COVERAGE OF 'EMPLOYEE'



>> Who are the persons to be covered as "Employees" ?

My person employed for wages in or in connection with the work of a covered factory or establishment, and: 
1) Directly employed by the Principal employer on any work of the Factory or establishment within the premises or elsewhere, or in any part, department or branch dealing with administration, purchase of raw materials, sale, or distribution of the products of the factory or establishment. 
2) Employees of the Immediate employer: 
a) Employed in the premises on any work of the factory or establishment; 
b) Employed outside the premises on any work of the factory or establishment under the supervision of the Principal employer or his agent; 
c) Employees lent or let on hire to the principal employer on any work of the factory, or 
d) Paid Directors of a company. 
Exclusions: 1. An Apprentice engaged for the first time under the Apprentice Act 1961 and 2. An employee drawing wages above the wage ceiling prescribed by the Central Government 


>> What is the wage ceiling limit prescribed for coverage of an employee? 

It is Rs. 15,000 per month from 1-May, 2010. 
The wage ceiling for cover age of an employee with 'disability' is Rs. 25,000/- per month from 1-4-2010. 


>> What is 'Average Daily Wages'? 

Average daily wages: 
a) ln respect of an employee who is employed on time rate basis, the amount of wages which would have been payable to him for the complete wage period had he worked on all the working days in that wage period divided by 26, if he is monthly rated, 13 if he is fortnightly rated,6 if he is weekly rated and 1 if he is daily rated. 
(b) In respect of piece rated employee, the amount of wages earned during the complete wage period divided by the number of days in full or part for which he worked for wages in that wage period (Rule 1-B). 


>> Who is an 'Exempted Employee'? 

An employee who is exempted from payment of employees' contribution is called an exempted employee. The present exemption limit is average daily wages of Rs.70 (seventy rupees). However, employers contribution is payable on these wages. 






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APPLICABILITY OF THE ACT & SCHEME:

 Is extended in area-wise to factories using power and employing 10 or more persons and to non-power using manufacturing units and establish-ments employing 20 or more person upto Rs.15,000/- per month w.e.f. 01.04.10. It has also been extend-ed upon shops, hotels, restaurants, roads motor transport undertakings, equip-ment maintenance staff in the hospitals.

COVERAGE OF EMPLOYEES:

 Drawing wages Upto Rs.15,000/- per month Engaged either directly or thru’ contractor

RATE OF CONTRIBUTION OF THE WAGES:

 Employers’ 4.75%

 Employees’ 1.75%

MANNER AND TIME LIMIT FOR MAKING PAYMENT OF CONTRIBUTION:

 The total amount of contribution (employee’s share and employer’s share) is to be deposited with the authorized bank through a challan in the prescribed form in quadruplicate on ore before 21st of month following the calendar month in which the wages fall due.

BENEFITS TO THE EMPLOYEES UNDER THE ACT:

 Medical Benefit
 Sickness Benefit(SB)
 Maternity Benefit(MB)
 Disablement Benefit
 Dependants’ Benefit(DB)
 Funeral Expenses

 In addition, the scheme also provides some other need based benefits to insured workers.

WAGES FOR ESI CONTRIBUTIONS:

 Registers/files to be maintained by the employers

CONTRIBUTION PERIOD:

 If the person joined insurance employment for the first time, say on 5th January, his first contribution period will be from 5th January to 31st March and his corresponding first benefit will be from 5th October to 31st December.

TO BE DEEMED AS WAGES:

• Basic pay
• Dearness allowance
• House rent allowance
• City compensatory allowance
• Overtime wages (but not to be taken into account for determining the coverage of an employee)
• Payment for day of rest
• Production incentive
• Bonus other than statutory bonus
• Night shift allowance
• Heat, Gas & Dust allowance
• Payment for unsubstituted holidays
• Meal/food allowance
• Suspension allowance
• Lay off compensation
• Children education allowance (not being reimbursement for actual tuition fee)

NOT TO BE DEEMED AS WAGES:

• Contribution paid by kthe employer to any pension/provident fund or under ESI Act.
• Sum paid to defray special expenses entailed by the nature of employment – Daily allowance paid for the period spent on tour.
• Gratuity payable on discharge.
• Pay in lieu of notice of retrenchment compensation
• Benefits paid under the ESI Scheme.
• Encashment of leave
• Payment of Inam which does not form part of the terms of employment.
• Washing allowance for livery
• Conveyance Amount towards reimbursement for duty related journey

PENALTIES :

 Different punishment have been prescribed for different types of offences in terms of Section 85: (I) (six months imprisonment and fine Rs.5000), (ii) (one year imprisonment and fine), and 85-A: (five years imprisonment and not less to 2 years) and 85-C (2) of the ESI Act, which are self explanatory. Besides these provisions, action also can be taken under section 406 of the IPC in cases where an employer deducts contributions from the wages of his employees but does not pay the same to the corporation which amounts to criminal breach of trust.

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