Tag Archives: ESIC

August 30, 2014 · 10:08 am

ESIC inspection & Account Books of employers!

 

Can the ESI Inspector (the SSO) demand the ledger, cash books, balance sheets, Income Tax Assessment Reports, etc., of the employers?

What will happen if the employer says that he has not preserved the records as mandated by the Income Tax Act for six years or as per the Companies Act for eight years?

The Power Point Presentation provides a brief answer to these questions.

Slide

 

Click on the link below for the Power Point Presentatin

Inspection and Account Books

NB: This presention would also provide answer to the comments of Mr. Jai who said, “If an employer does not preserve records as per the Company Act and the Income Tax Act, that is none of the business of ESIC” under the thread “On Amnesty Scheme 2014: Part -II”.

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January 3, 2013 · 3:41 pm

Test Inspections in the ESIC: A charade!

(This article deals only with the theory of checks and balances in the functioning of an organization and not the practice in Test Inspections, which will be dealt with separately. The theories must always be correct and take into account the problems that would be encountered in the field when it is enforced).

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Every system in a democracy must have checks and balances. As far as the ESIC is concerned, a provision for inspection of factories and establishments was incorporated in the ESI Act to facilitate monitoring proper compliance by the employers. Inspecting the records of the past periods helps the ESIC Administration detect (a) the occasions and (b) the manner in which the employers had, in the past, concealed the concealment of employment of persons and payment of wages. Such inspections help the Administration to find remedial measures to ensure that such concealments do not recur in future. The ESI Act is a labour-welfare legislation and the provision for inspections in the Act are, obviously, intended to advance the purpose of labour and their welfare. Such advancement can be achieved only when the inspections are done in a qualitative manner with adequate depth and substance. This being the importance of inspections under the ESI Act, as a natural corollary, the Administration must provide a system to monitor the performance of the Inspectors, the way there is a need to police the police.

The only way in which such monitoring can be done is to conduct Test inspections by higher officers. This system of checks and balances is there in the EPF Organisation also where it is called Supervisory Inspection.

Test Inspection is only an Administrative action

Test Inspection is only an Administrative action. It does not require any statutory provision. Reg. 102 of the ESI (General) Regulations, 1950 was found adequate for conducting Test Inspections. There was no problem on this issue until some employer went to court and got an interpretation that there was no provision for test inspection in the ESI Act. But, there were many Courts, which did not find fault with the system of such test-inspection. Moreover, the matter was not taken up with higher judiciary for any final verdict on the issue. The legitimacy of test inspections can be explained and justified by the ESIC by citing the practice followed in other departments. That would have protected the interests of the organization. However, it was not considered so essential at that time as the test inspections were continued to be done everywhere by calling them only as inspections (although they were done by the officers who were superior in rank to that of the inspectors).

But, all of a sudden Test Inspections were stopped describing them, strangely, as ‘harassment of employers’. This kind of phraseology in official communication puzzled the readers, as the test inspection was intended to monitor the quality of inspections conducted by the inspectors. That the employer had to pay, sometimes, additional contribution was only a consequential effect. Continue reading →

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December 28, 2012 · 12:19 am

Action Against Defaulters: Quo vadis, the ESIC?

Excerpts from a news item from the Times of India dated 07.12.2012:

“It has been observed that open-ended assessment, inquiries and investigations serve no real purpose. Moreover, such inquiries often do not result in the identification of beneficiaries and only tend to harass the employers and establishments. It is accordingly directed that no inquiry or probe shall ordinarily go beyond seven years that is, it shall cover the period of default not exceeding preceding seven financial years. It is to be ensured that compliance actions are initiated in time and there is normally no reason for extending the scope of investigation and assessment inquiry beyond previous seven financial years,” Central PF commissioner R C Mishra said in a circular issued on November 30, the day he superannuated.

“This circular is anti-worker. The law of limitation does not apply on us and does not stand the test of law as there are several Supreme Court rulings on the issue,” said A D Nagpal, Hind Mazdoor Sabha secretary and a trustee on the EPFO board.

“Nagpal said that fearing action, employees often do not complain against their employer till they leave service and the new provision will make it impossible for them to claim what is due to them.”

“It is not proper to have a time limit for what is an employee’s right,” added CITU president A K Padmanabhan, who is also on the EPFO board. He said the EPF statement usually does not reach employees on time and very few actually check the balance and deposits carefully.

Even before the circular was issued, there were protests within EPFO over the move. Sources said some of the members of a committee of officers on judicial proceedings had opted out from giving their recommendations as they recognized that the move was not employee-friendly. Yet, Mishra went ahead and issued the directive.

TIMES VIEW

“In a country which has precious little by way of a social safety net, the provident fund is one of the few such fallback options, even if only for those in the organized labour force. Any change in the rules governing this scheme must therefore be tested on the touchstone of whether it enhances the safety net or weakens it. Imposing a time limitation on when defaults can be investigated clearly weakens it. Most of those whose savings lie in the EPF do not regularly track whether money is being deposited in it by their employers and, if so, whether it is as much as it should be. They may well discover a default well after it happens. Clearly, they cannot be left with no scope for redress due to a time limitation clause.”

What happened in the ESIC? The ESIC had, silently, restricted the duration to five years (and not seven as in the EPFO) and got the Act amended too. The cut-off date for determining the five years period is not with reference to the financial years but with reference to the 21st of every month. The cut-off date was just left to float, so fast.

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December 21, 2012 · 9:24 am

Interviews: ESIC on the reverse journey?

 

I. There were vacancies in the cadre of medical officers in the ESI Corporation and a proposal was mooted to recruit them. A political heavyweight who came to know about it, pressured the Head of the Department to select people as per his choice. He wanted the selection process to have only the mode, i.e.,  interview,  to facilitate his nefarious designs. But, the pressure was resisted, very courageously, by the Head of the Department. Yet, the politician won the day and the Head of the Department was shifted out abruptly and prematurely. Same pressure was brought on the next incumbent also. But, he also resisted the pressure, admirably, and did not agree to dispense with the Written Test. Interview was only for those who came through the Written Test, he said. Now, it was the turn of the politician to lose. Advertisement was issued, applications were processed and written tests were held in a transparent manner and the evaluation was a computerized one. But, that was not the end of the story. Presidential_Dollars_Madison_Coin

II. The process of interview was the next part of selection. It was, now, attempted to be hijacked by the political leader. An elaborate net was woven in the political circles to hijack the interview process. Action was taken to frame even a new Recruitment Regulations for that purpose, i.e., to hijack the interview board. But, the Head of the Department was so clever that he just kept watching the game (played by the people within and outside the ESIC) and very simply and effectively checkmated the game ultimately. The end result was least interference in the recruitment process. Besides,  the ESIC came to have a Recruitment Regulation which had not been used at all. The incident proved that clever and honest bureaucrats could always stop the corrupt politicians.

Organised mischief by the interview board

III. There was an advertisement inviting applications for the post of para-medical personnel in Group-D in a hospital. More than 7000 applications were received. Appointment was to be made on the basis of the performance of the candidates in the interview. That was the only mode of selection. Continue reading →

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December 14, 2012 · 1:39 am

Transfers: Discretion Vs. Arbitrariness

Dear Readers,

In regard to the Transfers in public service, a beautiful judgment has been delivered by a Court of Law. It is a virtual treat to go through the judgment. To facilitate readers, the details regarding the judgment concerned are given in three parts. On going through the judgment one recalls the noble Latin maxim followed by the Judiciary in the West, “Fiat justitia, ruat caelum” (Let justice be done, even if heavens fall).

Part I: Excerpts regarding the particular case.

An employee working in the Railways was transferred. Feeling aggrieved, the employee approached the Court of Law. “The respondents in their reply in para 3 has stated that who should be transferred where, is a matter for appropriate authority to decide. Unless the order is vitiated by malafide or is made in violation of any statutory provision the court cannot interfere with it. While ordering transfer, there is no doubt; the authority must keep in mind the guidelines issued by the Government on the subject. Similarly if a person makes any representation with respect to his transfer, the appropriate authority must consider the same having regard to the exigencies of administration. The guidelines say that as far as possible, husband and wife must be posted at the same place. The said guideline, however, does not confer upon the government employee a legally enforceable right.”……………“The wheels of administration should be allowed to run smoothly and the courts or tribunals are not expected to interdict the working of the administrative system by transferring the officers to proper places. It is for the administration to take appropriate decision and such decisions shall stand unless they are vitiated either by malafides or by extraneous consideration without any factual background foundation.”………………“The Railway would contend that the applicant has assailed the order on the ground also that there are large number of officers who are having longer tenure than the applicant but it is part and parcel of the administration that some people may get longer posting in a particular place due to administrative interest. They also said that large number of officers in the grade of SAG did not work in Delhi upto the level of SAG or above. They would say that the applicant had been transferred during mid academic session which would affect adversely the education of children. But it is also stated by them that such problems are general with officers of his age and status.”……… Continue reading →

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December 13, 2012 · 8:56 am

Medical personnel for ESIC Medical Colleges

A Medical graduate who passed the examination for recruitment of Insurance Medical Officer Gr. II in the ESI Corporation presents himself before an officer in the ESI Corporation and says, “ Sir, I have been selected for recruitment in the ESI Corporation. I have also been selected for admission to the PG course in the PGI, Chandigarh. What shall I do?”  Without any hesitation, the well-meaning officer advises him to join the PGI. It happened years ago.

In the same year another Medical graduate enters into the office of the Railway authorities. He has also passed two examinations. One, the examination for recruitment as Medical Officer in the Railway hospital and two, the examination for admission in a Post Graduate Medical course. He seeks advice from the Railway authorities. He is advised by the authorities to join the Railways first. And, immediately, thereafter, he is sanctioned Study Leave and permitted to undergo the post-graduation course, keeping lien in the Railways.

Are there provisions in the Leave Rules? Apparently, there is no provision at — first sight. An employee should have put in, at least, three years of service to be given Study leave without pay. So, a new entrant cannot eve n think of doing post-graduation. But, there is a provision for relaxation in Rule 65 of the CCS (Leave) Rules. The Railway authorities invoked the similar provision in the Indian Railway Establishment Code to permit that new entrant to prosecute higher studies.  Rule 557 in Chapter 5 of that Code contains Leave Rules for the Railway employees. The authorities there got a bond executed by that candidate as provided in Rule 530(3)(a)(b) therein.

The candidate has nothing to lose. Railways have everything to gain. They would get a P.G. level doctor after three years who will be with the Railways for a minimum period of five years and draw the salary of only an entry level doctor without the PG qualification. Continue reading →

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December 6, 2012 · 12:30 pm

Defaulters: what the ESIC could do but did not.

Action had been taken once very effectively and enthusiastically by the ESIC Officers’ Federation in the year 1997 through a Member of the Standing Committee Mr. Gautam hailing from Mumbai, to streamline the work of follow-up with the defaulters by making it easier for the employers to pay the contribution. All the Regions were asked to give their opinion on it. And, all the Regions supported that proposal.

A recap of that proposal is appropriate.

  1. Every employer covered under the ESI Act would pay the contribution through a Cheque or Demand Draft in the Branch Office (then, Local Office) and get formal acknowledgment of the same.
  2. No payment would be received in cash by the Branch Office. The Branch Manager will arrange to deposit all the instruments  in the ESI Corporation’s Bank Account the next day by preparing a Broad Sheet for the same.
  3. By twenty second of every month, he would easily know which employer did not pay the Contribution for the previous month and issue notices to all those Partial Defaulters besides calling them over phone and remind them.
  4. In the case of Persistent Defaulters, he would issue Show Cause Notices after the six monthly Period of Contribution is over and send the notice as well as acknowledgment to the Regional Office for taking action for prosecution.
  5. He would, during the course of the month, obtain the Bank Reconciliation Statement and ensure that all the cheques and Demand Drafts presented by him were accounted for and no cheque was dishonoured.
  6. In the event of dishonour of any cheques, the Branch Manager would take further action of issuing notices in time as per law and send the papers to the Regional Office for further action.

This process was suggested by the ESIC Officers’ Federation after a lot of deliberation with various Regional Units.

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November 29, 2012 · 9:45 pm

Inspections: We want! No, we don’t want!

Inspections of factories are desired in some cases and disliked in some cases. (Readers may please click on the images to get full size  readable pictures.)

The first image is from the magazine Business India of the year 2001. The next one is from the Business Standard of November 2010. There are justifications on either side. But, what is important for the society as a whole must be made law. How to control the negative factors in inspection? The readers may please offer their opinion.

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November 22, 2012 · 4:30 pm

ESIC Inspection Procedure and its Impact on Society

(Dear Readers,

We have seen the theory and practice in Administrative Procedure in the earlier Posts. We have seen the link between the internal administrative procedure of a department and its impact on public. The current Post deals with certain vital aspects of the administrative procedure evolved in the Revenue Wing of the ESI Corporation and the way it directly affects the insured persons, insurable persons, employers, Social Security Officers and the Revenue Branch Officers. All the instructions cited in the Post are available in public domain.)

The objective of the ESI Scheme is to provide a variety of benefits to the working population. The provisions for inspection mentioned in the statute are, therefore, intended only to further that objective.  Concealed employment can be detected only through proper inspection including Ledger Verification in a thorough manner. A simple visit by the Inspector or his going around the factory cannot help detecting such cases. Inspections alone can ensure that all the coverable employees have been covered without being left out, and that contribution is paid on their behalf on all items of wages. If contribution is not paid on all items of wages, the benefits payable would only be a pittance and would not help sustenance of the family of the insured persons during the periods of sickness, maternity, etc., The provision for inspection in the ESI Act is, therefore, intended, mainly, to safeguard the benefit provisions.

The ESI scheme pre-supposed mutual trust on the part of the Employers and the Corporation. It was presumed that the compliance would be honest and correct. That was why the Act did not make inspection mandatory. But, when the scheme was enforced, it was found that the reality in the field was different. The working population was denied coverage or was given benefit very very less as the wages on which the contribution was paid was very less.

Periodical and proper inspections alone could safeguard the interests of the working population by ensuring proper coverage and compliance, the authorities understood. As the saying goes, the ESIC did not get what it expected. It got only what it inspected.

Former Director General, Mr. T.C. Puri who was in charge of the ESIC during the period from 1967 to 1972 had done personal research on insurance matters and issued orders for  proper documentation of the behaviour of the employers so that the Inspection methods could be made more effective when dealing with recalcitrant employers. He ordered that such details available with the ESIC authorities must help them to ascertain which employer was ‘absolutely honest’ and ‘above board’ and which employer was ‘trying to cheat the ESI Corporation’. He said that such information must be readily available to the SSOs whenever they join a particular inspection division. Proper and necessary focus was there at that time on the inspection procedure. That set the trend of inspections for more than 24 years from 1968 to 1992.

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November 15, 2012 · 7:50 pm

Administrative Procedure: A Powerpoint Presentation

A powerpoint presentation that highlights the importance of Policy, Procedure, Law, Theory and Practice of Administrative Procedure, the direct connection between internal administrative procedure of a department and the interests of the society at large, the extent to which the administrative decisions must be treated as quasi judicial ones, etc., is the Post of this week.

Information culled out from various sources have been threaded together in the Presentation.

Readers are welcome to make use of it.

 Presentation on Administrative Procedure

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