Respected Expert, Please advice..... shall we consider voucher payment employees under PF & ESC Act? Regards, Anant
From India, Pune
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4From India, Pune
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What you are doing amounts to unfair labor practice. It is against all labor laws. If you are not maintaining any records, then how do you pay them? You will be in big trouble one day. If you are hiring casual laborers and paying them in cash, then all statutory benefits are applicable.
Regards
From India, Pune
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Regards
From India, Pune
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Although there is no exemption provided expressly under the Act, there are case laws holding that casual employees appointed to deal with exceptional circumstances (such as for redemption after a fire incident or for annual painting/color washing, etc.) are not subject to PF & ESI. You may get caught in two ways: if the inspector visits your factory and seeks compliance regarding such casual workers, or if the voucher payment expenses are booked in the wage and salary account head. Inspectors, when they inspect your account, can ask for compliance in this regard.
Regards,
KK
From India, Bhopal
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Regards,
KK
From India, Bhopal
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Whatever mode you make the payment definitely such payment attracts PF and ESI if it is within the wage ceiling of pf and esi
From India, Coimbatore
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From India, Coimbatore
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In my opinion, if a person is engaged for some temporary exigencies and is not engaged for a long period, but paid through vouchers, no PF deduction is required. This has been held in a few cases. However, if engaged for a continuous period, payments made through vouchers are liable for PF deductions.
Regards,
AK Chandok
RPFC (Retd.)
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From India, Chandigarh
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Regards,
AK Chandok
RPFC (Retd.)
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From India, Chandigarh
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Dear Anant, in simple words, if you are giving any amount through a voucher to employees and showing it as salary and wages, then it comes under cover. (Remember: if you are not showing it, it's illegal.) For example, Person X is receiving a total of 10,000 on record, and suppose 5,000 by voucher payment.
1) PF and ESIC will be only for 10,000 (if no voucher payment is booked or shown in the record).
2) If you are showing voucher payment as salary (by any means we can give salary to our employees, by cash, cheque, or salary transfer, etc.), then PF and ESIC cover will be applicable for 10,000 + 5,000 = 15,000. I think it will clear your views.
Regards,
Anjani Singh
From India, Mumbai
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1) PF and ESIC will be only for 10,000 (if no voucher payment is booked or shown in the record).
2) If you are showing voucher payment as salary (by any means we can give salary to our employees, by cash, cheque, or salary transfer, etc.), then PF and ESIC cover will be applicable for 10,000 + 5,000 = 15,000. I think it will clear your views.
Regards,
Anjani Singh
From India, Mumbai
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All employees are to be covered under all labor laws, irrespective of how you pay and how you try to hide such payments. In fact, there is no category called "Voucher Paid employee." What you mean by voucher payment appears to refer to those who are not brought into the wage register or muster roll. Not covering them under ESI/EPF, etc., is a violation of the law and also a criminal offense, as well as a violation of the Payment of Wages Act, Factories Act/rules, and various other laws. It is true that often you may have to engage a person for a day or two or even a few hours, and you may not include them in the permanent employee's register, but you need to have a separate register for "Temporary/Casual and Badli workers," indicating their wages, period of work, etc., and need to comply under ESI/EPF.
I do not agree with Kknair that there are court judgments saying that such employees need not be covered. The majority of judgments of the Supreme Court and High Courts emphatically state that all workers, whether employed as casual, temporary, or through a contract, need to be covered under ESI and EPF. In fact, he may be referring to a particular case where the court talked about "birds of passage," which is not the law laid down. Please remember that accidents (which may result in death or permanent disability) are not based on seniority or manner of payment of wages and can happen to anyone at any time, and you can't just throw out the body of a victim outside the gate. In fact, more accidents happen to untrained, insecure casual workers.
Regards,
O Abdul Hameed
Formerly Addl. Commissioner ESIC
[Email Removed For Privacy Reasons]
From India, Coimbatore
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I do not agree with Kknair that there are court judgments saying that such employees need not be covered. The majority of judgments of the Supreme Court and High Courts emphatically state that all workers, whether employed as casual, temporary, or through a contract, need to be covered under ESI and EPF. In fact, he may be referring to a particular case where the court talked about "birds of passage," which is not the law laid down. Please remember that accidents (which may result in death or permanent disability) are not based on seniority or manner of payment of wages and can happen to anyone at any time, and you can't just throw out the body of a victim outside the gate. In fact, more accidents happen to untrained, insecure casual workers.
Regards,
O Abdul Hameed
Formerly Addl. Commissioner ESIC
[Email Removed For Privacy Reasons]
From India, Coimbatore
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Can I request you to provide the information on the said case laws? In my view, extinguishing a fire or redemption after a fire incident is an exceptional circumstance, but annual painting/color washing, etc., is not an exceptional circumstance.
Regards.
From India, Mumbai
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Regards.
From India, Mumbai
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Understanding ESI Contributions for Indirect Workers
Friends, I am unable to agree with the views of learned advocate Madhu TK, and those judgments quoted do not answer the question raised initially. Firstly, High Court judgments are not the law of the land. The department may have filed an appeal against those judgments, and each judgment needs to be seen in the context of the facts in that particular case. Only Supreme Court judgments on the law will work as the law of the land.
In some of the cases referred to by Madhu, the payment to the loading/unloading persons, also called Hamalies, was made in the warehouses owned by the Government, the dealer, or some other persons, and not on the premises of the principal employer. If any work is done inside the premises of the employer covered under the ESI Act, whether it is for a few minutes or regularly, and whether the consideration for this work is paid through a wage register, a payroll, an individual voucher, or through the supply invoice indirectly, the person doing the work, even indirectly connected with the process of the employer, ESI contribution needs to be paid.
Why ESI Contributions Are Necessary
Now the question is, why? Because the ESI department is duty-bound to pay all the benefits, specifically the death and disability benefit in case of any accident, and all that the disabled or dependent of the deceased need to prove is that the person was inside the premises and doing some work indirectly or remotely connected with the work of the employer when he met with an accident.
Now some HR or accounts executives want to hide such payment and hoodwink the department. They may even succeed since the ESI officials often are not smart enough to find out such subterfuge, or may take some bribe, or may not have time and energy to go through all vouchers. But the moment there is an accident, the liability on the department will start, and that can lead to deep scrutiny.
Advice for HR and Accounts Executives
My advice as a former officer of ESIC and GM of a group of manufacturing industries is to cover all the people, keep proper records, pay contributions, and also educate the workers and their families by giving a small handout in their language and through training on how they can avail themselves of the various benefits. The HR executive should be proactive in case of any sickness, accident, etc., for workers or their family and ensure that they get all the services they are legally entitled to from the ESI Department.
In other words, comply with the law, fight for one's rights under the law, and do not seek shortcuts and subterfuges.
Regards,
O Abdul Hameed
Formerly Additional Commissioner ESIC
[Email Removed For Privacy Reasons]
From India, Coimbatore
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Friends, I am unable to agree with the views of learned advocate Madhu TK, and those judgments quoted do not answer the question raised initially. Firstly, High Court judgments are not the law of the land. The department may have filed an appeal against those judgments, and each judgment needs to be seen in the context of the facts in that particular case. Only Supreme Court judgments on the law will work as the law of the land.
In some of the cases referred to by Madhu, the payment to the loading/unloading persons, also called Hamalies, was made in the warehouses owned by the Government, the dealer, or some other persons, and not on the premises of the principal employer. If any work is done inside the premises of the employer covered under the ESI Act, whether it is for a few minutes or regularly, and whether the consideration for this work is paid through a wage register, a payroll, an individual voucher, or through the supply invoice indirectly, the person doing the work, even indirectly connected with the process of the employer, ESI contribution needs to be paid.
Why ESI Contributions Are Necessary
Now the question is, why? Because the ESI department is duty-bound to pay all the benefits, specifically the death and disability benefit in case of any accident, and all that the disabled or dependent of the deceased need to prove is that the person was inside the premises and doing some work indirectly or remotely connected with the work of the employer when he met with an accident.
Now some HR or accounts executives want to hide such payment and hoodwink the department. They may even succeed since the ESI officials often are not smart enough to find out such subterfuge, or may take some bribe, or may not have time and energy to go through all vouchers. But the moment there is an accident, the liability on the department will start, and that can lead to deep scrutiny.
Advice for HR and Accounts Executives
My advice as a former officer of ESIC and GM of a group of manufacturing industries is to cover all the people, keep proper records, pay contributions, and also educate the workers and their families by giving a small handout in their language and through training on how they can avail themselves of the various benefits. The HR executive should be proactive in case of any sickness, accident, etc., for workers or their family and ensure that they get all the services they are legally entitled to from the ESI Department.
In other words, comply with the law, fight for one's rights under the law, and do not seek shortcuts and subterfuges.
Regards,
O Abdul Hameed
Formerly Additional Commissioner ESIC
[Email Removed For Privacy Reasons]
From India, Coimbatore
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All payment figures are reflected in the Balance Sheet. When an enforcement officer visits your establishment, he will first ask for the account books and balance sheets. You will have to produce them before the enforcement officer. Then, he will calculate the dues based on the figures you have shown in the balance sheet. It is better to follow the rules and regulations of all acts.
Regards,
Ra Lawande
Attribution: https://www.citehr.com/460725-vouche...#ixzz2Zm5W6gXa
From United States, San Jose
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Regards,
Ra Lawande
Attribution: https://www.citehr.com/460725-vouche...#ixzz2Zm5W6gXa
From United States, San Jose
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http://esic.nic.in/page.php?pid=MzIz
SERVICE CONTRACT
Amount paid to an organization for the maintenance of Machinery/Equipment as part of a service contract will not attract ESI contribution.
PAYMENT MADE TO LABOUR CONSULTANTS, LAWYERS, ENGINEERS, COUNSELS, CHARTERED ACCOUNTANTS:
The amount paid by the employer to labor consultants, lawyers, engineers, counsels, chartered accountants does not constitute wages as per the provisions under Section 2(22) of the ESI Act, and hence no contribution is payable.
From India, Pune
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SERVICE CONTRACT
Amount paid to an organization for the maintenance of Machinery/Equipment as part of a service contract will not attract ESI contribution.
PAYMENT MADE TO LABOUR CONSULTANTS, LAWYERS, ENGINEERS, COUNSELS, CHARTERED ACCOUNTANTS:
The amount paid by the employer to labor consultants, lawyers, engineers, counsels, chartered accountants does not constitute wages as per the provisions under Section 2(22) of the ESI Act, and hence no contribution is payable.
From India, Pune
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Dear Seniors,
In my organization, we have engaged 13 manpower for roles such as Prist, Temple Sweeper, and other support services for over 10 years. Due to a lack of knowledge, my previous officer only deducted their ESI, and their wages were paid by the organization through a voucher payment system.
I am seeking guidance on how to rectify this issue and understand the potential legal consequences. Your suggestions and advice would be greatly appreciated.
Thank you.
From India, New Delhi
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In my organization, we have engaged 13 manpower for roles such as Prist, Temple Sweeper, and other support services for over 10 years. Due to a lack of knowledge, my previous officer only deducted their ESI, and their wages were paid by the organization through a voucher payment system.
I am seeking guidance on how to rectify this issue and understand the potential legal consequences. Your suggestions and advice would be greatly appreciated.
Thank you.
From India, New Delhi
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What is the issue actually? You have been paying 13 employees by vouchers after deducting ESI. Yes, what is wrong with it? You continue to pay it until you make a system of paying salary through the bank. Once you are ready with the bank accounts of all the workers, you stop this present system and switch over to the payment through the bank.
From India, Kannur
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From India, Kannur
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Employees' PF & Misc Prov Act 1952.pdf
Employees' PF & Misc Prov Act 1952.doc