an insured woman or an employee's wife delivers a baby in a medical facility-deficient area, they can avail confinement expenses.
• Medical Aid: ESI Registration members and their families receive complete medical care and insurance.
• Maternity Aid: Pregnant women receive maternity benefits for up to 26 weeks, extendable by 30 days on medical advice. Employers contribute wages for 70 days in the preceding two contribution periods.
• Vocational Rehabilitation: VRS enables insured employees who are permanently physically challenged to receive vocational rehabilitation training.
• Physical Rehabilitation: It is made accessible to employees who experience physical disability resulting from work-related injuries or occupational hazards.
• Old Age Medical Care: For retiring ESI employees or those choosing VRS/ERS, a yearly payment of ₹120 grants them medical care benefits.
• Disablement Benefits: Disabled employees receive 90% of their monthly salaries as disablement benefits.
• Extended Sickness Benefits: ESI members with chronic diseases can receive this benefit for up to 2 years after using the standard sick leave of 91 days.
• Enhanced Sickness Benefit: Registered ESI members opting for sterilization procedures can get 100% of their daily wages and a recovery period of 7 days for vasectomy or 14 days for tubectomy.
• Sickness Benefits: Absence from work during illness is allowed for a maximum of 91 days per year, with 70% of monthly wages.

  Instructions on How to Register for ESI Online
  Employers now have the convenience of registering for ESI online without the need to submit physical paperwork or go through approval processes. Below are the step-by-step procedures for signing up:
  Step 1: Access the ESI portal via Internet Explorer or Mozilla Firefox using the following link: https://www.esic.nic.in/
  Step 2: Navigate to the 'Services' tab and choose 'Employers Portal', then click on 'Sign up'
  Step 3: Fill in the required company details in the designated window, including Company name, Principal employer name, State, Regions, email id, and contact number. Once completed, click on 'Submit'
  Step 4: An email containing the login credentials will be sent to the applicant. Use these credentials to log in to the ESI website again
  Step 5: Upon logging in, click on 'New Employer Registration' and select the appropriate company type from the dropdown menu (Factory, Shop/establishment).

  Step 6: Provide all the necessary information such as the unit's address, town/taluk name, contact details, ownership status, and any other compulsory details indicated with an asterisk*.
  Step 7: Specify the Business Nature and PAN (Permanent Account Number), select the employer type from the dropdown menu, input the incorporation date, business license number, and its corresponding date.
  Step 8: Proceed by clicking on 'Next' once you have filled out all the required fields.
  Step 9: Choose the 'Constitution of Ownership' from the dropdown menu in the subsequent window. Options may include Private Limited, Partnership, Cooperative Society, Proprietorship, and similar.
  Step 10: Save your progress by clicking on the 'Save' option once all the necessary details have been entered.

  Step 11: To proceed, enter the employees' gender and employment type (contract or permanent) by selecting 'Save.'
  Step 12: Fill in the necessary information, including 'Total wages paid,' on the 'Employee declaration form.' Select 'Yes' if the Insured Person (IP) is already registered, or 'No' if not. Then, click 'Continue.'
  Step 13: Now, you will see the Insured Person's (IP) details screen. Provide the IP's name, their father's name, address, date of birth (DOB), gender, and marital status.
  Step 14: Add the permanent address, date of joining (DOJ), nominee details, and family information. Make sure to review the declaration.
  Step 15: Enter the required information and select 'Save.'

  Step 16: After completing the details of all the 10-20 employees, simply click on 'Close'.
  Step 17: Choose the options for 'Branch office', 'Inspect Division', etc.
  Step 18: Finally, accept the declaration and click on 'Submit'.
  Step 19: A section titled 'Payment of Advance Contribution' will appear. Follow the link provided, 'Pay Initial Contribution'. Enter the amount to be paid and press 'Submit'. On the payment page, fill in the bank's debit/credit card details.
  Step 20: Once the payment is successfully processed, you will receive a system-generated registration letter (C-11) via email. This letter will include your login credentials (user id and password).

  ESI Registration in India: Eligible Entities for Coverage
  Online registration under the ESI Act of 1948 is available for all establishments in India. To be eligible, establishments must have the required number of employees in the respective state.

  1.      Factories: Any establishment involving ten or more employees, working with power or ten or more employees without power is required to register under ESI.

  2. Shops: Shops or commercial establishments employing ten or more persons are obligated to undergo ESI registration.
  3. Cinemas: Theatre establishments, including cinemas, with ten or more employees are eligible entities for ESI registration.
  4. Roadside Motor Transport Establishments: Entities engaged in transporting passengers or goods via road—such as motor transport undertakings, inland water transport, and tramway services—are covered under ESI if they employ ten or more individuals.
  5. Newspaper Establishments: Entities involved in printing, publishing or distributing newspapers, employing ten or more staff members, come under the purview of ESI registration.
  6. Private Educational Institutions: Educational institutions, both aided and non-aided, with ten or more employees are required to obtain ESI registration.
  7. Medical & Para-Medical Institutions: Hospitals, dispensaries, and nursing homes, along with establishments providing medical, surgical, or other healthcare services, are eligible for ESI coverage if they employ ten or more individuals.
  8. Hotels and restaurants must only offer services and not engage in manufacturing activities.
  9. Connecting Entities: Any entity which is a part of or connected with the aforesaid establishments and has ten or more employees also qualifies for ESI registration.
     It is important for all these entities to recognize the significance of ESI registration and fulfil their obligations in order to ensure the well-being and social welfare of their employees.

     ESI Contribution Rate: The rate at which contributions are made under the Employee State Insurance (ESI) scheme.

     • The current rate of contribution under the Employees' State Insurance (ESI) Act 1948 is set at 3.25% of employees' wages. This contribution is divided equally between the employer and the employee.
     • In June 2019, the contribution rate was decreased from 4% to 3.25% to offer relief to employers and employees.
     • Wages considered for ESI contribution include both the basic wages and the dearness allowance (DA). The DA is given to employees as a means of compensating for the rising cost of living.

     The insured employees enjoy several advantages under the ESI Act, such as:

     • Access to medical care
     • Cash benefits during sickness, maternity, and disablement
     • Pension for old age and death
     • Disablement benefit
     • Funeral expenses support
     • The purpose of this act is to serve as a social security scheme that assists employees financially when required.
     • Both employers and employees contribute towards funding this scheme.

       Who is eligible for ESI Registration in India?

       To qualify for ESI registration in India, the general rule is to have a minimum of 10 workers. However, in certain regions, ESI is applicable only if there are more than 20 employees.
       Additional eligibility criteria include:

       1. Gross Salary Limit: Employees with a gross salary of up to ₹21,000 per month can partake in ESI benefits with the assistance of their employers.
       2. EPFO Registration: The establishment must be registered with the Employees' Provident Fund Organization (EPFO).

       The contribution to ESI will be 6.5% of the gross salary, divided as follows:

       • Employers are responsible for contributing 4.75%.
       • Employees are required to contribute 1.75%.

       Moreover, for industrial units where there is a likelihood of injuries or health issues at the business premises, ESI is compulsory for all employees earning less than ₹21,000.

       Compliances Following ESI Registration
       Immediate Adherence to the Employees' State Insurance Act of 1948
       Upon registering under the Employees' State Insurance Act of 1948, the company's registration status will be activated. It is imperative for the company to commence complying with the ESI Act, 1948 within six months from its establishment.
       Temporary Dormant Status for Companies Exempt from ESI Act
       In the event that the company is not immediately subject to the Employees' State Insurance Act, 1948, it has the option to render its registration number dormant within six months by accessing the system. This step is crucial to evade penalties arising from non-compliance. It is important to note that the maximum duration of the dormant mode of the registration can be six months at a time.
       Extending the Dormant Mode
       To ensure continuity of the dormant status, the company must log in to the ESI website before the expiry of 180 days from the initiation of the dormant state. This will allow the company to extend the dormant mode further and maintain compliance with the regulations.

       What is Contribution Period in ESI?
       The Employees' State Insurance (ESI) Act of 1948 defines the contribution period as a six-month duration. This period, commonly referred to as the contribution period, is split into two parts:

       • The first contribution period stretches from 1 April to 30 September.
       • The second contribution period extends from 1 October to 31 March of the following year.
         Payment Obligation:
         During these six months, contributions are required to be paid, regardless of whether the employee works for the entire duration or not.
         Illustration:
         To illustrate, let's consider an employee who starts working at a company on 1 July. In this case, they would be liable to pay contributions for the complete first contribution period, lasting from 1 April to 30 September.

       The ESI Act allows for exemptions from contribution payments in specific situations. These include:

       • Individuals earning less than Rs. 176 per day
       • Employees working in establishments with fewer than ten employees
       • Workers employed in seasonal establishments
       • Employees working in rural areas
         However, it is important to note that even if an employee meets the criteria for any of these exemptions, the responsibility for making contributions on their behalf still lies with the employer.

         Returns Required After ESI Registration

         • ESI returns must be filed every six months once ESI registration is completed. This includes submitting several important documents.

         The submission necessitates specific documents as follows:

         1. Employee Attendance Register
         2. Form 6 Register
         3. Wages Register
         4. Accidents Register (for documenting any incidents within the business premises)
         5. In addition to the aforementioned registers, monthly returns and challans also need to be submitted.

            Latest Updates:
            On November 30, 2022,
            ESIC Recruitment Interview Concluded for Senior Resident and GDMO Positions:

            The ESIC recruitment interview, held on December 1 and December 2, 2022, has successfully concluded. Interested applicants had the opportunity to apply for Senior Resident and Senior Resident against GDMO positions on a contractual basis for a year, across various departments at the Employees' State Insurance Corporation (ESIC).

            A total of 83 open positions were available for these roles. We would like to mention that candidates must be below 45 years of age to be eligible for ESIC recruitment 2022. The selection process involved conducting interviews to handpick the most suitable candidates for these positions.

            Why Choose Taxapillar?
            Without considering the authorities' processing time, Taxapillar can swiftly obtain your ESI registration in just 12 days. When you rely on us for ESI online registration, you benefit from:

            ·         A Complimentary Initial Consultation: Receive expert guidance without any cost.

            ·         Effortless Application Preparation: Our team collects all the necessary documents for your ESI form, ensuring a complete and accurate submission.

            ·         Attentive Application Processing: We handle your application at every stage, providing continuous support and resolving any queries that may arise.

            ·         Expert Final Registration Steps: Our experienced professionals take care of the final registration procedures and remain available to address any concerns.

            ·         Focus on your Business, Leave the Rest to Us: While we handle all the complexities, you can dedicate your attention to your core business activities.