How Can We Ensure Employee Safety with ESIC Coverage on Low Wages in a Factory Setting?

Dear Seniors, please help me with regards to the following situation: Suppose a company has 45 employees on a contract basis, and the contractor is paying all of them less than the minimum wage, such as 3500/- per month. The principal employer is also content with this arrangement, but now they want all employees to be on a permanent basis with the same salary/amount. The principal employer now wishes to provide ESIC coverage for all of them for their safety, again at the same rate of 3500/-. Currently, they are registered under the Factory Act and are only paying PF/ESIC for executive-level employees. It is noted that they intend to pay 3500/- as a salary for reduced attendance, such as 3500/- for 18 days only. Can you please suggest any other ideas for ensuring the safety of all employees?

Thank you.

Addressing Wage Manipulation Under the ESI Act

I think paying contributions under the ESI Act, 1948 based on manipulated records of attendance and wages is not a major issue under the said Act. However, it could be an objection under either the Minimum Wages Act or the Payment of Wages Act. Therefore, it would be better if you could contact and seek guidance from the appropriate Officer of the Labour Department in your area authorized under the aforementioned Wages Acts.

Covering Workers Under ESI and EPF

If the principal employer and their contractor wish to cover their workers under the ESI Act or EPF, then in my opinion, it is a positive step.

Regards

So far so good, as long as any employee does not care to enforce his/her rights. Refraining from staking one's claim is not illegal on the part of employees. Once everything is officially detected, both the contractor/principal employer can manage to lightly let them off by paying a paltry amount as a fine!

This is a common technique adopted by some principal employers. They adjust the days present to reduce the net payable amount to the workmen to save on PF, ESI, etc. In the given case, it seems the wage is fixed to match the minimum wages (in books), but attendance is adjusted to bring down the net payable to the workmen to Rs. 3500/- per month. It apparently looks "okay" until discovered by the "appropriate authority." The punishment in such cases is severe as the authority first "seals" all bank accounts of the principal employer and then calculates the amount (for full attendance) payable with the imposition of fines and damages.

It is better to avoid such situations. You may kindly refer to the PF case of M/s B.L. Kashyap & Sons (BLKS) Ltd. (http://www.thehindu.com/news/cities/...cle6382273.ece) and consult your employer.

Regards,

Understanding Employer Responsibilities and Legal Implications

It is similar to a situation where an employer is knowingly committing a crime with full knowledge of the punishment. Moreover, penalties, labor problems, etc., are bound to arise, making things unmanageable. If you are an HR professional or an advisor to the employer, are you not honestly complicit in the creation of black money? One willful mistake can lead to and link many others in the circumstances; do not dream that it will always remain uncovered.

Employee Solidarity and Evidence

If a group of employees stands together with this problem and all state that, instead of 30 or 26 working days, the employer, in conspiracy with HR, falsifies documents to show only 15-18 days, then you cannot stop them. Workers will provide full evidence of attendance, production records produced and recorded by them, and generated by management. The past time has passed, and it may have felt happy so far. Today, be prepared to upload all attendance and bank statements of payments made to all employees.

Proactive Measures for Employers

Please boldly share these with your employers and suggest a legal, realistic plan that can erase any bad reputation from the minds of employees, as your employees should always be well-wishers of the company.

Regards,

This is legally not correct. It will come to the department's notice how an employee can work for 15-18 days a month on a regular basis. This is not an issue for just 1 or 2 employees but for more than 40 employees, I believe. Hence, it is not advisable to engage in such actions as both you and your employer may have to face consequences at a later stage.