My factory in Gorakhpur has not paid ESI contributions for several months; what are the legal consequences and how can I regularise it?
MA Asked by Madhuri Dixit from India
Quick Answer
Under the Employees' State Insurance Act, 1948, failure to pay ESI contributions attracts damages under Section 85B at rates ranging from twenty-two percent of the arrears, and interest under Regulation 31A at twelve percent per annum.
Detailed Legal Analysis
Under the Employees' State Insurance Act, 1948, failure to pay ESI contributions attracts damages under Section 85B at rates ranging from twenty-two percent of the arrears, and interest under Regulation 31A at twelve percent per annum. The employer is required to deduct the employee's contribution from wages and pay both contributions within the prescribed time.
You may approach the ESI Corporation for waiver or reduction of damages in genuine cases of financial hardship. Prosecution under Section 85 of the Act may be initiated for continuing default, with imprisonment up to one year and fine.
The Allahabad High Court may be approached for relief if the damages are disproportionate. The Uttar Pradesh Rent Control Act 1972 on social insurance may have additional state-level requirements.
Regularising involves paying all arrears with damages and interest, filing pending returns, and ensuring future compliance.
Disclaimer: AI-generated for educational purposes only. Does not constitute legal advice. Consult a qualified practitioner.