Struggling with Unpaid ESI & PF Dues: Can We Pay Current Obligations Without Settling the Past?

I am working in a manufacturing unit, and our company used to pay all its statutory payments on time. However, for the past couple of years, the company has been facing financial problems, and it has now become a sick unit. Even after deducting amounts from employees' salaries every month, the accounts department stopped generating ESI & PF challans or paying the deducted amount to the concerned authorities. As an HR person, I have discussed with the management several times about paying the pending dues. Each time, they would say they will arrange the amount later on. It has now been two years, and the statutory payments are still pending.

Recently, the management informed us that they would make statutory payments starting from the present financial year only and not the old dues. We explained to them that if the old dues (1.5 years) are not paid, employees will suffer and incur losses when withdrawing their PF amount. Instead of understanding the issue, they instructed the accounts team to submit a remittance letter to the concerned departments for paying the amounts from this financial year.

Is it possible to generate challans or make payments for the current months without clearing the old dues?

In the context of ESI & PF payments, it is crucial to adhere to legal requirements and ensure compliance. However, the situation you described raises concerns regarding the company's approach to statutory payments. Here are some practical steps to consider:

1. Understand Legal Obligations: Review the specific provisions of the Employees' State Insurance Act and the Employees' Provident Funds and Miscellaneous Provisions Act to ascertain the legal requirements regarding timely payments and potential consequences for non-compliance.

2. Communicate Effectively: Continue engaging with the management to emphasize the importance of clearing the outstanding dues to avoid legal repercussions and protect employees' interests.

3. Seek Professional Advice: Consider consulting with legal experts or HR consultants specializing in labor laws to assess the situation comprehensively and determine the best course of action.

4. Explore Resolution Options: Propose a structured repayment plan to gradually clear the old dues while ensuring that current payments are made promptly to prevent further accumulation of arrears.

5. Document Everything: Maintain detailed records of all communications, decisions, and actions taken regarding the statutory payments to protect the company's interests and demonstrate compliance efforts.

6. Employee Welfare: Advocate for the employees' rights and financial well-being by advocating for the resolution of the pending dues to safeguard their future benefits and entitlements.

7. Compliance First: Prioritize compliance with labor laws and regulatory requirements to avoid penalties, legal disputes, and reputational damage that could arise from non-payment of statutory dues.

Remember, addressing these challenges proactively and transparently is essential to safeguard both the company's integrity and the employees' financial security.