The Hindu Business Line : ESIC `move' irks Coimbatore tiny units

SMALL and tiny units in Coimbatore are up in arms over the alleged action of the ESI Corporation in demanding job-working units, employing less than 10 persons, to remit their ESI contribution, which they say is against law since such units are exempted from ESI coverage.

The units engaged in doing job work for larger manufacturers also fear that their business would take a knock if they did not comply with the ESI pressure as some of their big clients had indicated that they might review their business ties if they did not fall in line with the ESIC order.

Mr K. Elango, Hon Secretary, Coimbatore District Small Industries Association (Codissia), told Business Line today that the action of the ESI Corporation was against law since small units employing less than 10 persons were not covered under the ESI Act.

He said the ESIC also had arbitrarily calculated the ESI contribution for the workers based on 60 per cent of the job work charges. He said the job component constituted only about 10 per cent of the job work cost with the rest going for other expenses such as input cost, power etc.

By fixing a higher job cost, the companies were made to pay a higher amount as ESI contribution than what they would have to pay, which itself was being disputed by the job working units.

The Codissia Secretary said the small and tiny units were opposed to the ESIC action for various other reasons as well. He said the workers' attrition in these industries was very high and it would be impossible for the workers to keep track of the ESI contribution. He feared that this would also push up the employee cost, apart from forcing the units to do a lot of paper work.

Mr Elango said another development that was causing concern to the small and tiny units involved in job work for larger clients was the subtle caution given by the latter that they would review their business relationship if they (the small/tiny units) did not extend the ESI benefits to their workers.

The job working companies were worried about this development. Even small units at times distributed the work among other companies on job work basis. Close to 50 job working units have been served with notices asking them to extend ESI coverage to their workers.

The ESIC also was asking these units to pay up the workers' ESI contribution for the past five years. He questioned the logic of asking for payment with retrospective effect when no benefit accrued and when the units employing less than ten workers were not required by law to do so.

Mr J. Balu, President, Codissia sought the intervention of the Union Labour Minister for issuing appropriate guidelines to the concerned officials in this regard. He suggested that if necessary, meeting of ESIC officials and industrial associations at various levels could be convened.

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