ESI, PF, Safety/Fire Dept. NOC, Insurance etc.

Posted by fshsfhsfh on Tuesday, October 18, 2011

I got an email from a reader with the following questions - am posting the questions and the responses for the benefit of the larger reader base:

Disclaimer and Important Note: I am not a legal/accounting/statutory expert. These areas tend to be highly complex, localized and I would strongly advice seeking opinions from qualified accountants/lawyers for these. I have only provided broad guidance below, based on what I know.

1) What is the eligibilty criteria for a restaurant to be ESI and EPF compliant? If a restaurant comes under the purview of these departments, what are the formalities to be complied with?

ESI stands for Employees State Insurance. Essentially, this is a medical insurance scheme for low wage employees (monthly income of Rs.15,000 or below) for availing medical facilities at government hospitals, governed by the ESI Act of the Government of India. ESI is managed by the the Employees State Insurance Corporation (www.esic.in). You can find more information including a copy of the act on their website. Their new portal launched a few months ago is pretty good and a lot of transactions can be completed online with minimal fuss.

If you employ 10 or more employees with wages less than Rs. 15,000 per month, then you will need to participate in the ESI scheme.

EPF stands for Employee's Provident Fund - You need to participate in EPF if you employ 20 or more employees irrrespective of their salary levels. Again you can find information on their website - http://www.epfindia.com/

Most accountants have a external partner (typically a freelancer or who specializes in ESI, Labour & PF) they can refer you to. For a small monthly fee they will help you with the process of registration, ongoing statutory filings and support. Both of these require monthly payments and periodical filings (monthly, annual).Again the freelancer/specialist will help you with these.

2) Does a Restaurant need a fire safety certification / NOC from the fire department?

As far as my limited knowledge goes, buildings require a fire safety certification in certain cases. I am not aware of a restaurant business specifically requiring a safety certification / NOC from the fire department. Again this could be very localized - your best bet would be to ask a neighboring restaurant on if something of this nature is required.

3) Is Insurance (of premises etc) mandatory for a restaurant?

Insurance of the premises (building) is typically the landlord's responsibility. But Insurance of the fittings, furniture, equipment inside the restaurant is highly recommended. Most general insurance companies have a specific package for hotels/restaurants - E.g. Tata AIG insurance package for Hotels and Restaurants. This insurance is not mandatory, but highly recommended.

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