ESI Registration

ESI Registration Overview

ESI or Employee State Insurance is a self-financing social security scheme in India. ESI was originally applicable for factories that employed ten or more persons. Subsequently, the coverage of ESI scheme has been expanded. Currently, any factory or establishment employing ten or more persons drawing wages of upto Rs.21,000 per month must obtain ESI registration.

Definition of Factory under ESI Act

Under ESI, a factory is defined as any premises, including the precincts thereof, where ten or more persons are employed or were employed for wages on any day of the preceding twelve months, and, in any part of which, a manufacturing process is being carried on with or without the aid of power.

If within the same premises of a factory a number of departments are situated and the departments are engaged in the work in connection with or incidental to a manufacturing process of the factory, they would all form part of the factor.

Also, the definition of a factory under ESI includes a seasonal factory which works for a period not exceeding seven months in a year and is engaged during that period in any process of blending, packing or repackaging of tea or coffee or other manufacturing process notified by the Central Government.

The definition of a factory under ESI does not include a mine, subject to the operation of the Mines Act, 2952 or a railway running shed.
In summary, as long as the number of persons working on the factory premises is ten or more, the premises is a factory irrespective of the consideration whether they are paid wages or not. Also, all persons working in a factory need not be employed for the manufacturing process.