Towards objective Test-Inspections in the ESIC!

(The earlier Post titled ‘Test Inspections in the ESIC: A charade!’ dealt with the flaws in the amendment and the administrative instructions pertaining to Test Inspections, i.e., the Theory on the subject. The present Post deals with the Practice, the practical aspects in general. The ESIC Administration must plug the loopholes and not increase them by overlooking the routes for escapes and excuses)

 The perception of the employers

It has been mentioned more than once, in this forum, that periodical and proper inspections by the ESIC authorities could alone safeguard the interests of the working population by ensuring proper coverage and compliance. Proper inspections contemplate proper monitoring mechanism also in the form of Test Inspections and Vigilance Inspections. However, in practice, the employers feel that they are at the receiving end in an unjust manner because of the following reasons:

  • Undue claims are raised which are waived after questionable practices.
  • The fear of having to face such a situation compels the employers to resort to questionable methods during the inspection stage itself.
  • The inspections should, therefore, be avoided.

A narrative by Mr. O.A. Hameed, former A.C, in this regard is recalled here which can be considered as representative of the grievances of the employers. The ESIC, a public body, cannot ignore these observations:

“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 harassment. 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.”

More on the views of employers at the following links:

The issues that arise are:

Should inspections by the ESIC authorities be detested so much? Would the employers dislike the inspections even by the well-meaning and honest Inspectors of the ESIC? This article is an attempt to throw light on these facts.

Timely inspection, the need of the hour

Periodical inspections would not result in accumulated arrears. They would help the employer correct his procedure at the earliest stage. Such inspections would result in proper coverage of the insured persons in time to enable them to get even the medical benefits in time for them and their family members. There are many employers’ associations like CODISSIA which want timely and yearly inspection so that the employers would not have to shoulder extra burden. But, the ESIC has not focused attention on it. No employer would grudge payment of contribution, if the claim is lawful, correct and just, without any questionable intentions, and that too, at the earliest. In order ensure that, the ESIC has to address the problems in the following areas:

1. Serious flaws in inspection policy:

a) Day value system must be re-introduced and must be made scientific.

b) Work study by the persons who know the real work.

c) Day value system is the only way to measure and monitor the work of inspectors.

d) The unscientific and impractical twenty twenty formula must be abolished.

2. Scope for unjust inflated claims :

The tendency of the inspectors to report the total ledger figures emanates from two factors; One, inadequate day value and two, the tendency of the administration to initiate departmental proceedings even in cases of innocent omissions in spite of sincere efforts on the part of the inspectors.

3. Failure to act only against mala fide gross negligence:

The lapse on the part of the administration to differentiate between the cases of ‘negligence’ and ‘gross negligence’ results in low morale on the part of honest and sincere inspecting authorities. They try to find out safer methods while conducting inspections that they do not do proper inspections, resulting in additional work-load on the shoulders of the Insurance Branch Officers of the Regional Office.

4. Witch-hunting proclivity of the Administration:

a) Selective discrimination is displayed on the part of the authorities to penalize one and exempt another in similar and identical cases in the same region.

b) There is no uniformity in the approach of the officers of different regions in regulating the cases of omitted wages. This results in action and punishment of inspectors even for innocuous omissions in one region while deliberate blunders of inspectors are simply ignored in another region. Placements of the persons should not decide their fate. But, they do.

c) Same officer follows different yardsticks in different regions based on his pride and prejudice. He indulges in the witch-hunt of the inspectors in one region resulting in action against even the innocents while he chooses to patronize the guilty in another region, later.

d) Absence of response from the higher authorities to act on such complaints and set right such malady sends wrong message to the officers in the field. This gives room for the impression that satisfying the higher officer is more important, in practice, than satisfying the law.

5. Absence of Identical norms for all inspecting authorities:

a) Vigilance inspection must be done by persons who have worked as inspectors already. They must be posted again to work as inspectors after their stint in vigilance. That alone will ensure proper vigilance reports. Even direct-recruit inspectors are posted, directly, in Vigilance which results in unjustified findings. This is not correct. A superior officer is supposed to demonstrate how to do things. Findings of only such officers can carry weight and justification.Besides, the vigilance officials should also be rotated and also made accountable and responsible for their reports, since at times Assessing Officers find it extremely difficult to raise claim based on vague and perfunctory reports.

b) The Test inspecting authorities and Vigilance authorities do not have empathy. The system must ensure that. Test inspections and vigilance inspections must be asked to be done by the officers without giving them the copy of the reports sent by the inspectors. The reports given by them must be compared with the reports already submitted by the Inspectors. It is only when those test inspecting officers or Vigilance inspection officers have found something extra as omissions or lapses on the part of the inspectors who conducted the inspection originally that action should be initiated against those inspectors.

c) That alone can prove negligence and gross negligence. There is, at present, a tendency on the part of the Test Inspecting Officers and Vigilance Officers to utilize their time to examine the records of the employer to find out something extra in other heads of accounts not reported by the inspectors and report that fact stating that it was ‘gross’ negligence. That is neither the way to assess the performance of the Inspectors nor to level the allegation of ‘gross’ negligence.

6. Mechanical approach in acting against inspectors:

The thrust of vigilance action must be to see the intentions of the persons and proceed against only those who had mala-fide intention or shown gross negligence and not those who had erred in spite of their sincere efforts. Emphasis should be more on mischievous reports, rather than focusing on minor and innocuous mistakes.

 7. Harassment by higher officers:

Proper enforcement of the existing in-built system will ensure that the insurance branch officers and other officers do not harass the inspectors through various means.

8. The tendency to err on the safer side:

Training the insurance branch officers to issue proper speaking orders without giving any scope for them to believe that erring on the safer side would help them avoid departmental problems. That implies non-exercise of power vested in the officer, which is equivalent to exercising the power not vested in one. This tendency results in non-examination of the arguments put forward by the employers and results in inflated determination of arrears.

Major problem areas

 These are the major problem areas in the revenue wing of the ESIC today. All these things affect the employers first and the interests of the insured population next. The Administration must ensure that its administrative procedure ensures objective inspections that advance public interest.



Filed under Inspections

4 responses to “Towards objective Test-Inspections in the ESIC!

  1. O Abdul Hameed

    I continue to hold the view that inspections should be discontinued in ESIC and only in case of verifiable complaint, a team of 2 or 3 officials under an officer should make surprise visit, take head count of people working, study the manufacturing process, record the finding and then an assessing officer to call for records in the office and make an assessment based on the report of this team, with a cut off period of 3 month from date of such surprise visit and date of issue of order. Such order should be subject to one internal appeal before a zonal appellate authority. No regular inspection or test/vigilance inspection, instead educate the emploees and employers through handout and ensure prompt and satisfactory beneft dispensation. After a long years of experience in ESIC, primary in legal and revenue matters in different states and the Corporate office as head of Revenue and legal department, and subsequently as Group GM of a privte group with foot print in three southern states for over six years, this is my conclusion. In fact even while in department I had found the futility of inspection in most case and test inspection was certaily a waste of time and energy and the revenue earned did not match the actual expense of test inspection. In my companies where I work not, I have ensured that every one is covered under ESIC and EPF and also ensured that all get the benefits that is due and when the employees got superspeciality medical care and death benefts, there has been appreciation and both employees and the management of the Company, now wants ESI benefit for all. I found the ESIC official are atually very helpful in giving the benefit and getting fast decision, but often inspecting official consider most employers as thieves while often they do not understand the books or how to lift the viel of book keeping techniques to actually locate evasion. The MD of my Coimbatore unit wanted to find a way to get ESI coverage for those drawing above 15000 also, since he found that is more economical and beneficial for his employee as well for the Company. I also find that most of the personnel managers of HRD officials of companies are ignorant of ESI or EPF laws and procedure and find it easy to pay bribe to official and “manage” them. The questions raised in HR site by some of them show they acute ignorance. Hope this site is objective and provide a forum for Employers and Insred person to seek answers for their genuine doubts.

    • The purpose of this website has been explained in the “About” Page. It is again reiterated that “This website, dedicated to the matters on Social Security, is intended to fill the existing gap in this regard. This will serve as a forum for all the stakeholders in various social security organisations of the nation to express their opinions and problems.” Articles on topics of importance are solicited from the employers. They will be hosted in the website.

  2. Ram

    Adamant,harassing and ignorant attitude of the authorities due to misinterpretation or wrong interpretation of definition of wages,employees,etc under the act.To stop all these things contribution has to be collected on the overall turnover basis for which IT return shall be the basis.Irrespective of the salary all employees can be covered under the scheme without ceiling on salary.Employer has to submit a return containing complete details(Dt of joining,salary,family details,etc) of their employees.These things may put an end at least to a certain extent

    • A J

      A very good and practicable solution. There is no confusion/dispute in remittance of contribution, Inspection and in raising claims. Thanks to the website.

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