Page 79 - DMGT306_MERCANTILE_LAWS_II

Mercantile Laws – II

Notes Under the enabling provisions of the Act, a factory or establishment, located in a geographical
area, notified for implementation of the scheme, falls in the purview of the Act. Employees of
the aforesaid categories of factories or establishments, but drawing wages only up to 6,500 a
month are entitled to health insurance cover under the ESI Act. The wage ceiling for purpose of
coverage is revised from time to time; to keep pace with rising cost of living and subsequent
wage hikes.

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Caution The present ceiling of 6,500 has been effective from 1st January 1997 the
appropriate government state or central is empowered to extend the provision of the ESI
Act to various classes of establishment, industrial, commercial, agricultural or otherwise
in nature.

Notes As soon as the above conditions are fulfilled the employer should furnish the
details in Form-01 to ESI office for registration under the ESI Act, 1948 & obtaining of the
employer’s Code No.

4.3.1 Wage Ceiling for Coverage

The monthly wage limit for coverage under the ESI Act would be such as prescribed by the
central government in the ESI [central] rules, 1950. The existing wage ceiling for coverage
[excluding remuneration for over-time work] is 6500 per month [rule 50 of ESI central rules,
1950]. An employee who is covered at the beginning of a contribution period shall continue to
remain covered till the end of that contribution period notwithstanding the fact that his wages
may exceed the prescribed wage ceiling at any time after the commencement of that contribution
period. Wage ceiling for purpose of coverage is revised from time to time by the central
government on the specific recommendation of the corporation, at present the corporation has
recommended for the increase of the wage limit to 10,000 and its implementation is awaited.

4.3.2 Coverage

With the implementation of ESI scheme, at just two industrial centers in 1952, namely kanpur
and Delhi, there was no looking back since then in terms of its geographic reach and demographic
coverage. Keeping pace with the process of industrialization, the scheme today stands
implemented at over 679 centers in 25 states and union territories. The Act now applies to 230
thousand factories and establishments across the country, benefiting about 8.30 million family
units of workers in the wage brackets. As of now, the total beneficiary population stands at
about 32 million.
The Act applies, in the first instance, to, non-seasonal factories employing 10 or more persons.
The provisions of the Act are being extended area-wise by stages. The Act contains an enabling
provision under which the “appropriate government” is empowered to extend the provisions
of the Act to other classes of establishments - industrial, commercial, agricultural or otherwise.
Under these provisions most of the State Governments have extended the provisions of the Act
to new classes of establishments namely: shops, hotels, restaurants, cinemas including preview
theatres, road-motor transport undertakings and newspaper establishments employing 20 or
more coverable employees. The Scheme has also been extended to Educational Institutions
employing 20 or more persons in Rajasthan, Bihar, Pondicherry, Jammu & Kashmir, Uttarakhand,
Chattisgarh, West Bengal, Jharkhand, Kerala, Uttar Pradesh, Andhra Pradesh, Assam, Punjab,

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