One of the measures undertaken by the Government of India to ensure social security for the workforce includes the Employees’ State Insurance (ESI), established under the Employees’ State Insurance Act, 1948 (ESIC Act), and the Employees’ Provident Fund (EPF), instituted under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (EPFO Act).
Both acts are central legislations and are uniformly applicable across all states and union territories. These Acts apply to every establishment that employs more than the threshold number of employees as prescribed by the respective statutes. The definition of “establishment” under these acts is broad and encompasses virtually all types of organizations.
Under the EPFO Act, the term “establishment” encompasses all factories, institutions, and shops covered by the Act. Initially, the ESIC Act defined “establishment” to mean factories, but its scope was gradually extended to include shops, hotels, restaurants, road motor transport establishments, cinemas (including preview theatres), newspaper establishments, educational institutions, and medical institutions.
The Employees’ Provident Fund Organization (EPFO) applies to establishments under Section 1(3) of the EPF Act. According to this section:
1. Any factory employing 20 or more employees.
2. Any other establishment employing 20 or more employees.
However, Section 16 provides an exception for certain establishments, where the EPFO provisions will not be applicable even if they exceed the specified employee strength. ESIC is applicable to establishments under Section 1, Sub-section (3), and Sub-section (5) of the Employees’ State Insurance Act, 1948. Under Sub-section (3), it applies to factories, while Sub-section (5) extends its applicability to other specified establishments. Therefore, ESIC applies to establishments with 10 or more employees, whereas EPFO applies to establishments with 20 or more employees.
It is crucial to comprehend the significance of the employee threshold, which is set at 10 for ESIC and 20 for EPFO. To fully grasp the implications for employees, it is essential to understand the applicability criteria of both ESIC and EPFO. ESIC applies to every employee whose salary is ₹21,000 per month or less (salary being specifically defined under the ESIC Act). Employees earning more than ₹21,000 per month are not covered. Similarly, under EPFO, the scheme is applicable to employees earning ₹15,000 or less per month. However, employees earning more than ₹15,000 per month may voluntarily opt for EPFO. When determining the number of employees for the applicability of both ESIC and EPFO, it is necessary to consider all employees, regardless of whether their earnings are within or above the threshold limit. Employees earning above the threshold are referred to as excluded employees.
Once the applicability of the act is determined, or if we decide to obtain voluntary registration under EPFO, registration must be completed. Establishments can be categorized into two groups: those incorporated after February 2020 and those incorporated before February 2020, along with all other establishments. Companies incorporated after February 2020 will automatically receive EPFO and ESIC numbers upon incorporation. However, compliance is required only once they exceed the threshold limit or voluntarily opt for EPFO. Upon crossing the threshold limit or opting voluntarily, these companies must file the necessary information with the respective departments.
For all other establishments and companies incorporated before 2020, registration must be completed through the Shram Suvidha Portal, a single-window portal for obtaining registration under various labor law statutes.
The registration process begins with creating an account on the portal. Once the account is created, select “Registration” and then “Registration for EPFO-ESIC” under the registration tab. Depending on the situation, you can opt for both EPFO and ESIC if the establishment exceeds the threshold of 20 employees, only ESIC if it exceeds 10 employees, or only EPFO if registering voluntarily.
It is important to note that EPFO registration can be obtained voluntarily even if the establishment has fewer than 20 employees. However, voluntary registration is not available for ESIC.
After selecting the required registration, a new window will appear with different tabs to provide the necessary information. The first tab, “Establishment Detail,” requires information such as the name of the establishment as per PAN, the establishment’s address, whether it is a factory (and if so, relevant factory details), and whether it is a startup or MSME, along with ownership details.
The second tab is for e-Contacts, where the primary email and mobile number of the establishment must be provided.
The third tab is for the Contact Person. This requires the name of the contact person, along with details such as their PAN, father’s name, address, and other relevant information. Typically, this is the primary owner of the establishment.
The fourth tab is for Identifiers. Here, select the documents from the provided list that prove the existence of the establishment. For instance, a company would select the Certificate of Incorporation and provide details such as the identifier number, issuing date, and authority.
The fifth tab is for Employment Details. This section requires information on the applicability of the act, whether mandatory or voluntary. Details to be filled include the total number of employees, number of excluded employees, salaries, and the number of employees earning ₹21,000 or less.
The sixth and seventh tabs are for details of branches, if any, and the activities carried out by the establishment.
The final tab is for Attachments. After entering all the required details, attach the necessary documents and submit them for approval.
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