ESIC Revenue Manual Vs. EPF Inspector Manual

Once upon a time, in the later Eighties, an Insurance Inspector sent his Inspection Report pertaining to a hotel in a small town, which fell within the implemented area. The hotel had been covered as an establishment, then. He reported that the Attendance Register and the Wages Register showed very clearly that there were only 22 employees in the hotel. But, the employer had been paying contribution for 25 employees and submitting Return of Contribution Cards too.

The matter was probed into by him further and it was found that the three persons for whom the employer of the hotel was paying contribution were employed in the neighbouring peanut shop, not run by the hotel-owner. The peanut-shop owner had, earlier, been working in a textile mill in Mumbai and had come back to his native town, after the mills were closed after the large scale strike by the labour leader Datta Samant. This peanut-shop owner knew the benefits of coverage under the ESI Act and, therefore, wanted to provide that security net to his employees. He requested the neighbour, the hotel owner, to include his employees also in the RCC stating that he would pay the contribution amount correctly.

While this report was considered to be a compliment to the ESI Corporation, the hotel-owner was advised to desist from such practice, as the employees of the peanut-shop were not the employees of the hotel and the peanut-shop was not an establishment coverable under the ESI Act.

Moreover, providing Disablement Benefits and Dependant Benefits to these three employees in the event of accidents in the non-coverable peanut shop would become difficult.

The ESIC is supposed to receive contribution compulsorily from and in respect of all the coverable employees, but, only from the coverable employees and not from the non-coverable but willing employees. ESIC did not see that there was more revenue because of such coverage. ESIC went beyond it and understood that there was more liability than what was legally permitted, when such non-coverable but willing employees are admitted into its fold. ESIC took care to enforce the law strictly and rightly.

What is the position now? And, what is the position after the introduction of the I.T. Roll-Out? Is it a free-for-all now in respect of coverage? These matters will be discussed when the issues involved in I.T. Roll-Out are taken up. For the present, the contents of the Revenue Manual alone are discussed. Flourishing ESIC acknowledges with deep appreciation the inputs given by many.

When the ESIC Headquarters Office released the Revenue Manual, two questions were asked:

1. Does this Revenue Manual supersede all the instructions on Revenue-related matters until the date of its publication?

2. Has this Revenue Manual taken into consideration all the instructions issued by the Hqrs. on revenue-matters until the date of its publication?

The answer was a plain and simple ‘No’.

The extent to which the Revenue Manual would be useful to the Revenue Branch Officers, Social Security Officers, and the staff members dealing with Revenue matters in the ESIC can be understood from the above-said reply itself.

This Manual is available online and is in public domain. It is a fact that the Revenue Manual, brought out after a lot of hard work, throws  light on important issues with historical facts. But, a Manual of an organisation must be foolproof. When the Local Office Manuals were prepared and updated, different sections of the Manual were sent to various regions for examination and feedback to ensure that there was no error. But, such an exercise had not been done before printing the Revenue Manual, in spite of the fact that some problems were and are endemic while many are epidemic. Endemic issues are those which are confined only to a few Regions or Sub-Regions. This Manual does not tackle certain important  endemic and epidemic issues plaguing the revenue administration. A consultation and brain-storming sessions with regions would have helped the Hqrs. to solve many problems.

Some of the issues are, therefore, brought up for discussion in this article. Some major issues are and will not be discussed here in this forum, as it would be misused by unscrupulous elements, which already play a negative role aided by the deficiencies in the Revenue Manual. :

Issue 1: Incorporating obsolete instructions:

It has been mentioned in Page 212 of the Revenue Manual that order under Sec. 45-A of the ESI Act, 1948 could be issued on the basis of entries in the Despatch Register regarding the despatch of C-18 adhoc.Instructions like this had been issued in July 2002 but were later modified in May 2008.There had been so many judgments against the method suggested in Page 212. That a letter had been sent by Registered Post does not imply that it had, really, been delivered. One must ensure that the Notice sent in Form C-18 had actually been delivered before passing the order under Section 45-A.But, the instructions issued in May 2008 had not been taken into account before publishing the contents of Page 212.
Page 221 contains the word ‘or’ in line 3 in Para L.13.2.(1) and this confuses the issue more.
But, Page 223 contains the following details of the instructions issued in May, 2008:

“Keeping the above broadly in view, it has been desired that adequate care should be taken to ensure that the following action has been completed before issuing speaking order u/s 45-A:

  • . i)  to ensure proper service of the notice (C-18) to the employer. “


What, then, is the need to incorporate the obsolete instructions in Page 212?


Issue 2: Essential details omitted:

The format for issue of order u/s 45-A does not contain, in its last paragraph in Page 230, the date of delegation of power by the Corporation and the details of gazette in which it was published in the year 1991. When a standardised format is introduced, this aspect could have been taken care of.
Issue No. 3: Allotment of Code Numbers to Contractors:

Page 57of the Revenue Manual contains unlawful instructions. While Para P.5.3 is correct, the contents of the next para P.5.4 are wrong. It is true that the authorities are able to do now whatever they desire. But, that does not imply that whatever they do is right.

P. 5.3. Submission of Employer’s Registration Form by the Contractors (Immediate Employers): A contractor or the immediate employer to whom the Act applies, but is letting out the services of all his employees to only one covered factory or establishment, no separate ESI code number is allotted to him. He is required to comply with the provisions of the Act, rules and regulations under the code number of the principal employer, with a sub-code number to identify him and his compliance.
P. 5.4. Allotment of a code number to a contractor or immediate employer : If a contractor or immediate employer to whom the Act applies, and letting out the services of his employees to an uncovered factory or establishment or to more than one covered factory or establishment, such contractor or immediate employer may be registered separately and a separate code number allotted to him. For this purpose, the following points may be kept in view.
A contractor is only an Immediate Employer and he cannot be given separate code number to enable him to cover the employees sent by him to do work of other employers, to do the work in the premises of other employers.
The directions in page 57 and subsequent pages on this issue have created a lot of havoc. The manner in which the software under the I.T. Roll Out has enabled the employers to create their own code numbers has added to the problems, to put it very politely.
Hope the matter will be set right by the authorities. The intricacies of this issue had been brought to the notice of the authorities long back. But, there is no system in place to hear the subordinates.
The management principle recommended by Mr. Gordon M.Bethune, former Chief Executive of the Continental Airlines is to hear the subordinates. For, they know more about the work, they know more about the weak-spots.
The importance of respecting the views of the subordinates has already been highlighted in the following thread:
In the context, the contents of the EPF Inspector Manual, available in the following link, is worth-comparing. The ESIC too had similar Handbook for Insurance Inspectors. This Handbook has not been published now.
On the other hand, the Revenue Manual contains the duties of Social Security Officers too. But, as a rule, Manuals must confine themselves only to time-tested procedures. They should not give room to ambiguous interpretations.



Filed under For Trainees, Inspections

2 responses to “ESIC Revenue Manual Vs. EPF Inspector Manual

  1. Abdul Hameed

    The point brought out by the author, are absolutely relevant. It only shows that good intentions also need to be achieved with patience, care and greater level of consultation and more importantly, there has to be close legal vetting considering that ultimately everything done by a organization implementing enacted law must stand scrutiny of the law. Drawing a manual of instruction where none exist need to meet all these essentials. As an example, saying that a dispatch register entry is sufficient to establish proof of getting notice before quasi-judicial determination destroys years of judgments on Principles of Natural justice given by Indian Supreme court and also House Lords, UK and several Commonwealth Courts on the subject followed religiously in India. On this issue, only this much from me at this point of time. Suffice it to say, I have much more to write about.
    Dealing with some specific cases of potential misuse mentioned at the start of this post, let me give some real example, that happened much later.
    A gentleman, well dressed with gold framed specs, gold watch etc walked in to the office of MS in Delhi ESI Hospital, seeking immediate clearance for one of his “Employee” for some expensive surgical operation in AIMS. The MS was bit surprised with the anxiety and agitation of the person, who came as an employer since he has not seen so much interest shown by Employer himself for an employee that too in case of a medium sized restaurant. Since the “Employees” was eligible going by the laws, the formalities were completed but the Doctor asked some one to make some inquiries. It was found that the Employee was his wife, a house wife who was enrolled about two months or so and technically become eligible and the lady was advised for the operation few days prior to her being “Employed” in his restaurant as cook. Now nothing wrong in employing ones own wife as cook in his small restaurant, and nothing wrong in her falling sick or needing operation and law did not prohibit such employment even after being diagnosed for major ailment. I know subsequently some qualification of six months and then reduced to 3 months have been made for super-specialty treatment. In any case most such surgical operation can wait 3 to 6 month or so. Earlier this was not much of a problem when private hospitals were not approved and one has to go to medical college.

    When I was in Karnataka, a hotel owner came to me with recommendation of senior politician and his request literally stumped me. He want to be covered retrospectively from a date before about 10 months and he was willing to pay all penalties and even face prosecution. ( and subtly hinted paying bribe!) The hotel was situated in northern part of State (Belgaum) and I have not heard anything particular about this hotel. On checking the survey reports I found that the hotel was surveyed 2 or 3 occasion earlier and found to have only 8 or 9 employees. The owner admitted that he in fact had about 14 workers and manipulated attendance and wage record to show below 10 to escape ESIC and now he is willing to rewrite all the records to show it as 14 again. Naturally I was intrigued and thought there is a catch-22. It turned that the hotel had a major fire due to gas cylinder explosion in which 3 employees died and son of the owner was badly injured. The sincere local ESI Manager, on his own made surprise inspection immediaely after the accident, based on local reports, and foun that the unit had less than 10 person and owner even gave this in write besides copies of muster roll and attendance registering not realizing the consequent of not covering. The Commissioner under Workmen’s Commission is now after them and the compensation for deceased and injured will be close to 10 Lakhs. It is then some one advised that had he got ESI registration not a penny was required to be paid. So he wanted to do the reverse manipulation.

    Six months back a cook in a Calicut hotel had some serious ailment (blood cancer or something) and due to pressure from Union was admitted to the top Calicut hospital which was also approved by ESIC. The hospital sought a deposit of over one lakhs and pointed out that the treatment will cost over 3 lakhs and inquired whether he has ESIC. The hotel was covered but this cook, though employed for about 10 years, was not covered. Union threatened to go on strike if the employer fails to provide the treatment from this top hospital either from his pocket or through ESIC. The owner has been running around to find a way to manipulate record to bring the man into ESI fold from back date.

    All these are actual and not hypothetical cases. There are many such cases. IT-Enabled on line-services , private hospital coverage (all these hospital employees are seeking all kind of diagnistic check up, getting reference from State ESI Doctors) and recognizing private hospital for super-specialty treatment are all good steps in itself, but also has many devils in its detail. Addressing them in time will save lot of future hurt-burning. The fancy surplus fund will not be there always, with all these medical colleges, beautification of unused buildings,needless opening of DO, SROs and what not.

    • Flourishing ESIC thanks the Former A.C. for the very important inputs. It is proposed to take up this thread also to the knowledge of the Director General, officially, for remedial action.

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