Social security programs like employee State Insurance & Provident Fund in India are vital for Employee welfare. Both schemes administered by the Ministry of Employment and Labour seek to enhance living conditions of the working class. However they serve different purposes with different registration processes and benefits. This article compares PF and ESI registration in terms of eligibility criteria, benefits and documents.
ESI & PF: What are they?
Employee State Insurance: The Employee State Insurance Corporation administers The ESI scheme under the ESI Act of 1948. Dependents and workers receive medical and financial benefits from ESI. It provides medical care and money if workers become ill, disabled or pregnant.
Provident Fund: The Employees’ Provident Fund & The Miscellaneous Provisions Act of 1952 established The EPF. The EPF is a cost savings program which helps employees save for emergencies or even retirement. Both employee and employer make contributions to the PF thus building savings up over the employee’s career.
Eligibility Selection Criteria for ESI and PF
Here is the eligibility criteria for ESI and PF:
ESI Eligibility:
- Organizations incorporated under the Shops & Establishments Act or the Factories Act.
- Factories along with other establishments with ten or more workers must join the ESI scheme.
- Employees with earnings not exceeding 21,000 a month are enrolled in the ESI scheme.
PF Eligibility:
- Any factory or establishment with a minimum of 20 workers should join the EPF scheme.
- Organizations with fewer than 20 employees can join the EPF scheme voluntarily.
- All workers on a monthly salary below 15,000 are obligated to contribute to the EPF.
- Employees already registered with the EPF scheme are automatically enrolled upon joining a brand new organization.
ESI & PF Benefits
Here are the benefits of the ESI and PF scheme:
ESI Benefits:
- Medical Benefits: ESI offers medical care along with clinical investigations to insured employees and their families.
- Sickness Benefits: Insured workers receive extended sick leave benefits.
- Disability Benefits: Employees are compensated for disabilities during employment only if the disability lasts.
- Dependent Benefits: Dependents of an insured individual who dies due to a work related injury are paid financially.
- Maternity Benefits: Female workers get 26 weeks pay maternity leave. They get six weeks paid leave if the miscarriage happens.
- Funeral Benefits: The insured pays a one time fee for funeral costs.
Benefits of PF:
- Savings for Future Needs: Employees can withdraw savings from EPF account for education, marriage or health emergencies.
- Tax Exemption: The whole amount, which includes interest, is exempt from income tax in case withdrawn after five years of constant work.
- Online Access: EPF accounts are managed online and employees can access money from anywhere with a UAN.
- Nominee Benefits: In case of employee death, nominee gets the PF balance and accrued interest.
Documents Required for ESI Registration
Here are the documents needed for ESI Registration:
- Certificate of Incorporation: For private limited companies only.
- Registration Certificate: In line with the Factories Act or the Shops & Establishments Act.
- Employee Details: Information on each employee including monthly salary.
- Ownership Information: Details of partners, shareholders and directors.
- Bank Statements: Company bank statements and proof of business beginning.
- Proof of Address: Last electricity bill & PAN card of the business.
- Also Miscellaneous docs: Other relevant documents needed by ESIC.
Here are the documents necessary for PF Registration:
- Establishment Information: Details of the business including PAN card copy and address.
- Factory License: Copy of factory license in case applicable.
- Startup Certificate: For startups: startup registration certificate.
- MSME Certificate: For MSMEs: a copy of the MSME registration certificate.
- OWNERSHIP Details: Information on primary and other owners.
- Contact Information: Address & contact info.
- Government Certificates: GST registration, Shops and Establishment registration or other government certificate.
- Employee Details: Details of EPF Act covered employees.
- Branch Information: Details of branches & divisions.
- Activity Details: Nature of work and NIC code (where applicable).
- Proof of Address: Employer – employee Agreement regarding voluntary coverage.
Contribution Rates
Here are the contribution rates for both schemes:
ESI Contribution:
- Employer Contribution: 3.25% of employee salary.
- Employee Contribution: 0.75% of their salary.
PF Contribution:
- Employer Contribution: 12% of the employees basic salary and dearness allowance.
- Employee Contribution: 12% of their basic salary & dearness allowance.
The employer and worker’s minimum salary for PF contributions is 15,000.
Conclusion
Though both ESI and PF schemes are meant to enhance the welfare of employees, they have different purposes and differ in their registration methods and advantages. ESI offers medical and financial benefits to workers and dependents so they can receive health care whenever they need it. In comparison, PF is a savings scheme where workers save for emergencies or retirement with tax exemptions and can withdraw funds for different purposes.
Understanding the differences between ESI and PF registration is essential for both companies and workers to ensure they’re properly covered and benefit from these social security schemes. Following the eligibility requirements and submitting the appropriate documentation enables organizations to offer their workers both medical support and financial security to ensure a productive and happy workforce.
FAQs
What is EPF & ESIC registration?
Registering under the ESIC and PF schemes ensures corporate compliance and demonstrates a concern for employees’ wellbeing and financial stability.
What is the employee limit on PF and ESI registration?
A company with 20 or more workers must by law register in the EPF scheme within a month of attending the minimum strength of 20 workers. The small companies without minimum strength would register themselves.
Is ESI and PF required for employees?
Yes. Most establishments covered under the ESI Act and most industries employing over ten workers earning wages below or upto Rs.21,000 monthly (Rs.25,000 for workers with disability) should register with the ESIC and also add to the ESI scheme.
What is difference between PF & ESI?
In a provident fund arrangement, a worker’s income is deposited into the fund every month and matched by the employer. ESI is employees State insurance (social security and health Insurance program for Indian employees).
Is PF compulsory for all employees?
To open an EPF account is a required process for workers earning Rs. 15,000 or more, though anybody can select it voluntarily. Employees contribute at least 12% of their earnings and may contribute more voluntarily.
