A contractor had rendered his service of providing manpower for a principal employer, which is a Government of India organization. The contract ran for a span of 11 months, wherein the principal employer's bill payment was not continuous. They had paid fewer wages than the prescribed minimum wages and only paid 4 months' bill to the contractor. The principal employer had stopped payment stating irrelevant reasons, due to which the contractor was able to pay only the salary to employees as per applicable wages, even though the contract employees were given ESI numbers under the contractor code. Later, the principal employer wrote a letter to ESI, for which ESI conducted an inspection of the contractor. Based on the inspection, the ESI officer issued an inspection report. For the recovery of the ESI amount, the ESI inspection officer obtained a letter from the contractor to collect the ESI recovery amount from the contractor's bill held up at the principal employer and obtained all ESI challans from the contractor, and the matter was closed.
After 6 years, ESI has issued a notice to the contractor to pay the ESI dues for the said period without considering the principal employer. Upon verification, the contractor realized that out of the 11 months of ESI contribution, the ESI department had collected only 4 months' ESI amount from the principal employer from the contractor's bill due at the principal employer and had not recovered the amount for the remaining 7 months, even though the contractor's bill is still held up at the principal employer. The same ESI that previously received a letter from the contractor for recovery of the ESI amount from the principal employer has now issued a notice to the contractor to make contributions.
It is unclear who should be responsible for the payment of ESI contributions as the contractor's bill is held up at the principal employer. ESI has only recovered 4 months of ESI contributions from the principal employer from the contractor's bill and has left 7 months unpaid. It is important to specify under which act ESI can recover only part payment from the principal employer.
Additionally, who should be held responsible for the partial recovery of the ESI amount, as the ESI department obtained challans and a letter for recovery from the contractor's bill held up at the principal employer but failed to collect the entire ESI contribution due to unknown reasons? The contractor cannot claim the ESI amount from the principal employer after this lapse of 6 years. This matter is further complicated by the fact that the contractor has stopped his business due to ill-health for the past 6 years, which has been communicated to the ESI authorities.
From India, Mysore
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After 6 years, ESI has issued a notice to the contractor to pay the ESI dues for the said period without considering the principal employer. Upon verification, the contractor realized that out of the 11 months of ESI contribution, the ESI department had collected only 4 months' ESI amount from the principal employer from the contractor's bill due at the principal employer and had not recovered the amount for the remaining 7 months, even though the contractor's bill is still held up at the principal employer. The same ESI that previously received a letter from the contractor for recovery of the ESI amount from the principal employer has now issued a notice to the contractor to make contributions.
It is unclear who should be responsible for the payment of ESI contributions as the contractor's bill is held up at the principal employer. ESI has only recovered 4 months of ESI contributions from the principal employer from the contractor's bill and has left 7 months unpaid. It is important to specify under which act ESI can recover only part payment from the principal employer.
Additionally, who should be held responsible for the partial recovery of the ESI amount, as the ESI department obtained challans and a letter for recovery from the contractor's bill held up at the principal employer but failed to collect the entire ESI contribution due to unknown reasons? The contractor cannot claim the ESI amount from the principal employer after this lapse of 6 years. This matter is further complicated by the fact that the contractor has stopped his business due to ill-health for the past 6 years, which has been communicated to the ESI authorities.
From India, Mysore
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ESI Contribution Recovery in India
In this scenario, the issue of partial recovery of ESI contributions from the principal employer raises legal and procedural questions. Here are the key points to consider:
1. Responsibility for ESI Contributions:
- The responsibility for ESI contributions lies with both the contractor and the principal employer. As per the Employees' State Insurance Act, 1948, both entities are obligated to contribute towards ESI for the contract employees.
- The contractor, as the employer of the contract employees, is primarily responsible for ensuring ESI compliance, including timely payments.
2. ESI Recovery Process:
- The ESI department's action of recovering only a portion of the ESI contributions from the principal employer is irregular. Ideally, the full amount should have been recovered from the principal employer as per the contract terms.
- The contractor should have ensured that the full ESI contributions were remitted to the ESI department, even if the principal employer delayed payments.
3. Legal Recourse:
- Given the lapse of 6 years and the contractor's health situation, claiming the unpaid ESI contributions from the principal employer may be challenging.
- The contractor may need to seek legal advice to explore options for recovering the outstanding ESI contributions from the principal employer, considering the circumstances.
4. Communication with ESI Authorities:
- It is crucial for the contractor to maintain open communication with the ESI authorities regarding the situation. Explaining the health-related business closure and the challenges faced may help in negotiating a resolution.
5. Consultation with Legal Experts:
- Engaging legal experts specializing in labor laws and ESI matters can provide clarity on the contractor's rights and options for addressing the unpaid ESI contributions.
- Legal counsel can assist in navigating the complexities of recovering the outstanding ESI amount and determining the appropriate course of action.
6. Documentation and Evidence:
- The contractor should gather all relevant documentation, including past correspondence with the principal employer and the ESI department, to support their case for partial ESI recovery and the reasons behind the non-payment.
In conclusion, the situation requires a thorough review of the contractual obligations, legal provisions, and communication with relevant authorities to determine the best course of action for addressing the unpaid ESI contributions. Seeking professional advice and maintaining transparent communication will be key in resolving this issue effectively.
From India, Gurugram
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64In this scenario, the issue of partial recovery of ESI contributions from the principal employer raises legal and procedural questions. Here are the key points to consider:
1. Responsibility for ESI Contributions:
- The responsibility for ESI contributions lies with both the contractor and the principal employer. As per the Employees' State Insurance Act, 1948, both entities are obligated to contribute towards ESI for the contract employees.
- The contractor, as the employer of the contract employees, is primarily responsible for ensuring ESI compliance, including timely payments.
2. ESI Recovery Process:
- The ESI department's action of recovering only a portion of the ESI contributions from the principal employer is irregular. Ideally, the full amount should have been recovered from the principal employer as per the contract terms.
- The contractor should have ensured that the full ESI contributions were remitted to the ESI department, even if the principal employer delayed payments.
3. Legal Recourse:
- Given the lapse of 6 years and the contractor's health situation, claiming the unpaid ESI contributions from the principal employer may be challenging.
- The contractor may need to seek legal advice to explore options for recovering the outstanding ESI contributions from the principal employer, considering the circumstances.
4. Communication with ESI Authorities:
- It is crucial for the contractor to maintain open communication with the ESI authorities regarding the situation. Explaining the health-related business closure and the challenges faced may help in negotiating a resolution.
5. Consultation with Legal Experts:
- Engaging legal experts specializing in labor laws and ESI matters can provide clarity on the contractor's rights and options for addressing the unpaid ESI contributions.
- Legal counsel can assist in navigating the complexities of recovering the outstanding ESI amount and determining the appropriate course of action.
6. Documentation and Evidence:
- The contractor should gather all relevant documentation, including past correspondence with the principal employer and the ESI department, to support their case for partial ESI recovery and the reasons behind the non-payment.
In conclusion, the situation requires a thorough review of the contractual obligations, legal provisions, and communication with relevant authorities to determine the best course of action for addressing the unpaid ESI contributions. Seeking professional advice and maintaining transparent communication will be key in resolving this issue effectively.
From India, Gurugram
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GOI Proposal for reduction in ESI Contributions.p df
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