How to Handle Employees Refusing ESIC Formalities: Are Employers Liable?

Dear All,

I am working in a private firm with around 200 employees, of which more than 125 employees are covered under ESIC. Many of them have come back under ESIC coverage due to the increase in the ESIC limit. Those of you in the same profession may be aware that ESIC authorities are conducting camps for a photoshoot at the employer's premises as well as at various local offices.

Now, in our company, some employees who have come back under the coverage have completely refused to complete the formalities, stating that they are not interested in ESIC at all. We need to obtain new numbers for these employees as when they joined in January, they were out of the limit, and we do not have their numbers. We have completed the formalities for almost all employees except for these few.

In this case, will the employer be liable in the future for not completing the formalities for such employees? Can ESIC authorities hold the employer liable for this? What if an employee in the future claims lack of awareness on the employer's part?

Kindly suggest.

Regards,
Yashswa

Dear Yashswa,

As an employer, you are responsible for successfully completing these activities. Otherwise, you may also face an inspection due to delays in the process.

If you have any queries, please feel free to contact the undersigned:

Ravikumar S.
9892028625

Thank you.

Dear Yashswa,

I totally agree with Mr. Ravi Kumar. You will face problems in the future due to a short deposit of ESI contributions under the challan, resulting in damages/delay charges and non-compliance during inspection. Moreover, you may face issues due to the non-submission of returns on time (as you will not have TIC/PIC numbers). I suggest starting to deduct the ESI share from their salaries immediately. They will automatically approach you for the formalities after the deduction.

Regards,
Baba Naresh

Hi,
You have to cut the employee's contribution for his/her joining in ESIC and get their IP No/TIC. Otherwise, you will face problems at the time of submission of Form No. 5 (Six-monthly Challan).

Hi,

This is called Statutory Compliance, and hence it does not work based on an individual's interest or need. Everyone has to comply with it irrespective of their interests. You may please arrange to send out circulars or put up notices at every common place and ensure that it is complied with. Otherwise, as rightly said by Ravi Kumar and Baba Naresh, you might have to pay a fine/penalty for non-compliance.

Regards, Sarita Sr. Manager - HR

Obviously, your employees know that it's not in their interest to have deductions for pathetic hospitals with improper services and no doctors to attend to them. They ultimately have to go to private hospitals only. However, we can only sympathize with employees. I wish the government had provided access to decent services at reputed hospitals. Mind you, all employees would have then contributed more than the present share of ESIC.

Dear Yashswa,

Since May 2010, when the ceiling was raised to 15K, the same situation has occurred in most sectors, whether it be a factory or a multinational organization. Employees are reluctant to complete the formalities of ESI, presuming that if they don't complete the formalities, their ESI will not be deducted. However, as an employer, we must strictly follow the rules. We have to give notice to each and every individual who is not complying with the provisions. Subsequently, you can stop the payment of the individual for the month until he/she completes the formalities of ESI. This is the only method I have found effective with employees, whether in the manufacturing industry or a multinational corporation.

Regards,
Swapan

Hi,

Now you have to implement it successfully and make sure that your employees understand the benefits of ESIC Corporation.

Visit the site: [ESIC - Headquarters' Office](http://www.esic.nic.in)

Regards,
Ravikumar S.

Dear Yashwa,

Firstly, please issue a letter to all employees providing information about the coverage under ESI and the deduction of their contribution at 1.75% from their wages/salary. Advise them to submit the document within the given 2 days. Secondly, in case they do not submit the documents, as it is a compliance requirement, you can issue a show-cause notice to them and take disciplinary action.

Regards,
YASH
9560507444

FYI, find out whether their gross salary is nearer to the ESIC ceiling limit (Rs. 15,000/-). If so, find out whether the Employer contribution of 4.75% on Gross salary is more or less compared to the salary which can be revised to come out of ESIC contribution.

By revising the salary, see if there are any potential savings for the company. If there are, speak to your Management and inform them about the savings that can be achieved by revising the wages. This action will help the employees and staff to come out of ESIC.

With regards,

Dharaneesh Kumar.V
HR/Admin Executive
Organica Aromatics Pvt Ltd
Bangalore

Dear Yashwa,

I appreciate your concern regarding statutory obligations. I want to clarify any doubts or misinterpretations among all the members about this issue:

i) Due to the recent planning of computerization of all ESI Offices, Dispensaries, and Hospitals throughout India with networking facilities, for better services to insured persons, ESIC has planned to provide 2 SMART CARDS to all its Insured Persons (one for the Individual and another for their Family members). There is no rule that their dependent family members should be residing along with the I.P. This can be considered a historic and revolutionary change in the service sector, especially in government organizations.

ii) To ensure the success of providing the smart cards to Insured Persons, all employees who are coverable under the ESI are supposed to enroll for the Photo Camp by submitting the revised declaration forms with the latest family particulars.

iii) To ensure the success of this program, it is highly necessary to have cooperation from both employers and employees. It is unfortunate that employees are not cooperating, even though employers are stepping forward. This is a common psychology among employees who often do not show interest in revolutionary changes, including positive ones. We should appreciate that some improvement is always better than none, especially in a developing country. It is important to accept this fact.

iv) Regarding your question, as an employer, you will not be made liable for non-enrollment of all your employees for the Photo Camp.

v) Your responsibility as an employer is to submit their Declaration Forms to the concerned Branch Office and obtain Insurance Numbers for all such employees. The responsibility for providing manual cards/biometric cards lies with the Corporation.

vi) The aim of the Corporation is to enroll the maximum number of eligible Insured Persons through these Photo Camps.

vii) It is crucial for all coverable employees to voluntarily enroll themselves to receive the benefits under the ESI SMART CARD.

In any organization, small loopholes will always exist, and solutions for such loopholes are readily available. Please refrain from criticizing ESI and first understand the benefits it offers. If you have any doubts, you can refer to my posts or contact me at 09443434313 or email [Login to view].

I am confident that the ESI SMART CARD will become one of the best MEDICAL CARDS in the world.

Please let me know if you need further assistance.

Sincerely

Dear members of this forum,

Isn't it ironic that we are imposing a "benefit" on the employees just because it is a statutory requirement? Shouldn't we reconsider these statutory "benefits"?

Due to the existing laws, employers are obligated to deduct contributions and make their own contributions for a "benefit" that nobody desires. This often results in employee dissatisfaction, especially in a country like India where the workforce may not fully comprehend the existing laws. Is it not the responsibility of ESIC to educate their "beneficiaries" about the provisions of the law and the rights they hold as beneficiaries?

Should the ESI system persist when insurance companies are introducing innovative medical insurance policies regularly?

I am eagerly awaiting your responses to the above issues.

B. Acharya

Dear Yashswa,

In this world, when you try to do some good things, hurdles come up. We have to tackle this kind of situation in a very calm way. First, try to convince them regarding the benefits of ESIC. Give them the booklets available in the ESI office. Provide them with the ESI internet link (ESIC - Headquarters' Office) to go through. If they do not listen to you, then create a format of Undertaking on behalf of the company. In that, you should mention that if they do not comply or complete the formalities of ESIC, then they will be responsible for any loss incurred by them or their family members by any means. If they do not comply, just give them a memo. Next, remove them from the payroll. Once you start removing people, others will fall in line and begin to follow your process. I think this will work.

All the best.

Kind Regards,

Debashis Nayak

Sr. Executive - HR cum Training

91+9438128586

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