In India, providing social security to employees is a crucial aspect of labor law. Two key organizations responsible for this are the Employees’ State Insurance Corporation (ESIC) and the Employees’ Provident Fund Organisation (EPFO). Registering with these bodies ensures that employees receive benefits related to healthcare, financial security upon retirement, and in other contingencies. This article outlines the significance, eligibility, registration processes, and benefits of ESIC and EPF registration for employers and employees.

Understanding ESIC and EPF

• Employees’ State Insurance Corporation (ESIC): ESIC is a statutory body that provides socio-economic protection to employees and their dependents in the organized sector in the event of sickness, maternity, disablement, or death due to employment injury. It offers medical benefits and cash benefits during periods of inability to work.
• Employees’ Provident Fund Organisation (EPFO): EPFO manages a mandatory savings scheme for retirement. It aims to provide financial security to employees upon retirement, resignation, or death. The scheme involves contributions from both the employer and the employee.

Applicability and Eligibility

ESIC:

• Applicable to factories and other establishments (including shops, hotels, restaurants, cinemas, educational institutions, etc.) employing 10 or more employees. In some states, the threshold is 20 employees.
• Covers employees earning wages up to ₹21,000 per month (₹25,000 for employees with disabilities).
• The scheme applies to various industries and sectors as notified by the government.

EPF:

• Mandatory for establishments employing 20 or more employees.
• Establishments with less than 20 employees can opt for voluntary registration.
• Employees earning less than ₹15,000 per month at the time of joining are generally required to be members. Employees earning more than this can also join with the employer’s agreement and the Assistant PF Commissioner’s approval.
• Once an establishment is registered, it continues to be under the Act even if the employee strength falls below 20.

DOCUMENTS REQUIRED FOR REGISTRATION

While the process is online, you’ll need to have scanned copies of the following documents ready:

For ESIC:

• Registration Certificate under the Factories Act or Shops and Establishment Act.
• Certificate of Incorporation (for companies), Partnership Deed (for partnerships), GST Registration Certificate.
• Memorandum of Association (MoA) and Articles of Association (AoA) for companies.
• Address proof of the establishment (Utility bills not older than three months, Rental agreement, Property tax receipt).
• PAN Card of the establishment and its employees.
• Employee details (list of employees, their PAN cards, compensation details, attendance register).
• Cancelled cheque of the company’s bank account.
• List of company directors and shareholders (if applicable).

For EPF:

• PAN Card of the Proprietor/Partner/Director.
• Aadhaar Card of the Proprietor/Partner/Director.
• Digital Signature Certificate (DSC).
• Business Registration Certificate (Certificate of Incorporation, Partnership Deed, Registration Certificate for sole proprietorship).
• GST Registration Certificate or Shop & Establishment Certificate or any license issued by the government.
• Address proof of the establishment (Utility bills not older than two months, Rental agreement, Bank statement, License issued by a government authority).
• Cancelled cheque or bank statement of the entity.
• Details of employees (joining date, salary details).
• Specimen Signature of the Authorized Signatory on company letterhead.

BENEFITS OF ESIC AND EPF REGISTRATION

Benefits for Employees:

• ESIC:
  • Medical Benefits: Free medical treatment for the employee and their family members at ESIC hospitals and dispensaries.
  • Sickness Benefit: Cash benefit at 70% of average daily wages for up to 91 days in a year during certified sickness.
  • Extended Sickness Benefit: Extended benefit at 80% of wages for up to two years for certain long-term diseases.
  • Maternity Benefit: Full wages for 26 weeks during maternity leave.
  • Disablement Benefit: Periodic payments in case of temporary or permanent disablement due to employment injury.
  • Dependants’ Benefit: Periodic payments to the dependents of an insured person who dies due to employment injury.
  • Other benefits like funeral expenses, rehabilitation allowance, etc.
• EPF:
  • Retirement Savings: A portion of the employee’s and employer’s contribution accumulates over time, providing a substantial sum upon retirement.
  • Financial Security: Provides financial support upon retirement, resignation, death, or in case of certain medical emergencies.
  • Tax Benefits: Contributions are tax-deductible under Section 80C of the Income Tax Act, and the interest earned is also tax-free under certain conditions.
  • Loan Facility: Members can avail loans against their PF balance for specific purposes like education, marriage, medical treatment, or housing.
  • Pension Scheme (EPS): A part of the employer’s contribution goes towards the Employees’ Pension Scheme, providing a monthly pension after retirement.
  • Insurance Scheme (EDLI): Employees are also covered under the Employees’ Deposit Linked Insurance scheme, providing a lump-sum payment to the nominee in case of the employee’s death while in service.

Benefits for Employers:

• Legal Compliance: Registration ensures compliance with labor laws, avoiding potential penalties and legal issues.
• Social Responsibility: Demonstrates the employer’s commitment to the well-being and social security of their employees, enhancing the company’s reputation.
• Employee Satisfaction: Providing these benefits can lead to increased employee satisfaction, loyalty, and retention.
• Streamlined Processes: Online registration and compliance processes make it easier to manage these statutory requirements.

POST-REGISTRATION COMPLIANCE

Once registered, employers need to fulfill certain compliance requirements regularly:

ESIC:

• Maintain registers for attendance, wages, and accidents.
• File monthly returns and pay contributions by the 15th of the succeeding month.
• Provide information for inspections conducted by ESIC authorities.

EPF:

• File monthly Electronic Challan cum Return (ECR) by the 15th of the following month.
• Ensure timely payment of both the employer’s and employees’ contributions.
• Assist employees with PF-related claims and queries.
• Update employee details as and when required.

 

 

CONCLUSION

ESIC and EPF registrations are vital for ensuring the social and financial security of employees in India. Understanding the eligibility criteria, navigating the online registration processes, and adhering to post-registration compliance are crucial for employers. By fulfilling these obligations, businesses not only comply with the law but also contribute to the well-being of their workforce, fostering a positive and secure work environment. The online portals and the Unified Shram Suvidha Portal have significantly streamlined these processes, making it easier for employers to register and comply with these essential social security schemes.