Please find the following which are important when gauging the coverable employees:
The ESI Act, (1948) applies to following categories of factories and establishments in the implemented areas:-
Non-seasonal factories using power and employing ten (10) or more persons
Non-seasonal and non power using factories and establishments employing twenty (20) or more persons
2. The Act was originally applicable to non-seasonal factories using power and employing 20 or more persons; but it is now applicable to non-seasonal power using factories employing 10 or more persons and non-power using factories employing 20 or more persons.
3. The ESI Scheme is mainly financed by contributions raised from employees covered under the scheme and their employers, as a fixed percentage of wages. Employees of covered units and establishments drawing wages up to Rs.7500/- per month come under the purview of the scheme for social security benefits.
4. Wages for the purpose do not include:
Employers part of provident fund
Employees part of provident fund
Leave Travel Allowance
There is no voluntary registration under the Act. Supreme Court has reiterated the same in one of the cases. In order to determine the number of employees covered, the wages of the employees need to be ascertained.
Section 2 (22) defines wage as under:
Wages means all remuneration paid or payable, in cash to an employee, if the terms of the contract of employment, express or implied, were fulfilled and includes any payment to an employee in respect of any period of authorized leave, lock out, strike which is not illegal or lay-off and other additional remuneration, if any paid at intervals not exceeding two months, but does not include-
any contribution paid by the employer to any pension fund or provident fund, or under this act;
any traveling allowance or the value of any traveling concession;
Conveyance allowance is paid to the employee to compensate the expenses incurred by the employees on travelling etc. The travelling allowance or value of any travelling concession is also being paid to the employees in the nature of conveyance allowance, which is neither wages for the purpose of coverage of employees under Sec.2(9), nor it is treated as wages for the payment of contribution under Section 2(22) of the ESI Act.
In the case M/s.Hyderabad Asbestos Cement Products Vs. ESIC, Punjab & Haryana High Court, Chandigarh as well in the case of M/s.Harihar Polyfibres, the Supreme Court have held that conveyance allowance is not wage under Section 2(22) of the ESI Act.
(Earlier instructions were issued by this office vide No.P.11/13/97-Ins.IV dated 27.1.97.)
Please note the following judgment which is the latest on whether conveyance will form part of the wages or not:
Conveyance allowance paid to every employee in terms of contract of employment would form part and parcel of Wages within the definition of Section 2 (22) of the act as laid down in the case of Regional Director, Employee’s State Insurance Corporation Vs Lucktex III, Bangalore, 2002.
Any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or
Any gratuity payable on discharge
based on the above you may find that many employees cannot be brought under the purview of ESI if the wage structure is observed very closely