India is a democratic country and a home to nearly 15% of the world’s population. With the focus on providing social security to working population, the state protects their rights through various legislations including PF & ESI Acts. Recently, amendments have been made in ESIC Act, 1948 for the benefit of employees. But, before going through the amendment, let us first know what PF & ESI are and to whom it is applicable.
*Maximum Wage ceiling limit: This is the maximum salary/ wage limit upto which deduction of PF & ESI by employer is mandatory. Let us understand this with examples assuming the period of December 2016.
Eg.1:Let us say there are 25 employees in a factory out of which 5 employees have salary of Rs. 16000 p.m. and rest 20 employees have a salary of Rs. 5000 p.m.
Eg.2: Let us say there are 9 employees in a factory all having a salary of Rs. 2000 p.m.
Eg.3: Let us say there are 25 employees in a factory and all employees have a salary of Rs. 5000 p.m.
Eg.4: Let us say there are 15 employees in a factory out of which 5 employees have salary of Rs. 16000 p.m. and rest 10 employees have a salary of Rs. 5000 p.m.
Conclusion: Applicability of PF & ESI arises as soon as the number of employees reaches the specified limit. But the PF & ESI Contribution has to be deducted by the employer only if the employees have a salary below maximum wage ceiling limit.
Further, please note that as stated above, vide notification dated 22.12.2016, maximum wage ceiling limit under ESIC has been increased to Rs. 21000 p.m. w.e.f. 01.01.2017 from existing limit of Rs. 15000 p.m.
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