1. I think there is apprehension among HR professionals that with the intention notification published for the enhancement of the wage ceiling under the ESI Act, 1948 on 06/10/2016, the Government might implement the said enhancement from a retrospective date in the final notification expected to be issued after 30 days. Upon examining past practices, I believe there are no reasons for such apprehension. For example, the last enhancement of the wage ceiling under the said Act was carried out as follows:
(a) Date of intention notification: 27/02/2010.
(b) Date of final notification: 20/04/2010.
(c) Date of effectiveness of the enhanced wage ceiling: 01/05/2010.
2. From the above, it is clear that the previous enhancement of the wage ceiling was not retrospective, and sufficient time was allowed by the Government. It is pertinent to mention that the wages for May 2010 were, as per practice, paid either on the last day of the month or on the 7th of the next month. The contribution for May 2010 was payable to ESIC by 21st June 2010. Therefore, I personally feel there should not be much apprehension on the subject.
3. However, since the actions of the present Government are sometimes unpredictable, we have no alternative but to wait for the final notification. I believe it will be a strong argument for employers and affected persons to contest such enhancement of the wage ceiling from a retrospective date, even in a court of law. Making or amending a rule to affect retrospective deductions of contributions would be a violation of Section 40 of the ESI Act, 1948. Let's hope for the best.
Thank you.