Inspection of factories

An article published in the Business Standard in December, 2010 brought out how the employees of the factories in Vellore felt that their legitimate rights would be protected only when the factories were inspected by the inspectors periodically. Long working hours, penalty for visit to toilets more than twice during a day, etc., were highlighted in that article.

As far as the ESIC is concerned, numerous cases of concealed employment are not detected because of absence of availability of information, lacunae in the Inspection Policy and lack of adequate number of Social Security Officers with reference to the actual work-load in such cases.

The ESIC has permitted the employers to register themselves online and get Employer’s Code Numbers generated. As a result, various kinds – repeat various kinds – of further problems have cropped up.

Monetary liability for the ESIC is, at present, created in respect of every TIC generated online by an employer or by a person posing as an employer even when the organisation is not sure whether the case is genuine and whether contribution as per rules would be forthcoming or not.

The EPFO is also facing only some of these problems. For more on this issue, please visit

But, the laxity in inspection does not  result in incorrect financial outgo as the EPFO pays benefits only with reference to the contribution paid, while the ESIC pays benefits not only on the basis of contribution paid but also on the basis of contribution payable but not paid.

The ESIC has not put in place adequate monitoring mechanism. The availability of man-power in the cadre of Social Security Officers is very very less when compared to the magnitude of the work in hand.

The government wants to do away with inspections, of course, for certain legitimate reasons. Please visit the following link:

But, controlling corruption and doing away with inspection are not synonymous. The government should also find a way and convince the working population how the problems faced by them would be located and solved.

Periodical and proper inspection of all factories and establishments will, alone, ensure coverage and protection of the workforce.

The very concept of compliance under the ESI Act is based on mutual trust and that was why the word ‘may’ is used instead of ‘shall’ in Sec. 45 (2) of the ESI Act, 1948.

But, the concept of Public Administration is “You do not get what you expect; you get only what you inspect’.

In other words, “Do not expect what you do not inspect”.

It would be helpful to the insured population if the inspection system of the ESI Corporation is streamlined to be ‘employee-friendly’ so that all employees are covered in time and contributions made to be paid on all items of wages as defined  under Sec. 2 (22) of the ESI Act, 1948.

ESI Corporation can ensure willing participation of labour in the making of the nation.



Filed under For Trainees, Inspections

6 responses to “Inspection of factories

  1. Abdul Hameed

    All Inspections are source of corruption, intimidation and harassment. Often the inspecting official do not themselves know the law clearly and they are also totally ignorant of modern system of book keeping and therefore unable to understand and examine various kind of books and documents, which result in bulk booking of some entries and then leaving it to be sorted out between the department officers and employers, which is opening further scope for corruption and avoidable harassement. An organization which claims to provide various kind of benefits in case of sickness, abstention, accidents and death and help employees immensely, should not resort to inspection but education of employees. The law that benefits has to be given even for those in respect of whom no contribution is actually paid but only payable is more a myth since actual amount of benefit is linked to contribution payable and this requires verification of records when there is a claim which can only come through report from employers. When the employers certify a claim of workers, he need to give his wage break up and period of employment and he is open to scrutiny of his records. Let ESIC ensure better, speedy and seamless benefit dispensation, educate the public at large and the industrial workers and their leaders continuously as also employers, I am sure the registration and payment will be more voluntary and friendly and that is what ESIC should strive for. Instead of inspection, department should undertake selective scrutiny of records called to its office, in case of complaint or doubtful claim.

    • The suggestions are well-taken with reverence. This site abstained from publishing matters like the methods of inspection which are intra-departmental matters. But, still, it is possible to guide the stakeholders the way they have to respond at the time of inspection. That will give some inputs to the Social Security Officers, too.
      It is a fact that when an employer who was the ESI Corporation Member as Employers’ Representative was informed by his HR Manager that the ESI Inspector was conducting inspection and whether he could tell him that the owner of the factory was the Corporation Member, the employer advised the HR Manager to pay the Inspector if he demanded only the routine amount and to inform him of the employer’s status only if he demanded much more.
      Such state of affairs can be curtailed if employers and employees are made aware of the intricacies of inspection.
      With profound regards.

      • Abdul Hameed

        We all know that Income Tax revenue is crucial to the Nation and form bulk of Public fund for both State and Central Governments. Income Tax payer has no direct benefit linked to his tax payment and therefore greater keenness to avoid payment of income tax. Yet there is no periodical and routine inspection of records by income tax department. Even the power of scrutiny is severely curtailed so that a local income tax officer can not order scrutiny. Slowly all scrutinies of tax assessors records are being done away. So is the case of excise, service tax etc, where only in case of tax credit taken by assessor, some audit is taken up and not routinely or periodically. So why should there be an inspection for ESIC and EPFO, when both employers and employees are directly benefited by paying them ? Look at this issue in another view. The total cost of inspection and resultant assessment procedure and litigation cost appears to be more than the actual recoveries ultimately made as a result of such inspection. Social cost of corruption, harassment and intimidation is extra.

  2. Tom

    Very bad state of affairs in India.India never needed independence from ‘Rule of Law’ to ‘No Law Rule’.

  3. Srinivas M

    ESIC is an employees friendly scheme(Intent of Law) But here inspectors and Officials have made it a money spinning Racket.Whenever they want money they order for inspections of records or go in for new coverage of units whether they are coverable or not.Cover using force and recover contributions and bribes in a highhanded manner using Govt. mechanism.This amounts to day light robbery by the state using state machinery not by the state but by its officials and in this dept. there is no mechanism to solve employers or employees problems.But both pay contributions to this dept. like jokers and yet employers and employees have to pay bribes to get things done,\What an irony in India under famous scandal ridden UPA Govt.,

  4. Pingback: Towards objective Test-Inspections in the ESIC! | Flourishing ESIC

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