A pivotal labour law compliance item that has far fetching support to employees' medical needs. Calculations, contributions, claims, settlements, are all ingredients of ESI compliance. However, regular ESI Filing by the employer is a mandatory pre requisite to avail any benefits under the scheme by the employees.
ESI or Employee State Insurance Scheme is a social welfare scheme curated for the well-being of the employees. This multi-dimensional security scheme provides socio-economic protection for the employees in the organised sector.
The ESI scheme helps the employees full medical aid at the time he or she was incapacity to work. The scheme acts as financial assistance to the employee at the times he or she had to abstain from work due to maternity, sickness or any sort of employment injury. It is essential to file the returns concerning ESI on a compulsory basis as declared by the respective authority.
The scheme is administered by Employee State Insurance Corporation or ESIC. This legal statutory body has representatives from employees, employers, state government, central government, medical professionals and members of the Parliament.
Funding of ESI is from the contributions of both employees and employers. The employer has to contribute 3.25%; the employee's contribution is deducted from the salary after the loss of pay amounts 0.75%. The ESI return is submitted monthly. The submission has to take place before the 15th of the next month.
The documents required for submitting the ESI Return:
- The Insured Person number or IP Number.
- The name of the employee
- The salary is drawn by the employee
- Number of days they have worked
- Register of wages
- Inspection book
ESI return has to be mandatorily filed by anyone who has taken an ESI registration and those eligible to register under the ESI scheme are as follows:
- When a company or an establishment have 10 or more employees.
- An employee who has a salary of less than Rs 21000.
Profito Global helps its clients in an untroubled ESI return filing. The submission of the ESI returns will be done before the due date, provided they have all the necessary documents. It also helps the client in investing time in productive activities.
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Filing ESI Return
What is the basis on which ESI is calculated?
Calculation of ESI is based on monthly salary. The salary taken is after the deduction of loss of pay.
What are the penalties for delayed or non-payment of ESI?
The ESI corporation can levy and recover damages under reg 31 C of the ESI act for default of payment or delay in the payment of contribution. The damage rates are as follows:
- If the period of delay is less than two months, then the rate of damage will be 5%.
- If the period of delay is two to four months, then the rate of damage will be 10%.
- If the period of delay is four to six months, then the rate of damage will be 15%.
- If the period of delay is more than six months, then the rate of damage will be 25%.
How will the employer be affected by non-payment?
If the employer has deducted the contribution sum from the employee's salary under section 40(4) of the ESI Act, 1948 and the employer hasn't deposited that sum under the ESI payment; it will amount to a "criminal breach of trust" and is a punishable offence under the IPC sections 406,409 and section 85 of ESI Act, 1948.
What are the records to be maintained for ESI purposes?
The records that have to be maintained for ESI purposes are:
- Muster roll, wage record and books of Account maintained under other laws.
- Accident Register in 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 consequences of non / late payment of employees' contribution deducted but not paid?
Any sum deducted by the Principal employer from wages under the ESI Act shall be deemed to have been entrusted to him by the employee for the purpose of paying the contributions. Non-payment or delayed payment of the Employee's contribution deducted from the wages of the employees will lead to interest and penalty charges.