Employee State Insurance

Employees’ State Insurance Scheme of India is a multi-dimensional Social Security Scheme tailored to provide Socio-economic protection to the 'employees' in the organized sector against the events of sickness, maternity, disablement and death due to employment injury and to provide medical care to the insured employees and their families.

Who has to get registered under the Employees Provident Fund Act?

Is it compulsory for the business establishments to register under the Act?

Yes, it is the statutory responsibility of the employer under Section 2A of the Act read with Regulation 10-B, to register their Factory/ Establishment under the ESI Act within 15 days from the date of its applicability to them.

What is the Present Rate of Contribution?

Employer’s contribution: A sum equal to 4.75% of the wages payable to an employee, rounded off to the next higher rupee.

Employee’s contribution: A sum equal to 1.75% of the wages payable to an employee, rounded to the next higher rupee.

Employer’s contribution: A sum equal to 4.75% of the wages payable to an employee, rounded off to the next higher rupee.
Employee’s contribution: A sum equal to 1.75% of the wages payable to an employee, rounded to the next higher rupee.

Can an establishment once covered go out of coverage if the number of persons employed therein goes down to the minimum limit prescribed?

Once a factory or an Establishment is covered under the Act, it continues to be covered notwithstanding the fact that the number of persons/ coverable employees employed therein at any time falls below the required limit.

If the salary of an employee exceeds Rs. 21,000 in a month, can he be treated as not covered and deduction of contribution from his salary is stopped?

If the salary of an employee exceeds the prescribed wage limit (currently it is Rs.21000) after start of contribution period, he continues to be an employee till the end of that contribution period. This means, coverage can be stopped in the next contribution period.

What are consequences of non / late payment of employees' contribution deducted but not paid?

An employer who fails to pay the contribution within the limit prescribed under Regulation 31, shall be liable to pay simple interest at the rate of 12% per annum in respect of each day of delay or default in payment of contribution.

Non-payment or delayed payment of the Employee's contribution deducted from the salary of the employee amounts to 'Breach of trust' and is punishable under IPC 406, 409 and also an offence u/s 85 of ESI Act.

What are the penal provisions for non-payment or delayed payment of contribution?

The Corporation may levy and recover damages under Reg. 31C at the following rates, not exceeding the amount of contribution payable for default or delay in payment of the contribution.

Period of delay

Rate of damages in % p.a

Less than 2 months

5 %

2 to 4 months

10 %

4 to 6 months

15 %

6 months and above

25 %

The employer is liable for prosecution under Section 85(a) for the first time, whoever, having been convicted by a court of an offence punishable under the Act, commits the same offence shall, for every such subsequent offence, be liable for enhanced punishment under section 85 A of the Act

The Corporation may levy and recover damages under Reg. 31C at the following rates, not exceeding the amount of contribution payable for default or delay in payment of the contribution.

Period of delay

Rate of damages in % p.a

Less than 2 months

5 %

2 to 4 months

10 %

4 to 6 months

15 %

6 months and above

25 %

What are the records to be maintained for ESI purpose?

For ESI compliance the employer has to maintain following records:

Muster roll, wage record and books of Account maintained under other laws.

Accident Register in new Form-11

An inspection book.

The immediate employer is also required to maintain the Employees Register for the employees deployed to the principal employer.

For ESI compliance the employer has to maintain following records:

Muster roll, wage record and books of Account maintained under other laws.
Accident Register in new Form-11
An inspection book.
The immediate employer is also required to maintain the Employees Register for the employees deployed to the principal employer.

What are the returns/ reports to be submitted by the employer?

The Employer has to submit following records:

Accident Report: Notice of Accident to the concerned Branch office in Form -12 should be submitted on-line within 24 hours.

Abstention verification Report: It is required to be submitted to the Branch office as and when it is sought by the Branch Manager in respect of any IP.

Records including attendance, wages and books of accounts etc. in respect of principal employer and records of immediate employer as required by the Labor Laws

The Employer has to submit following records:

Accident Report: Notice of Accident to the concerned Branch office in Form -12 should be submitted on-line within 24 hours.
Abstention verification Report: It is required to be submitted to the Branch office as and when it is sought by the Branch Manager in respect of any IP.
Records including attendance, wages and books of accounts etc. in respect of principal employer and records of immediate employer as required by the Labor Laws

Compliance Ready reckoner under ESI Act

Particulars

Compliance

Registration

Within 15 days of applicability

Amendments

Within 15 days of changes

Monthly contribution

15th of the subsequent month

Other registration required to start the business :

GST Registration

Registration under Karnataka Shops and Establishment Act

Profession Tax Registration

MSME | Udyog Aadhaar Registration

Employee Provident Fund Registration (PF Registration)

Import Export Code ( IEC)

Trade License from BBMP