Financial crisis in establishment – nonpayment of salary to employees and ESI contribution to ESI Authority

In case the aforementioned problem alarmed for a particular establishment who have financial crisis due to certain reasons and said establishment not able to pay wages to its employees for 3-4 months and also failed to pay ESI contribution towards authority, then in that situation said establishment cannot take a stand of “due to non-payment of salary to employees, said establishment will not be liable to pay ESI contribution”.

To explain above in detail, it can be added that ESI contribution will still payable, as the contribution is need to be paid on the salary paid or payable to employees.

If there is a delay in payment of contribution from said establishment then in that scenario said establishment will be liable to pay interest and damages for the period of delay.

The interest is 12% per annum (w.e.f. 1-10-2005 ) and the damages will be

If delay is less than 2 months - 5% per annum

If delay is for 2 months & above but less than 4 months - 10% per annum

If delay is for  4 months & above but less than 6 months - 15% per annum

If delay is more than 6 months - 25% per annum

Hope this small write up will give insight about pertained subject.

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