Can anybody please give me any idea that if a company is registered under Shops and Establishment act, but does not provide ESI, Gratuity and minimum days of leaves, then what can happen?
Is it okay if PF is provided only to those employees whose basic is less than 6500?
If a company has different branch units in different states then is it required for every branch unit to get registered? If they are not then what is the future of that unit?
From India, Mumbai
Is it okay if PF is provided only to those employees whose basic is less than 6500?
If a company has different branch units in different states then is it required for every branch unit to get registered? If they are not then what is the future of that unit?
From India, Mumbai
If companies strength- including all branches- is more than 20 the n company should provide ESI and PF to employees. It is ok to provide PF to those employees whose basic is less than 6500. Company should provide leave as per particular state rules where your branch is located. PF code can be one for all branches but ESI code to be taken separately.
This is the legal position, if company does not follow then they have to face the consequences.
From India, Delhi
167This is the legal position, if company does not follow then they have to face the consequences.
From India, Delhi
Thank you very much for your reply. Our employee strength is near 100 and it is basically a one man company. So can you please tell me, what will be the role of an HR when the management doesn’t feel it necessary to provide min no of leaves and ESI? What are the consequences of not obeying the legal compliances?
From India, Mumbai
From India, Mumbai
You can only make a suggestion to your employer. If he does not listen, it is not your fault. However, he might have to face serious problems eventually. Specially in case of ESI, the whole amount will be recovered from employer with interest and penalty.
From India, Delhi
From India, Delhi
Malik has said it. If you are an HR person you have to convince the employer of the consequences of not complying with Labour Acts. You can convince him that if your establishment is covered by ESI, the ESI Corporation will look after the workman's compensation in case of accident and even death while on job. You have to highlight that a woman employee covered by ESI will get maternity benefits from ESIC and the employer need not provide it. The employer's liability is limited to a meagre amount calculated at 4.75% of salary but if he has not gone for ESI, in case of accidents he will have the bear the burden of paying compensation as per Workmen's Compensation Act.
Regards,
Madhu.T.K
From India, Kannur
Regards,
Madhu.T.K
From India, Kannur
The Penal consequences contemplated under the ESI Act, 1948 for non compliance is summarised below:
PENAL PROVISIONS
i. Sec 84 provides for punishment of imprisonment of upto 6 months or with fine not exceeding Rs. 2000/- for making false statements to avail ESI benefits and forfeiture of cash benefits.
ii. Sec 85 (a) An employer who fails to pay contribution due (Sec40) is punishable with imprisonment for upto 3 years but shall not be less than one year where employees’ share is not paid after recovery and shall also be liable to pay a fine of Rs. 10,000/,
iii. In any case it shall not be less than 6 months and shall also be liable to pay fine of Rs. 5000/-
iv. Sec 85 (b) – (g) such as recovery of employer’s contribution from employee(Sec 72), reduces the wages/benefits of the employee, dismisses/discharges/punishes I.P who is in receipt of ESI Benefit (Sec 73) non submission of returns (Sec 26), Obstructs Inspector or contravention of any other provision of the Act shall be punishable with imprisonment for a term which may extend to one year or with fine which may extend to Rs. 4000/- or with both.
Sec 85 A provides for enhanced punishment if convicted for the same offence again he shall be punishable with imprisonment for a term which may extend to two years and with fine of Rs. 5000/-. However failure to pay contribution due after conviction, the employer shall be punishable with imprisonment for a term which may extend to five years but shall not be less than 2 years and shall also be liable for fine of Rs. 25000/-
P.S This is apart from recovery of ESI contribution due together with interest and damages.
regards
Patrick Ryan
From India, Madras
PENAL PROVISIONS
i. Sec 84 provides for punishment of imprisonment of upto 6 months or with fine not exceeding Rs. 2000/- for making false statements to avail ESI benefits and forfeiture of cash benefits.
ii. Sec 85 (a) An employer who fails to pay contribution due (Sec40) is punishable with imprisonment for upto 3 years but shall not be less than one year where employees’ share is not paid after recovery and shall also be liable to pay a fine of Rs. 10,000/,
iii. In any case it shall not be less than 6 months and shall also be liable to pay fine of Rs. 5000/-
iv. Sec 85 (b) – (g) such as recovery of employer’s contribution from employee(Sec 72), reduces the wages/benefits of the employee, dismisses/discharges/punishes I.P who is in receipt of ESI Benefit (Sec 73) non submission of returns (Sec 26), Obstructs Inspector or contravention of any other provision of the Act shall be punishable with imprisonment for a term which may extend to one year or with fine which may extend to Rs. 4000/- or with both.
Sec 85 A provides for enhanced punishment if convicted for the same offence again he shall be punishable with imprisonment for a term which may extend to two years and with fine of Rs. 5000/-. However failure to pay contribution due after conviction, the employer shall be punishable with imprisonment for a term which may extend to five years but shall not be less than 2 years and shall also be liable for fine of Rs. 25000/-
P.S This is apart from recovery of ESI contribution due together with interest and damages.
regards
Patrick Ryan
From India, Madras
I thank all of you for your valued inputs.
I would also like to know, whether any employer running the business since 8yrs, registered under shops and establishment act, employing near 100 employees and having a turnover near 20Crs is liable to pay minimum 8.33% of basic salary as bonus in a year to all employees? If not providing then what are the legal consequences?
In the existing system PL is encashed only during separation. Is the employer liable to encash PL if the employee requests to do so?
From India, Mumbai
I would also like to know, whether any employer running the business since 8yrs, registered under shops and establishment act, employing near 100 employees and having a turnover near 20Crs is liable to pay minimum 8.33% of basic salary as bonus in a year to all employees? If not providing then what are the legal consequences?
In the existing system PL is encashed only during separation. Is the employer liable to encash PL if the employee requests to do so?
From India, Mumbai
Your company owner is walking on thin ice. Let him enjoy till the going is good.
He is running an organisation employing 100 persons with 20 crore turnover since last eight years. But No PF, NO ESI, No bonus and presumably no gratuity?
In case of bonus, there is an infancy clause. But then your company has completed eight years, so where is the question of not giving even 8.33%.
It seems no labour law is followed in your organisation. How come your S & E Inspector has not pointed out anything so far ? Are you managing him with a 'lifafa' ?
As a HR person, it is your duty to make your boss understand that it actually will help him run his organisation in an efficient manner if he follows the laws of the land.
One innocuous complaint to a labour officer will open flood gate for your company.
It is very difficult to apply for PF and ESI now and get the registration without letting them go through your earlier year's books. But hurry, I think ESI has an amnesty scheme going on. Take advantage of it and apply. Try PF registration also. You may have to spend some hush money to the inspecting officers but I guess you should not delay. They will want to know as to when your employee strength crossed twenty for the first time. If you manage to re-work this figure to the satisfaction of the inspectors (of course with the help of the 'lifafa'), they can give you Code numbers.
Remember, PF and ESI people have enrmous powers and they can cripple your business.
Knowing them is bad but not knowing them is more bad.
From India, Hyderabad
He is running an organisation employing 100 persons with 20 crore turnover since last eight years. But No PF, NO ESI, No bonus and presumably no gratuity?
In case of bonus, there is an infancy clause. But then your company has completed eight years, so where is the question of not giving even 8.33%.
It seems no labour law is followed in your organisation. How come your S & E Inspector has not pointed out anything so far ? Are you managing him with a 'lifafa' ?
As a HR person, it is your duty to make your boss understand that it actually will help him run his organisation in an efficient manner if he follows the laws of the land.
One innocuous complaint to a labour officer will open flood gate for your company.
It is very difficult to apply for PF and ESI now and get the registration without letting them go through your earlier year's books. But hurry, I think ESI has an amnesty scheme going on. Take advantage of it and apply. Try PF registration also. You may have to spend some hush money to the inspecting officers but I guess you should not delay. They will want to know as to when your employee strength crossed twenty for the first time. If you manage to re-work this figure to the satisfaction of the inspectors (of course with the help of the 'lifafa'), they can give you Code numbers.
Remember, PF and ESI people have enrmous powers and they can cripple your business.
Knowing them is bad but not knowing them is more bad.
From India, Hyderabad
Community Support and Knowledge-base on business, career and organisational prospects and issues - Register and Log In to CiteHR and post your query, download formats and be part of a fostered community of professionals.
Legal COMPLIANCEs and DUE dates.xls
Service Jurisprudence & Legal Compliances.pdf