PT Pvt. Ltd., is engaged in the business of textile related products and employs 20 employees. Out of which, 11 employees draw a monthly salary of more than ₹25,000 each and 9 employees draw a monthly salary of less than

CS Executive · Setting up of Business Entities and Closure · PYQS · June 2021
PT Pvt. Ltd., is engaged in the business of textile related products and employs 20 employees. Out of which, 11 employees draw a monthly salary of more than ₹25,000 each and 9 employees draw a monthly salary of less than ₹20,000 each. Because of this the Management of the Company is of the view that the Company is not covered under Employee's State Insurance (ESI) Act, 1948. Referring to relevant provisions clarify whether the contentions of the Management of PT Pvt. Ltd. is correct.

Answer & Explanation:

Registration of Employer: Any employer having more than 10 employees is mandatorily required to register under ESI. Employees earning ₹21,000 INR per month or less shall make contribution for ESI scheme. Employees with higher wages are exempt. Registration depends on the number of employees and not on earnings of the Employees. Though employees drawing more than ₹21,000 per month are exempt for ESI contribution. Registration limit is mandatory, if a Company has more than 10 employees. Accordingly PT Pvt. Ltd. have to obtain registration, even if the number of employees who are contributing is less than 10.

Topics: Labour Laws

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