In this editorial author shall discuss about the compliance to de done by every ‘Newly Incorporated Company with AGILE‘ with ESI Act. Many questions asked by Companies and Professional in respect of ESIC Compliances like:
1. Whether every New company is required to comply with compliances of ESI Act in relation to ESIC?
2. Even if the employee is below the limit of ESI Act. Whether Companies required to comply with ESIC Compliances?
What is ESI and ESIC:
ESI stands for Employee State Insurance managed by the Employee State Insurance Corporation (ESIC) which is an autonomous body created by the law under the Ministry of Labour and Employment, Government of India.
The ESI scheme was started for Indian workers. The workers are provided with a huge variety of medical, monetary and other benefits under the ESI Act from the contributions made by both the employer and employee towards the ESI Scheme.
Applicability of ESIC:
The ESI scheme is applicable to all factories and other establishments as defined in the Act with 10 or more persons employed in such establishment. The threshold for coverage of establishment is 20 employees in Maharashtra.
The scheme under the act also supports restaurants, motor road transports, newspaper establishments and undertakings, movies and purview theatres, hotels, shops.
Company Law Provisions:
If any new company getting incorporated on MCA Portal (OPC, Private or Public) such company needs to file web form AGILE PRO. In AGILE PRO company have to mandatory apply for ESIC registration.
Therefore, Every Company getting incorporate in India shall be allotted ESIC registration no. irrespective of no. of employees in the Company.
Therefore, every company incorporated in India having ESIC registration no from the date of Incorporation.
Now the question arise that ESIC compliances are applicable on the Company when its crossed the threshold limit of minimum 10 employees. If the Company having less than 10 employees. Whether such company need to comply with the regular returns/ compliances of ESI Act?
As per the latest circular issued by the ESIC they have mentioned that:
♦ W. e.f. 15th February, 2022 ESIC has stopped the Registration of New OPC, Private and Public Company on Shram Suvidha Portal of ESIC.
♦ W.e.f. 15th February, 2022 New Companies shall get the ESIC registration through AGILE PRO form along with Incorporation of Company.
Note: Practically the new incorporated Companies will have to comply with the provisions of ESI Act, 1948 when they reach the threshold limit of employment under the ESI Act.
Latest Clarification by ESIC:
I. In case, the companies registered through the MCA portal are found not coverable as per the statutory provisions of the ESI Act, they need not to make compliance
Whichever is earlier.
II. If Company doesn’t reach the threshold in 6 months, it has to login on the ESIC website to further extend the ‘Dormant’ mode.
III. In case, it does not extend the same, the registration will automatically activate and the company has to start compliances under the ESIC Act.
IV. If it is not followed by the respective employers, necessary actions under the existing provisions of ESI Act may be taken against the defaulting units.
ACTION TO BE TAKEN BY NEWLY INCORPORATED COMPANIES:
1. Initially the status of registration shall be activate. Company have to start compliance with ESI Act within 6 months of Incorporation.
2. Within 6 months Company can make registration number dormant by logging in the system in case they are not immediately coverable under ESI act to avoid defaulter action.
** In one go maximum period it ca choose is 6 month.
3. Before expiry of 180 days from the application of dormant status, Company has to login on the ESIC website to further extend the ‘dormant’ mode.
Screenshot of the Screen:
The screen which will appear at the time of initial login, employer have to tick appropriate box option 1 will appear only on the first login. In the below case the date will be editable and employer can extend the dormant status of the filing of registration.
After reading of the Circular of ESIC one can opine that it is mandatory for every company incorporated by AGILE PRO to comply with the compliances of ESIC Act until unless company has applied for Dormant Status of the same every 6 month.
Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at email@example.com).
What if company having more than 10 employees but employee wages are more than the ESIC limit. Should we file nil return or what action need to be take in this case?