Missed ESIC Registration for Employees: How Can We Fix This and What Are the Penalties?

Addressing the ESIC Registration Oversight

I take care of an organization with approximately 50 employees. Back in 2011, we crossed 20 employees and registered for EPF, and since then, we have been following all EPF rules. Since the beginning, we have left our HR department to an external contractor for all labor law-related formalities as we were largely unaware of the complications.

However, we have just realized that we have not registered for ESIC, even though our three employees who are still working in the organization should have been covered under the same, since their gross is less than 15,000 per month. It seems we have made a grave mistake by completely relying on the external consultant.

Now, what can we do to rectify this mistake? What penalties will be imposed in such a case? Or should we approach the labor office ourselves?

Thanks

Addressing ESIC Registration Issues

1. Why should you approach the "Labour Office" as mentioned? ESIC has no relevance or connection with any of the offices of the labor department.

2. If you have any issues, you can visit the nearest ESIC office and discuss them. The address of the nearest ESIC office can be found on the ESIC website. I hope ESIC authorities will extend their cooperation, especially in matters of coverage of new units.

3. Ignorance of the law is no excuse. You can get your unit covered under the ESI Act, 1948, and have your records inspected by the competent authority, i.e., the SSO of the area. Interest and damages are leviable on delayed payments of contributions, and the rates of the same are available in the ESI (Central) Rules, 1950.

Also, I wanted to ask whether IT companies are covered under the ESIC Act?

Applicability

Under Section 2(12), the Act is applicable to non-seasonal factories employing 10 or more persons. Under Section 1(5) of the Act, the Scheme has been extended to shops, hotels, restaurants, cinemas including preview theaters, road-motor transport undertakings, and newspaper establishments employing 20 or more persons. Furthermore, under Section 1(5) of the Act, the Scheme has been extended to private medical and educational institutions employing 20 or more persons in certain States/UTs.

*Note: 14 State Governments/UTs have reduced the threshold limit for coverage of shops and other establishments from 20 to 10 or more persons. Remaining State Governments/UTs are in the process of reducing the same. The existing wage limit for coverage under the Act is Rs. 15,000/- per month (w.e.f. 01/05/2010).

Areas Covered

The ESI Scheme is being implemented area-wise by stages. The Scheme has already been implemented in different areas in the following States/Union Territories of the Indian Union.

So, can someone clarify my query?

Regards,
Shreyansh

Sir, the term "IT company" has no special provisions under the ESI Act, 1948, and is treated on par with other units. Such companies/firms are covered or coverable under the provisions of the said Act (provided the unit/company is located in an implemented area). If you have any doubts, I have already suggested that you approach the nearest office of ESIC to get the records of your unit inspected or verified to confirm the coverage of the unit under the said Act.