Missed ESIC Deductions for 10 Months: Should I Recover or Start Fresh? Seeking Advice

Dear All,

I work for a company that has a PAN India presence. Due to oversight, ESIC deductions for some employees have not been made for the past 10 months. Please advise on what I should do now. Should I recover the deductions from the employees or start deducting from this month onwards? What will be the impact in case of an ESIC inspection?

Thank you.

Start deducting from this month. Wait for inspection; you may have to pay the amount with interest and damages.

Start deducting from this month. Employees won't welcome the deduction for the period passed. Wait for inspection; you may have to pay the amount with interest and damages. Also, you can hide those employees and show their joining from this month. Although, it's not advisable, neither easy as it's unethical.

With all due respect to Mr. Aniket, I will differ from him. You have to pay the arrears for all the months by creating supplementary challans for pending employees. Regarding whether to recover it from employees or not, that decision has to be taken by your management. As an HR professional, you should bring this to the notice of management and discuss the issue with them. Ignorance is not an excuse. If you're not paying the arrears, then in the future, it will lead to higher interest and damages during inspections.

Regards,
Manish

You can deduct and pay all the pending months. But you will be penalized for the same.

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You can deduct and pay all the pending months, but you will be penalized for the same.

1. Sir, I feel that the question you raised is doubtful or has not been fully explained.

2. Kindly intimate whether such employees were working in any of the implemented areas or in non-implemented areas. The coverage of each and every employee is to be examined based on coverage under section 1(3) or under section 1(5) of the ESI Act, 1948. The term "pan India" appears to be vague so far as compliance under the said Act is concerned.

Dear Vishal, this is gross negligence or implied action which simply cannot be attributed to oversight. Whatever the reason may be, you should start depositing the ESIC contributions of the current month along with those from the past period. Write a letter to your ESIC local office with a copy marked to the RO office, stating that X amount is for the left-out period for Y number of employees. By doing so, the penalty and interest amounts will be calculated up to the date of your remittance or will be determined on the date when ESIC conducts an audit.

Before proceeding, discuss this matter with the local ESIC manager, taking him into confidence. Deducting from employees could create problems as they cannot be considered contributors for that period due to the time elapsed. Fortunately, within these 8 months, nothing adverse has happened to these left-out employees; otherwise, you all would have been in trouble.

Kind regards, [Your Name]

Dear Vishal,

I couldn't understand one thing here. How can some employees be excluded while others are paid? Is there any payroll system for your implementation? How did the finance team and Senior Management allow this? It is a total system lapse.

Please check the provisions and make immediate payments from now to all, including arrears. Inform your Management about the mistake and prepare them for the penalties on arrears.