Employee State Insurance Corporation (ESIC) - Fraudulent Practice & Legal Provisions

Fraudulent Practice

Any person who makes a false statement or fake representation for the purpose of obtaining benefits whether for himself or for some other person renders himself/herself liable to prosecution, under the appropriate Court of Law for Misappropriation of Funds.

Legal Provisions

Section 72

Section 72 of the ESIC Act, places a bar upon the powers of an employer with regards to reduction of wages of an employee/worker for reasons of his/her liability to pay contribution.

Section 73

Under Section 73, an employer cannot dismiss or punish an employee during the period of his/her certified sickness, disablement etc. Contravention or Non-adherence of these provisions attracts penalties provided under Section 85 of the Act.

Regulation 97

Regulation 97 permits an employer to discontinue or reduce the benefits payable to his/her employees/workers under conditions of their service that are similar to the benefits conferred by the Act, to the extent as specified below:

a) From the date of the commencement of the first benefit period following the Appointed Day for his factory or establishment -

• Sick leave on half pay to the full extent;
• Such proportion of any combined general purposes and sick leave on half-pay that may be assigned as a sick leave but in any case must not exceed 50 per cent of such combined leave.

b) Any type of maternity benefits granted to a woman employee to such an extent in which a woman employee may become entitled to the Maternity Benefits under the ESIC Act.

Where an employee avails himself/herself for any leave from the employer for sickness, maternity or temporary disablement, the employers are entitled to deduct from the leave salary of the concerned employee or worker, the amount of benefit to which he/she may be entitled under this Act for the corresponding period.

It is only when a workman actually obtains or receives cash benefit under the ESIC Scheme that the employer can exercise his/her right to make a suitable deduction from the wages due to him/her by way of leave salary.

Recovery machinery

Under Section 45(I)(b) of the ESIC Act, Recovery Officer is appointed with the purpose of providing empowerment to recover ESI Contribution, Interest and Damages determined under the provisions of Section 45(A), Regulation 31A, under Section 85(B)(I) and Regulation 31C of the ESIC Act. Such Recoveries are made under the provisions of Section 45(C) to 45(I) of the Act. Such provisions are contained in second and third schedule to the Income Tax Act, 1961(43 of 1961) and Income Tax (Certificate Proceedings) Rule 1962 as amended from time to time, with necessary modifications/substitutions of certain words that are referred to as arrears.

For effecting such recoveries, the Recovery Officer issues Notice of Demand in Form CP-2 allowing 15 days time to make compliance thereof. In the event of failure to comply with such a Notice, the Recovery Officer is entitled to one or more modes of recovery as enlisted below:

• Attachment and sale of the movable and immovable property of the factory or commercial establishment/Principal/immediate Employer.
• Arrest of the Employer and his/her detention in prison.
• Appointing a receiver for the management of the movable and immovable property of the factory or commercial establishment/ Principal/ immediate employer.