Pf and ESIC damage and penalties
4 months ago
My dad owns a small enterprises firm which before COVID had family relatives as employee around 15 people and now we have 2 employees working my dad and a person of Field .
Dad never knew about the penalties and damage for esic and pf as we have got a notice of 45 A without any prior notices .
What steps must we take now so that we don't have to pay the huge fines in lakhs.
A.Dear client
Carefully read and understand the content of the notice. It should specify the reasons for non-compliance and the penalties imposed. This will help you identify the areas that need attention.Conduct an internal review of your compliance status with ESIC and PF regulations. Identify any lapses or areas where you may not have fulfilled the statutory requirements.
Take immediate steps to rectify any compliance issues identified during the review. This may involve registering with ESIC and PF, updating records, and ensuring timely contributions. If possible, communicate with the ESIC and PF authorities to explain any genuine lapses and seek guidance on the steps you need to take to rectify the situation. Some authorities offer Voluntary Disclosure Schemes where you can voluntarily disclose any non-compliance and pay reduced penalties. Check if such a scheme is available in your jurisdiction
Carefully read and understand the content of the notice. It should specify the reasons for non-compliance and the penalties imposed. This will help you identify the areas that need attention.Conduct an internal review of your compliance status with ESIC and PF regulations. Identify any lapses or areas where you may not have fulfilled the statutory requirements.
Take immediate steps to rectify any compliance issues identified during the review. This may involve registering with ESIC and PF, updating records, and ensuring timely contributions. If possible, communicate with the ESIC and PF authorities to explain any genuine lapses and seek guidance on the steps you need to take to rectify the situation. Some authorities offer Voluntary Disclosure Schemes where you can voluntarily disclose any non-compliance and pay reduced penalties. Check if such a scheme is available in your jurisdiction
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A.Dear Client,
The ESI scheme is applicable to all factories and other establishments like Shops, Restaurants, Hotels, Cinema theatres, Road motor transport undertakings, Newspaper establishments and undertakings, Educational institutions, Medical institutions, Contract and casual employees of Municipal Corporations or Municipal Bodies as defined in the ESI Act with 10 or more persons (20 or more in some states) employed in such establishments. However, only those employees are covered under the ESI scheme whose monthly wages do not exceed Rs.21,000. As per Sec. 45A (1) of the Act where in respect of a factory or establishment no returns, particulars, registers or records are submitted, furnished or maintained in accordance with the provisions of section 44 or any [Social Security Officer] or other officials of the Corporation referred to in sub-section (2) of section 45 is [prevented in any manner] by the principal or immediate employer or any other person, in exercising his functions or discharging his duties under section 45, the Corporation may, on the basis of information available to it, by order, determine the amount of contributions payable in respect of the employees of that factory or establishment. Provided that no such order shall be passed by the Corporation unless the principal or immediate employer or the person in charge of the factory or establishment has been given a reasonable opportunity of being heard. In June 2010, Section 45-A was amended which states that no such order shall be passed by the ESIC in respect of the period beyond five years from the date on which the contributions shall become payable. Further, in April 2012, the ESIC updated the ESI Inspection Policy setting out guidelines for SSOs for conducting inspections. This limited the right of SSOs to call for records relating to 5 years prior to the date of inspection. According to Sec.45AA which was inserted on an amendment in 2010 and effective from 01/06/2010, if an employer is not satisfied with the order referred to in section 45A, he may prefer an appeal to an appellate authority as may be provided by regulation, within sixty days of the date of such order after depositing twenty-five percent. of the contribution so ordered or the contribution as per his own calculation, whichever is higher, with the Corporation. Provided that if the employer finally succeeds in the appeal, the Corporation shall refund such deposit to the employer together with such interest as may be specified in the regulation. So, in the given situation, on receipt of notice u/s.45 of ESI Act, you need to represent your case suitably to vacate the said notice failing which you have to prefer an appeal u/s.45AA of the Act before the Appellate Authority to quash the notice/order issued u/s.45A of the Act. Subject to the provisions contained in section 16 of EPF & MP Act, 1952, it applies (a) to every establishment which is a factory engaged in any industry specified in Schedule I and in which [twenty] or more persons are employed, and (b) to any other establishment employing [twenty] or more persons or class of such establishments which the Central Government may, by notification in the Official Gazette, specify in this behalf. Provided that the Central Government may, after giving not less than two months’ notice of its
intention so to do, by notification in the Official Gazette, apply the provisions of this Act to any establishment employing such number of persons less than [twenty] as may be specified in the notification. Section 7A of The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (1) The Central Provident Fund Commissioner, any Additional Central Provident Fund Commissioner, any Deputy Provident Fund Commissioner, any Regional Provident Fund Commissioner, or any Assistant Provident Fund Commissioner may, by order, (a) in a case where a dispute arises regarding the applicability of this Act to an establishment, decide such dispute, and (b) determine the amount due from any employer under any provision of this Act, the Scheme or the [Pension] Scheme or the Insurance Scheme, as the case may be, and for any of the aforesaid purposes may conduct such inquiry as he may deem necessary. As per Sec.7(3), No order shall be made under Sub-Section (1), unless the employer concerned is given a reasonable opportunity of representing his case. Under Sec.7(4) Where an order under sub-section (1) is passed against an employer ex parte, he may, within three months from the date of communication of such order, apply to the officer for setting aside such order and if he satisfies the officer that the show-cause notice was not duly served or that he was prevented by any sufficient cause from appearing when the inquiry was held, the officer shall make an order setting aside his earlier order and shall appoint a date for proceeding with the inquiry. So, in view of the above-stated proposition of relevant law, on receipt of a notice u/s.7A of the Act from EPFO, you need to represent your case suitably with supporting documents/evidence to set aside the order of the concerned Authority. Reach out to an Advocate handling social security laws for guidance and for tentative steps required to defend the case suitably before the concerned Authorities under ESIC & EPFO.
The ESI scheme is applicable to all factories and other establishments like Shops, Restaurants, Hotels, Cinema theatres, Road motor transport undertakings, Newspaper establishments and undertakings, Educational institutions, Medical institutions, Contract and casual employees of Municipal Corporations or Municipal Bodies as defined in the ESI Act with 10 or more persons (20 or more in some states) employed in such establishments. However, only those employees are covered under the ESI scheme whose monthly wages do not exceed Rs.21,000. As per Sec. 45A (1) of the Act where in respect of a factory or establishment no returns, particulars, registers or records are submitted, furnished or maintained in accordance with the provisions of section 44 or any [Social Security Officer] or other officials of the Corporation referred to in sub-section (2) of section 45 is [prevented in any manner] by the principal or immediate employer or any other person, in exercising his functions or discharging his duties under section 45, the Corporation may, on the basis of information available to it, by order, determine the amount of contributions payable in respect of the employees of that factory or establishment. Provided that no such order shall be passed by the Corporation unless the principal or immediate employer or the person in charge of the factory or establishment has been given a reasonable opportunity of being heard. In June 2010, Section 45-A was amended which states that no such order shall be passed by the ESIC in respect of the period beyond five years from the date on which the contributions shall become payable. Further, in April 2012, the ESIC updated the ESI Inspection Policy setting out guidelines for SSOs for conducting inspections. This limited the right of SSOs to call for records relating to 5 years prior to the date of inspection. According to Sec.45AA which was inserted on an amendment in 2010 and effective from 01/06/2010, if an employer is not satisfied with the order referred to in section 45A, he may prefer an appeal to an appellate authority as may be provided by regulation, within sixty days of the date of such order after depositing twenty-five percent. of the contribution so ordered or the contribution as per his own calculation, whichever is higher, with the Corporation. Provided that if the employer finally succeeds in the appeal, the Corporation shall refund such deposit to the employer together with such interest as may be specified in the regulation. So, in the given situation, on receipt of notice u/s.45 of ESI Act, you need to represent your case suitably to vacate the said notice failing which you have to prefer an appeal u/s.45AA of the Act before the Appellate Authority to quash the notice/order issued u/s.45A of the Act. Subject to the provisions contained in section 16 of EPF & MP Act, 1952, it applies (a) to every establishment which is a factory engaged in any industry specified in Schedule I and in which [twenty] or more persons are employed, and (b) to any other establishment employing [twenty] or more persons or class of such establishments which the Central Government may, by notification in the Official Gazette, specify in this behalf. Provided that the Central Government may, after giving not less than two months’ notice of its
intention so to do, by notification in the Official Gazette, apply the provisions of this Act to any establishment employing such number of persons less than [twenty] as may be specified in the notification. Section 7A of The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (1) The Central Provident Fund Commissioner, any Additional Central Provident Fund Commissioner, any Deputy Provident Fund Commissioner, any Regional Provident Fund Commissioner, or any Assistant Provident Fund Commissioner may, by order, (a) in a case where a dispute arises regarding the applicability of this Act to an establishment, decide such dispute, and (b) determine the amount due from any employer under any provision of this Act, the Scheme or the [Pension] Scheme or the Insurance Scheme, as the case may be, and for any of the aforesaid purposes may conduct such inquiry as he may deem necessary. As per Sec.7(3), No order shall be made under Sub-Section (1), unless the employer concerned is given a reasonable opportunity of representing his case. Under Sec.7(4) Where an order under sub-section (1) is passed against an employer ex parte, he may, within three months from the date of communication of such order, apply to the officer for setting aside such order and if he satisfies the officer that the show-cause notice was not duly served or that he was prevented by any sufficient cause from appearing when the inquiry was held, the officer shall make an order setting aside his earlier order and shall appoint a date for proceeding with the inquiry. So, in view of the above-stated proposition of relevant law, on receipt of a notice u/s.7A of the Act from EPFO, you need to represent your case suitably with supporting documents/evidence to set aside the order of the concerned Authority. Reach out to an Advocate handling social security laws for guidance and for tentative steps required to defend the case suitably before the concerned Authorities under ESIC & EPFO.
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A.Dear client
It is suggested that you share the notice with us and we shall evaluate on the legal remedies that you might have against the notice and try to save your dad from getting penalized, if possible
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