Navigating PF and ESI Registration: How Can I Ensure Compliance Without Major Issues?

PF and ESI Registration Compliance

Recently, I have joined a good service industry that has been in existence since April 2011 (as per the Shop Act license) and was showing 16 employees at that time. The number of employees has now increased to around 74 as of April 2013.

According to the PF & ESI Act, registration should have been done, but due to some technical problems, the registration has not been completed yet. In this case, how can I proceed with PF and ESI registration without any issues and ensure compliance? We have filled out Form NO-11 for PF without contributions while joining with employees' consent. The management does not want to increase costs but is willing to make all contributions starting from May 2013.

I am determined to complete PF & ESI registration smoothly and without encountering major problems. Your insights, experience, and advice on this matter would be greatly appreciated.

Regards,
Anant

Respected Anant,

You register your company in the PF with the date of Form 11 registration (which may be May 2013). You issue the appointment letter to your 74 employees from that date only. For this, you have to manage your 74 employees and the PF inspection authorities.

ESIC Registration

In the ESIC case, if you got the AP Shops & Establishment Licence number, then you can register your company online from your desired May 2013 date. Similarly, in the ESIC case, you also have to show all employees joined on this date only. During inspections, if they generally happen, they may also ask employees.

If you convince your employees that from this date you are providing these facilities to them, and you are giving the revised appointment letters, then they may get convinced and support you by saying, "Yes, I joined in May 2013."

This is one way.

Alternative Approach

Another way is a costly way; from the date of employees' coverage increased, you have to pay all payments and penalties.

But you can go with the first way; generally, you won't get caught because of the huge number of firms and limited PF & ESI inspectors.

Regards,
Ramnarayan

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Well, I echo Mr. Ramnarayan's advice. If you do not have EPF & ESIC registration, you must obtain it first. You can visit your nearest EPFO and ESIC Office for assistance with the registration process. Could you please share the specific technical problems or issues you are encountering during the registration process?

As suggested by your senior, you can register your employees under the ESI Act with effect from any date you wish. However, how will you manage in the future? The duty of the Social Security Officer is to report what is payable, from when it is payable, what has been paid, and what the balance payable is. The SSO (Social Security Officer of ESIC) will demand the production of Books of Accounts for the last 60 months and the Final Accounts, along with the IT returns, for verification. Your Books of Accounts should clearly indicate the date from which your establishment was to be registered and the amounts of your dues, etc. It is advisable to register from the date it was actually due.

In most cases, our SSOs will not be swayed by false statements from your employees, as their reports are always subject to Test Inspection and vigilance inspections. Disciplinary actions against SSOs in cases of such omissions will be severe. Moreover, regulations...

Respected Ramnarayan Sir,

Thanks for your valuable advice. I would like to proceed as per your first opinion. I will present to the PF authority that we have started a new organization with such employees. I have some questions in mind as below:

1. If the inspector asks to produce records, we can show him records from April 2013 onwards. In case he conducts a cross-inquiry on his own, can we get caught or not?

2. If the PF officer asks me any questions on the same, what should my defense be?

3. Does the PF inspector ask for all past documents on the same?

4. If he reveals that we are going to opt for a number with fake documents, what would be the consequences?

Other aspects need to be taken into consideration. Please share with me all your valuable opinions.

Regards,
Anant