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Employees State Insurance Law in India is regulated by the Employees State Insurance Act, 1948 which mandates the various provisions of the Employees Provident Fund Law in India.
Employees State Insurance Law in India is a self-financing and self-regulating social security scheme of the Central Government of India. It is controlled by the Standing Committee at the National level and by the Regional Boards and Local Committees at the local level. The Employee State Insurance Law in India requires the mandatory registration of a factory, establishments, etc to which the Act applies.
Under the Employees State Insurance Law in India, employers are bound under Section 2 A of the Employees Provident Fund Law in India to get them registered with the ESIC within a period of 15 days of the applicability of the Act on them.
The registration form for coverage of an establishment under ESI is filed online with all the details which are scrutinized and employer code is issued to the employer based on his location. With the opening of further branches, subcodes are allotted to each new branch of the establishment.
So far as the compliance within India is concerned, the same is by way of deposit of the compulsory employers share along with the share of the employee which can now be done online.
The returns are also filed online hence the entire process is very simplified as well as transparent. The employer has to deposit his share of 4.75% of the wages of the employee besides the deduction and deposit of 1.75% from the share of the employee.
The control over the entire mechanism is through the Regional Offices, Sub Regional Offices, and Sub Offices. The Inspectors of ESI visit the various establishments and conduct the inspection of ESI for seeking compliance with the ESIC Act.
Under the scheme of the Employees Provident Fund Law in India all establishments employing more than 20 employees are under obligation to get employer code under ESIC, almost all kinds of establishments are covered under the ESI Act which is bound to get themselves registered however exemption to certain establishments has been granted vide notifications issued by the ESI itself. The following types of establishments are covered under the Employees Provident Fund Law in India:
Shops employing more than 20 employees who are getting wages less than 15,000/- Per month.
Hotels or restaurants not having any manufacturing activity, but only engaged in sales.
Cinemas including theaters.
Road Motor Transport Establishments.
Private Educational Institutions including medical institutes.
The following categories of employees are exempted from coverage under the Employees Provident Fund Law in India:
i) All employees working under the establishment are covered under the ESI, irrespective of the fact whether they are employees of the contractors or the direct employees, the overall responsibility of the coverage is on the principal employer.
ii) The employees who are getting the wages more than Rs 15,000/- Per Month are not entitled to the benefits of ESIC.
iii) The employees with the disability getting more than Rs 25,000/- PM wages are exempted.
The present rate of contribution is 4.75% of the wages payable to an employee, rounded off to the next higher rupee as the share of the employer whereas the share of the employee is 1.75% of the wages. The deduction and not deposit of the contribution of the employees is also treated as a criminal breach of trust which is punishable under Section 406 of IPC. There is a provision of the penal interest on the delayed deposits of the ESI contribution by the employees.
The individual employee is also granted registration under the Employees Provident Fund Law in India and he is issued an I-Card which is now termed as Smart Card, he can avail all the benefits from the ESIC on the said card. The employees are entitled to various kinds of medical benefits, sickness benefits, extended sickness benefits, enhanced sickness benefits, disablement benefits, employment injury benefits, occupational disease benefits, temporary disablement benefits, permanent disablement benefits, dependents benefits, maternity benefits, funeral benefits. For establishments also the registration under the ESI is beneficial as well as mandatory as it saves their expenses in case of an accident or death during the course of employment.
The effects of non-compliance with the Employees Provident Fund Law in India are civil as well as criminal as the ESI Corporation can initiate recovery proceedings on the basis of the balance sheet of the establishment or on the basis of the inspection. A penalty is also imposed for non-compliance with the provisions of the ESI Act and in some cases, criminal prosecution is also launched against the establishment. It is always better to seek specific legal advice in the matter of applicability and compliance of the ESI on the establishment and make compliance in time as a stitch in time saves nine.
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Important services of Employees State Insurance Law in India:
i) Coverage and registration of establishment under ESI.
ii) Coverage of all eligible employees under ESI.
iii) Compliance of ESI contributions.
iv) Filing of returns of ESI.
v) Inspection of establishment under ESI.
vi) Filing of appeal against assessment orders of ESI.
vii) Handling of criminal prosecution under ESI.