39. CONTRIBUTIONS. –
(1) The contribution payable under this Act in respect of an employee shall comprise contribution payable by the employer (hereinafter referred to as the employer’s contribution) and contribution payable by the employee (hereinafter referred to as the employee’s contribution) and shall be paid to the Corporation.
1(2) The contributions shall be paid at such rates as may be prescribed by the Central Government :
Provided that the rates so prescribed shall not be more than the rates which were in force immediately before the commencement of the Employees’ State Insurance (Amendment) Act, 1989.
2[(3) The wage period in relation to an employee shall be the unit in respect of which all contributions shall be payable under this Act.]
(4) The contributions payable in respect of each 3[wage period] shall ordinarily fall due on the last day of the 3[wage period], and where an employee is employed for part of the 3[wage period], or is employed under two or more employers during the same 3[wage period], the contributions shall fall due on such days as may be specified in the regulations.
4(5) (a) If any contribution payable under this Act is not paid by the principal employer on the date on which such contribution has become due, he shall be liable to pay simple interest at the rate of twelve per cent per annum or at such higher rate as may be specified in the regulations till the date of its actual payment :
Provided that higher interest specified in the regulations shall not exceed the lending rate of interest charged by any scheduled bank.
(b) Any interest recoverable under clause (a) may be recovered as an arrear of land revenue or under section 45C to section 45-I.
Explanation : In this sub-section, “scheduled bank” means a bank for the time being included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934).
(i) No contribution need to be made on the incentive offered to the employees for a limited period and was paid at staggered intervals; Employees State Insurance Corpn., Hyderabad v. A.P. Electrical Equipment Corporation a Unit of ECE Industries Ltd., Visakhapattnam, 2005 LLR 466.
(ii) Payment of statutory interest on delayed deposit of E.S.I. contribution cannot be waived even when the E.I. Court has granted payment by instalments; Employee State Insurance Corpn. v. Bagsvig, 2005 LLR 983.
(iii) The liability to pay the entire contribution under section 39 is of the employer; Regional Director, Employees’ State Insurance Corporation v. Fashion Fabrics, (1990) 2 CLR 844 (Ker).
(iv) Contribution is payable by the employer even in respect of casual labourers under section 39(3) and (4); Employees’ State Insurance Corporation v. Jaipur Enterprises, (1988) 56 FLR 207 (Raj).
(v) The employer is statutorily bound to contribute, whether he has sufficient resources or not; South India Viscose Co-op. Stores Ltd. v. Regional Director, Employees’ State Insurance Corporation, (1986) 68 FLR 329 (Mad).
(vi) Contribution for the past period is recoverable even if the employees had not availed the benefit of insurance; Employees’ State Insurance Corporation v. Hotel Kalpaka International, 1993 LLR 177 (SC).
(vii) Contributions are to be paid only on the wages payable to the eligible employees; Employees’ State Insurance Corporation v. Vijayamohini Mills, (1990) 76 FJR 246 (Ker).
(viii) Only wages paid to the employees can be reckoned for calculation of contributions; Employees’ State Insurance Corporation v. Ram Lal Textiles, (1990) 61 FLR 298.
(ix) The E.S.I.C. must hear an employer before determining the contribution to be payable by him if there is any dispute regarding such liability; Rameshwar Jute Mills Ltd. v. Employees’ State Insurance Corporation, AIR 1986 Pat 228.
(x) The employer can claim refund of ESI contributions which have been deposited by mistake; Anil Textile Industry v. Employees’ State Insurance Corporation, (1992) 64 FLR 856 (Raj).
(xi) Section 39(5)(a) applies where the employer fails to make contributions. If such failure is on account of circumstances beyond his control or if the circumstances make it impossible for the employer to make contributions even if he wanted to do so, unless he risks being hauled up for contempt of court, such failure on the part of the employer in making payments in time cannot be called a failure within the meaning of clause (a) of sub-section (5) so as to call for levying of interest; H.M.T. Ltd. v. Employees’ State Insurance Corporation, (1998) 92 FJR 454 (Kar).
(xii) The applicability of the clause (a) of sub-section (5) of section 39 of the Act is where the employer fails to make contributions. If such failure is on account of circumstances beyond his control or if the circumstances make it impossible for the employer to make contributions even if he wanted to do so unless the risks being hauled up for contempt of Court, such failure on the part of the employer in making payment in time cannot be called a failure within the meaning of this provision; Fenner (India) Ltd. v. Joint Regional Director, Employees’ State Insurance Corporation, (2003) 2 LLJ 447 (Mad).
1. Subs. by Act 29 of 1989, sec. 12, for sub-section (2) (w.e.f. 1-2-1991).
2. Subs. by Act 45 of 1984, sec. 4, for sub-section (3) (w.e.f. 27-1-1985).
3. Subs. by Act 45 of 1984, sec. 4, for “week” (w.e.f. 27-1-1985).
4. Ins. by Act 29 of 1989, sec. 12(ii) (w.e.f. 20-10-1989).