Salary Breakdown Without PF and ESIC Deductions: Could This Affect Our HR Practices?

In our company, a real estate broking firm, they split the salary only into basic, HRA, conveyance, mobile reimbursement, PF, and ESIC. We do not deduct PF and ESIC at any salary level ranging from $5000 to $18000 per month for employees. Will this have any negative implications for us in HR terms?

Thank you.

It is illegal, so do not worry. Convey this to Directors/Owners; otherwise, they will have to answer government authorities for this.

All statutory bodies will initiate inspections for all types of industries, and penalties will be levied with damages and interest. If the said amount is not documented in papers or your balance sheet, that's good. However, if everything is shown, you must be prepared to pay the excess amount along with a fine/interest. It is advisable to inform your management and seek the assistance of a consultant to devise a strategy that would help your management navigate any shortfalls during inspections. This experience will also be a valuable learning opportunity for you. As an HR professional, you must ensure that all benefits for your workers are provided under any circumstances.

Thank you.

First, please confirm whether your establishment/organization is covered under PF/ESI. Secondly, if it is not covered, how many employees are there in your organization? Thirdly, if your organization fulfills the above conditions, you cannot avoid PF/ESI as it is mandatory.

Regards,
V. Subbarao