Employees State Insurance Contribution Rates, Rules, Procedure, Penalty and Related Matters

ESI Contribution Rates, Rules, Procedure, Penalty and Related Matters

EMPLOYEE'S STATE INSURANCE  CONTRIBUTION AND OTHER RELATED MATTER:-

Under Section 38, Subject to the provisions of this Act, all employees in factories or establishments to which this Act applies shall be insured in the manner provided by this Act.

Under Section 39, the contribution payable under this Act in respect of an employee

1.                  Shall comprise contribution payable by the employer hereinafter referred to as the employer's contribution and contribution payable by the employee hereinafter referred to as the employee's contribution and shall be paid to the Corporation.

2.                  The contributions shall be paid at such rates as may be prescribed by the Central Government:

3.                   PROVIDED that the rates so prescribed shall not be more than the rates which were in force immediately before the commencement of the Employees’ State Insurance (Amendment) Act, 1989.

4.                  The wage period in relation to an employee shall be the unit in respect of which all contributions shall be payable under this Act.

5.                  The contributions payable in respect of each wage period shall ordinarily fall due on the last day of the wage period, and where an employee is employed for part of the wage period, or is employed under two or more employers during the same wage period, the contributions shall fall due on such days as may be specified in the regulations.

6.                  If any contribution payable under this Act is not paid by the principal employer on the date on which such contribution has become due, he shall be liable to pay simple interest at the rate of twelve per cent per annum or at such higher rate as may be specified in the regulations till the date of its actual payment.  PROVIDED that higher interest specified in the regulations shall not exceed the lending rate of interest charged by any scheduled bank. Any interest recoverable under this clause may be recovered as an arrear of land revenue or under sections 45C to 45-1.

Explanation: In this sub-section, "scheduled bank" means a bank for the time being included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934).

Under Section 40, THE PRINCIPAL EMPLOYER SHALL PAY IN RESPECT OF EVERY EMPLOYEE, WHETHER DIRECTLY EMPLOYED BY HIM OR BY OR THROUGH AN IMMEDIATE EMPLOYER, BOTH THE EMPLOYER'S CONTRIBUTION AND THE EMPLOYEE'S CONTRIBUTION.

a.                  Notwithstanding anything contained in any other enactment but subject to the provisions of this Act and the regulations, if any, made there under, the principal employer shall, in the case of an employee directly employed by him (not being an exempted employee), be entitled to recover from the employee the employee's contribution by deduction from his wages and not otherwise:

b.                  PROVIDED that no such deduction shall be made from any wages other than such as relate to the period or part of the period in respect of which the contribution is payable, or in excess of the sum representing the employee's contribution for the period.  

c.                   Notwithstanding any contract to the contrary, neither the principal employer nor the immediate employer shall be entitled to deduct the employer's contribution from any wages payable to an employee or otherwise to recover it from him.

d.                  Any sum deducted by the principal employer from wages under this Act shall be deemed to have been entrusted to him by the employee for the purpose of paying the contribution in respect of which it was deducted.

e.                  The principal employer shall bear the expenses of remitting the contributions to the Corporation.

Under Section 41, A principal employer, who has paid contribution in respect of an employee employed by or through an immediate employer, shall be entitled to recover the amount of the contribution so paid (that is to say the employer's contribution as well as the employee's contribution, if any) from the immediate employer, either by deduction from any amount payable to him by the principal employer under any contract, or as a debt payable by the immediate employer. The immediate employer shall maintain register of employees employed by or through him as provided in the regulations and submit the same to the principal employer before the settlement of any amount payable under this clause. In the case referred to in sub-section (1), the immediate employer shall be entitled to recover the employee's contribution from the employee employed by or through him by deduction from wages and not otherwise, subject to the conditions specified in the proviso to sub-section (2) of section 40.

Under Section 42, No employee's contribution shall be payable by or on behalf of an employee whose average daily wages during a wage period are below such wages as may be prescribed by the Central Government. The average daily wages of an employee shall be calculated in such manner as may be prescribed by the Central Government. Contribution (both the employer's contribution and the employee's contribution) shall be payable by the principal employer for each wage period in respect of the whole or part of which wages are payable to the employee and not otherwise.  

UNDER RULE 50 OF ESI RULES 1950, THE WAGE LIMIT FOR COVERAGE OF AN EMPLOYEE UNDER SUB-CLAUSE (B) OF CLAUSE (9) OF SECTION 2 OF THE ACT

1.                  SHALL BE TWENTY ONE THOUSAND RUPEES A MONTH :

2.                   PROVIDED THAT AN EMPLOYEE WHOSE WAGES (EXCLUDING REMUNERATION FOR OVERTIME WORK) EXCEED TWENTY ONE THOUSAND RUPEES A MONTH AT ANY TIME AFTER AND NOT BEFORE THE BEGINNING OF THE CONTRIBUTION PERIOD, SHALL CONTINUE TO BE AN EMPLOYEE UNTIL THE END OF THAT PERIOD.

3.                  PROVIDED FURTHER THAT THE WAGE LIMIT FOR COVERAGE OF AN EMPLOYEE WHO IS A PERSON WITH DISABILITY UNDER THE PERSONS WITH DISABILITIES (EQUAL OPPORTUNITIES PROTECTION OF RIGHTS AND FULL PARTICIPATION) ACT, 1995 (1 OF 1996), AND UNDER THE NATIONAL TRUST FOR WELFARE OF PERSONS WITH AUTISM, CEREBRAL PALSY, MENTAL RETARDATION AND MULTIPLE DISABILITIES ACT, 1999 (44 OF 1999) RESPECTIVELY, SHALL BE TWENTY-FIVE THOUSAND RUPEES PER MONTH.

4.                  “ Contribution period ” means the period not exceeding six consecutive months, as may be specified in the regulations ; “ benefit period ” means the period not exceeding six consecutive months corresponding to the contribution period, as may be specified in the regulations.

5.                  Under Rule 4 of ESI General Rules,

a.                  Contribution periods and the corresponding benefit periods shall be as under : — Contribution period                                           Corresponding benefit period

1st April to 30th September                  1st January of the year following, to 30^th June.

1st October to 31st March                     1st July to 31st December. the year following

Provided that in the case of a person who becomes an employee within the meaning of the Act for the first time, the first contribution period shall commence from the date of such employment in the contribution period current on that day and the corresponding benefit period for him shall commence on the expiry of the period of 9 months from the date of such employment.

UNDER RULE 51, THE AMOUNT OF CONTRIBUTION FOR A WAGE PERIOD

1.                  SHALL BE IN RESPECT OF EMPLOYER’S CONTRIBUTION, A SUM (ROUNDED TO THE NEXT HIGHER RUPEE)

2.                  EQUAL TO THREE AND ONE FOURTH (3.25) PER CENT. OF THE WAGES PAYABLE TO AN EMPLOYEE ; AND

3.                  EMPLOYEE’S CONTRIBUTION, A SUM (ROUNDED TO THE NEXT HIGHER RUPEE) EQUAL THREE FOURTH (.75) PER CENT. OF THE WAGES PAYABLE TO AN EMPLOYEE.

Under Rule 51 A, In respect of an employee who is a person with disability under the Persons with Disabilities (Equal Protection of Rights and Full  Participation) Act, 1995 (1 of 1996), and under the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999), the employer shall not be required to pay employer’s share of contribution up to a maximum period of three years from the date of commencement of the contribution period. The employer’s share of contribution in respect of such employees and for such period under sub-section (1) shall be reimbursed to the Corporation by the Central Government

Under Section 44, every principal and immediate employer shall submit to the Corporation or to such officer of the Corporation as it may direct:

1.                  Such returns in such form and containing such particulars relating to persons employed by him or to any factory or establishment in respect of which he is the principal or immediate employer as may be specified in regulations made in this behalf.

2.                  Where in respect of any factory or establishment the Corporation has reason to believe that a return should have been submitted under sub-section (1) but has not been so submitted, the Corporation may require any person in charge of the factory or establishment to furnish such particulars as it may consider necessary for the purpose of enabling the Corporation to decide whether the factory or establishment is a factory or establishment to which this Act applies.

3.                  Every principal and immediate employer shall maintain such registers or records in respect of his factory or establishment as may be required by regulations made in this behalf.

Under section 45A, Where in respect of a factory or establishment

1.                  No returns, particulars, registers or records are submitted, furnished or maintained in accordance with the provisions of section 44 or

2.                  Any Inspector or other official of the Corporation referred to in sub-section 45 is prevented in any manner  by the principal or immediate employer or any other person, in exercising his functions or discharging his duties under section 45,

3.                  The Corporation may, on the basis of information available to it, by order, determine the amount of contributions payable in respect of the employees of that factory or establishment:

4.                  PROVIDED that no such order shall be passed by the Corporation unless the principal or immediate employer or the person in charge of the factory or establishment has been given a reasonable opportunity of being heard.

An order made by the Corporation under sub-section (1) shall be sufficient proof of the claim of the Corporation under section 75 or for recovery of the amount determined by such order as an arrear of land revenue under section 45B or the recovery under section 45C to section 45-I.