IMPORTANT provisions OF ESI ACT PAYROLL IMPLICATIONS

Certain important provisions which Payroll of a Staffing Company may over look under ESI Act

Legal provisions

Section 72

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

Section 73

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

Many a times the Clients report Sick cases as absconding leading to legal complication .

Regulation 97

Regulation 97 permits an employer to discontinue or reduce benefits payable to his employees under conditions of their service which .are similar to the benefits conferred by the Act, to the extent specified below, namely

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 as may be assigned as a sick leave but in any case not exceeding 50 per cent of such combined leave.

b) Any maternity benefits granted to a woman employee to the extent to which such a woman employee may become entitled to the Maternity Benefit under the ESI Act.

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

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

With Regards

V.Sounder Rajan
VS Rajan Associates,
Advocates & Notaries & Legal Consultants