Chapter - 1

STATUTORY COMPLIANCE
Statutory compliance, in HR, refers to the legal frame work with which
organizations must operates, in the treatment of their employees, Every
country has state several hundred of federal and state labour laws that
companies need to align with. This list is forever being added to.

A lot of your organization’s time, effort and money go into ensuring that
payroll is compliant through, statutory audit. From employees’ fair
treatment of labour to protecting the company from unreasonable wage or
benefit demands from trade unions or aggressive employees, every
company faces a worrying number of potential legal issues relating to
compliance. However, it may easily slip through the cracks.

So how can you be sure that you can avoid the risk of non- compliance.

To address this, let’s first understand what statutory compliance is and the
various compliances required for Indian payroll.

Definition: Human Resources Management as “Planning, organizing,

directing, controlling of procurement, development, compensation,
integration, maintenance and separation of human resources to the end
that individual, organizational and social objectives are achieved.”

-Edwin Flippo
 Meaning of Statutory

Statutory means “of or related to statutes, “or what we normally call laws
or regulations. Compliance means you are following of the laws on a given
issue.

The term is most often used with organizations, who must follow lots of
regulations.

When they forget or refuse to follow some of those regulations, they are
out of statutory compliance. A company that follows all the rules, is in
statutory compliance.

Definition:

In the Human Resources definition (payroll and taxation), statutory

compliance is the legal structure within which a company must conduct
itself with regards to the treatment of its employees.
Importance:-
Statutory compliance relates to the various labour and taxation laws
prevalent in India. These laws change on a state and National level, and
it mandatory for compliance to obey them. Non-compliance with these
regulations can land a company into legal trouble such as penalties, fines,
or worse. This is why companies spend a good deal resources for
ensuring statutory compliance.

It is importance to have sound understanding of the various labour and

taxation laws in India to keep abreast with any changes that need to
incorporated, since the law is very dynamic rules keep changing from time
to time.

No, it does not. Statutory compliance for a partnership firm, private limited
company, LLP, or any type of company broadly remains the same. Any
organization that hires employees or workers and pays them salary or
wages must comply with labour laws with regards to monetary
compensation, payment of taxes, protection and safety of employees, and
fairness of labour.

The following are some labour Acts in India that require statutory
compliance.
  The Workmen’s Compensation Act, 1923
 The Trade Unions Act,1923
 The Payment of Wages Act,1936
 The Industrial Employment Standing Orders Act, 1946
 The Employees’ State Insurance Act, 1948
 The Minimum Wages Act, 1948
 The Factories Act, 1948
 The Employees Provident Fund & Miscellaneous Provision Act,
1952
 The Employment Exchanges (Compulsory Notification of
Vacancies) Act, 1959
 The Apprentices Act, 1961
 The Payment of Bonus Act, 1965
 The Contract Labour (Regulation & Abolition) Act, 1970
 The Payment of Gratuity Act, 1972
 The Equal Remuneration Act, 1976
 Inter State Migrant Workmen(Regulation of Employment &
conditions of Service Act), 1979
 The Child Labour (Prohibition & Regulation Act), 1986

And now let’s look at the tax compliances that companies are required to
give importance to:

 Maintaining books of accounts that present a complete and fair

review of the financial position of the company. These books must
be maintained in compliance with relevant accounting standards
and must be or chartered Accounting standards and must be
audited by certified auditor or chartered Accountant.
  Depositing advance taxes and according to the norms. This differs
according to the nature of the company.
 Conducting statutory audit as and when the law demands it.
 All other paper work and documentation regarding formation and
registration of the company, among others, must be in place.

All these laws must be adhered to as they are mandatory to every

organization in India.

Ensuring statutory compliance.

Understand, it is difficult to know each and its nitty-gritties. What could be

the solution to ensure complete statutory compliance without any errors,
a proper payroll management system?

A payroll management system calculates.

1. How much tax is to be withheld when calculating the salary of an

employee.
2. How much net salary is to be paid to an employee after tax and
other deductions.

Both labour and taxation law compliance is taken care of with payroll
management system once call the basic information entered, it does all
the calculation for every employee. Just make the required modifications
as and when they come, and the system takes care of the rest.
Advantage of Statutory Compliance

The most important advantage of statutory compliance to employee is that

it ensures fair treatment of labour. It prevents employees from being
exploited or made to work for unmanly hours or in human conditions. It
also ensures that they are paid fairly in proportion to the work that they
have done, and that companies comply with the minimum wage rate.

The advantage to organizations is the timely payment of taxes, which

avoids a lots of legal trouble like penalties and makes it easier for the
Government to collect revenue as well as financials. Statutory compliance
is important to prevent legal troubles as well as be tried in a court of law,
depending on the scale of non-compliance.

Statutory Compliance is very important, and must be given due

consideration. Companies must have a proper payroll management
system in place for streamlining it.
 Chapter-3

Employees” State Insurance Act, 1948

And

Employee’s Provident Funds Miscellaneous

Provision Act, 1952

Constitution of India:
Article 41: Social security of social insurance Government of India passed
Employees” State Insurance Act 1948 to take care of Benefits to
Employees.

The Purpose of this Employee’s Provident Fund Act 1952 take care of
Employee after retirement or superannuation.

Need for the Study

Employees’ State Insurance (ESI) is self-financing social security and
health insurance scheme for Indian workers. This fund is managed by the
Employees’ State Insurance Corporation (ESIC) according to rules and
regulations stipulated in the ESI Act 1948. ESIC is an autonomous
corporation by a statutory creation under Ministry of Labour and
Employment, Government of India.

The employees’ state Insurance act, ESI act for short was enacted by the
Government of India in 1948. The major object of the act was to provide
certain benefits to employees in case of sickness, maternity and injury
during employment and for the main objectives.

The ESI act, 1948 in the first instance, applies to:

 Factories using power in the manufacturing process and employing

10 or more persons.
 Non-power using factories or establishments employing 20 or more
persons for wages.

Social security benefits various benefits that the insured employees and
their dependents are entitled to are as follows.

 Medical benefits
 Sickness benefits
 Maternity benefits
 Dependent benefits
 Disablement benefits
 Other benefits (like funeral expenses, vocational rehabilitation, free
supply of physical aid etc.)
This Act may be called the Employees’ Provident Fund and Miscellaneous
Provisions Act, 1952. It extends to the whole of India except the state of
Jammu and Kashmir.

 To every establishment which is a factory engaged in any industry

specified in Schedule I and in which 20 or more persons are employed.
 To any other establishment employing 20 or more persons or class of
such establishments which the central Government may, by notification
in the official Gazette.

EPFO provided three Schemes:

1. Pension Fund
2. Pension Scheme
3. Employees Deposited Linked Insurance.
 Scope of Study
For protecting the interest of employees, Central Government is talking
various steps in the organized sector against the events of sickness,
maternity, disablement or death due to injury at employment etc.

Government of India has noticed many enactments for taking care of the
health of the working people, out of which Employees’ State insurance
Act, 1948 is one of the most important Act. It was first implemented at
Kanpur and Delhi on 24th February 1952 an thereafter in other States. In
past few months, Government has implemented the Employees State
Insurance Act 1948 in many districts of various states.

As per power conferred by sub-section (3) of Section 1 of the Employees

State Insurance Act, 1948, provisions of Chapter IV (except Sections 44
and 45 which already brought into force) and Chapter-V and VI (except
Sub-section (1) of Section 76 and Sections 77, 78, 79 and 81 which have
already into force) of the said act shall come into force for implementation
of Employees State insurance Act 1948 in various districts.

The Employees’ Provident Fund (EPF) is a compulsory savings scheme

established to provide a measure of security for old age retirement to its
members.

Prior to 1 August 1998, expatriates and foreign workers were not required
to contribute to the EPF although they may elect to do so. However, with
effect from 1 August 1998, it is mandatory for all foreign workers to
contribute to the EPF except for those in the following categories.

 Foreign domestic maids

 Employees (Including expatriates) who hold employment
passes or expatriates who hold visit passes (temporary
employment) and whose monthly wages is not less than
Rm2,500
 Thai citizens who enter Malaysia with a Territorial Pass ; and
 Seaman.
 Objectives of the Study
The Employees State Insurance Act, ESI Act for short, was enacted by
the Government of India in 1948. The major objective of the Act was to
provide certain benefits to employees in case of sickness, maternity and
injury (during employment) and for providing other benefits in relation to
the main objectives.

 Facility of modern laundered in Employees State Insurance

Hospitals.
 Scheme to provide medical treatment in ESI Hospitals to registered
building construction workers.
 Scheme to provide reimbursement claims for expenditure insured
Individuals directly in their bank accounts through ECS.
 Scheme to provide medical treatment to the insured in designated
fields through Primary Health Centres/Community Health Centres of
health department under Employees State Insurance Scheme.
Scheme to fill the vacancies of category IV posts through
outsourcing.
 Requirement has been sent to Uttar Pradesh Subordinate Services
Selection Commission on 21.01.2015 through the government to fill
the pending technical/ paramedical posts in the department.
 A committee has been constituted for creation of literature regarding
disease management/ awareness. Committee is getting the material
readied.
 Against the vacant posts of Medical Officers the commission has
selected 84 medical officers and the appointment proceedings are
being done by the government and a requirement has been sent for
83 allopathic and 4ayurvedic medical officers to Public Services
Commission.
 In order to modernise hospitals/dispensaries a provision plan of
Rs.1.40 cores for hospitals and a provision plan of Rs.0.20 cores for
dispensaries to purchase new equipment’s/instruments has been
allocated in the budget by the government.
 Under the Scheme the department has pursed the government to
make a provision of Rs.16 lakhs to purchase 04 ambulance and of
Rs.50 lakhs to purchase 09 staff cars in the budget.
Employees’ Provident Fund

And

Miscellaneous Provisions Act, 1952

 The Employees’ provident Funds and Miscellaneous provisions Act,

1952 is enacted to provide a kind of social security to the industrial
workers. The Act mainly provides retirement or old age benefits,
such as Provident Fund, Superannuation Pension, Invalidation
Pension, Family Pension and Deposit Linked Insurance.
 The Act provides for payment terminal benefits in various
contingencies such as retrenchment, closure, retirement on
reaching the age of superannuation, voluntary retirement due to
incapacity to work.
 The Employees’ Provident Fund Scheme for contributory Provident
Fund.
 The Employees’ Pension Scheme 1995 provides for monthly
Member Pension, Widow Pension, Orphan Pension and Nominee
Pension.
 The Employees’ Deposit-Linked Insurance Scheme 1976 provides
for Insurance cover to all PF members in the event of their
unfortunate death while in service.
 Data Collection Sources
Data collection is perhaps the most technically rigorous and complex of
all the e-discovery phase. It involves the extraction of potentially relevant
electronically stored information (ESI) from its native source into a
separate repository.

Virtually every form of electronic data is up for grabs in e-discovery. And

while it’s one thing to identify and preserve various forms of ESI, it’s often
quite another to actually go out and collect it all. Different data sources
have different levels of accessibility and present different collection
challenges. Here is a breakdown of several common categories of ESI
that might need to be collected for e-discovery.

 Data that you interact with on a regular basis, such as email and
other traditional files that are stored on a local hard drive or network
drive. This ESI tends to be fairly easy to access and collect.
 Data created and stored on cloud servers, ranging from software as
a service applications to Google Drive and social medical accounts,
have grown exponentially in the in the past several years. Cloud
providers have their own polices for accessing data, but e-discovery
technology solutions have the ability to integrate with many of the
most popular cloud services, making collection easier than even
three years ago.
 Collecting data from mobile devices often requires sophisticated
tools and highly specialized expertise, often requiring consultants.
But as more and more companies have embraced bring your own
device (BYOD) polices, they have to be prepared to preserve and
collect ESI from call logs, text messages, instant messaging,
 relocation data, and other applications. Case law elucidates much
of current e-discovery practice for mobile data collection.
 Data that is no longer in active use but is stored or archived. Even
though offline data can’t be accessed over a shared server,
collecting it usually presents fairly minimal challenges as long as
you know the physical location of the data and the system on which
it’s stored.
 Traditional backup taps or disaster recovery systems are designed
to store data in the event that it must be restored. These systems
compress files and are not easily searchable or accessible and are
not easily searchable or accessible and therefore they tend to
present significant collection hurdles.
 Previously deleted or fragmented files that exit on various system
and are usually not readily visible to regular system users. These
files are highly inaccessible, and attempting to recover them
requires specialized tools. Learn more about hidden files below in
our section on forensic imaging.

The Employees’ Provident Fund Organisation (EPFO) allows subscribers

to take advance from their provident fund accumulations in certain cases.
An EPFO subscriber can take non-refundable PF advance during the
service period for various purpose such as illness, marriage, education
and purchase of house. The amount varies and the employee needs to
meet specific criteria to be eligible for PF advance. An employee can
withdraw upto90% of total PF balance within one year before retirement,
advance on unemployment upto75% of total PF balance, etc. You can
make final withdrawal of your EPF accumulations on retirement or two
months after ceasing to be an employee. You can also draw pension on
superannuation or after exit from service period.
Under the Provident Fund Scheme, you can avail refundable and non-
refundable loans for specific purposes by making an application in this
regard. Refundable loans have to be repaid via monthly instalments. Non-
refundable loans are like withdrawals. These loans are not be paid back.

 Illness: PF money can be partially drawn for medical purposes. It

is applicable for medical treatments of self, spouse, children, and
parents. An employee can withdraw up to 6 months of his basic and
DA or his/her entire contribution, whichever is least. There is no
lock-in period or minimum service period for this type of withdrawal.
 Marriage: An EPFO member can withdraw up to 50% of the money
from the EPF account for his or her own marriage, the marriage of
his daughter, son, sister or brother. However, the person should
have completed contribution to EPFO allows three such withdrawals
for this purpose and an employee can withdraw upto50% of his
share.
 Education: EPFO members can withdraw money for post-
matriculation education of his or her son or daughter after seven
years of service. The person can withdraw upto50% of the
employee’s share with interest. The retirement fund body allows
three such withdrawals for this purpose.
 Purchase or construction of a house: EPF members having
completed five years of service can apply for an advance for
purchase of a house/flat or construction of a house, including
acquisition of site from agency, under certain conditions. The EPFO
 allows only one such withdrawal is limited to the least of 36 months
of basic wage along with dearness allowance(DA), or the total
employee and employer shares with interest, according to the
provident fund body’s portal. The house in this case is required to
be owned by the subscriber, or jointly by the subscriber and the
spouse, according to the PF body.
 Retirement: An EPFO member can withdraw up to 90 to per cent
of his EPF amount at any time after attainment of the age of 54 years
or within one year before his actual retirement on superannuation,
whichever is later.
 Unemployment: EPFO allows an advance against your EPF
corpus to the tune of 75% on job loss and unemployment of a month.
 Chapter-4

Data Analysis and Interpretation

ESI scheme is a contributory fund that enables Indian employees to take
advantage of self-financing and healthcare insurance fund contributed by
the employee and the employer. The scheme is managed by Employees’
State Insurance Corporation which is a self-financing social security and
labour welfare organization. It administers and regulates ESI scheme as
per the rules mentioned in the Indian ESI Act of 1948.

ESI is one of the most popular integrated need-based social insurance

schemes among employees that protects their interest in uncertain
events, such as temporary or permanent physical disability, sickness,
maternity, injury during employment, and more.

Eligibility for ESI Deduction :-

ESI scheme applies to all establishments, like corporate organizations,
factories, restaurants, cinema theatres, offices, medical and other
institutions which are located in the scheme-implemented areas, where
10 or more people are employed. All employees of a covered unit, whose
monthly incomes (excluding overtime, bonus, and leave encashment)
does not exceed Rs.21000 per month, are eligible to avail benefits under
the Scheme. ESI fund provides cash and medical benefits to employees
and their immediate dependents.
ESI deduction is calculated on an employee’s gross pay. Most of the
employees face confusion in understanding ESI deduction rules because
they aren’t clear with the concept of Gross Salary amount.

Gross salary is described as the total income earned while working in a

job, before any deductions made for health insurance, social security and
state or federal taxes.

For ESI calculations, the salary comprises of all the monthly payable
amounts such as basic pay, dearness allowance, attendance bonus, meal
allowance and special allowance. The salary, however, does not include
annual bonus, retrenchment compensation, encashment of leave and
gratuity.

The contributions under the ESI Scheme is raised from the employees &
employers. The rates of contribution, as a percentage of wages payable
to the employees are:

 Employees’ contribution 1.75% of the gross pay

 Employers’ contribution 4.75% of the gross pay

Thus, 6.50% of the wages is to be paid as contribution to scheme for each

worker.
ESI Calculation
Consider the gross salary of an employee is Rs.12000 per month then the
ESI calculation for the employee would be calculated as:

ESI = 12000*(1.75%/100) = 210

(Employees contribution is 1.75 percent)

The ESI calculation for the employer’s contribution would be calculated

as:

12000*(4.75/100) = 570

(Employer’s contribution is 4.75 percent)

In case, the salary goes above Rs.21000 per month during the
contribution period (as defined below), the ESI would be calculated on the
higher salary. For example, if the salary of an employee is raised to
Rs.25000 per month during the ESI would be calculated on Rs.25000
instead of Rs.21000.
Latest amendment in ESI Contribution

The Government of India has taken a decision to reduce the rate of

contribution under the ESI Act from 6.5% to 4%.

 Employers’ contribution being reduced from 4.75% to 3.25% and

 Employees’ contribution being from 1.75% to 0.75%.

ESI threshold wage had been increased from Rs.15000 to Rs.21000

(amounting to Rs.252000 yearly income) to allow in increase in the
number of people eligible for Employees’ State Insurance.

All industrial workers drawing a salary of up to Rs.21000 are eligible to

avail health care benefits –from primary to tertiary—at more than 1500
clinics and hospitals managed by the Employees’ State Insurance
Corporation (ESIC) directly or indirectly.

The decision to increase wage limit for ESI was taken to add 3 million
workers to the ESIC pool; making it easier for beneficiaries to take benefits
for their immediate dependent.
‘Important Rule’ For ESI Deduction
Your payroll team may help you understand basics about ESI and the
related deduction, but there’s an important rule that you ought to
remember.

For ESI, there are two contribution periods each of six months duration:

(i) Starting from 1st April to 30th September and

(ii) Stating from 1st October to 31st march of the year following.

If the gross salary of an employee exceeds Rs.21000 in a month after the

commencement of the contribution period, the employee continues to be
covered under ESI scheme till the end of that contribution is deducted on
the total income earned by the person.

For example, during the first contribution period (April to September) if an

employees’ gross pay is increased from Rs.18000 (below ESI limit) to
Rs.25000 (above ESI limit) in the month of June, the deductions will
continue to happen till the end of the ESI contribution period i.e.
September. And the deducted amount will be calculated on the increased
gross salary, i.e. Rs.25000. When the 6 months contribution period ends,
if the employee salary is more than the ESI limit, no further deductions will
take place.
Statutory Compliance Requirement For PF Deduction
Just like ESI, the Employees Provident Fund (EPF) is also a contributory
fund in which both the employee and employer contribute amount. EPF is
a compulsory and contributory fund for the Indian organizations under
“The Employees’ Provident Fund and Miscellaneous Provisions Act
1952”.

For EPF, both the employee and the employer contribute equal amount,
which is 12% of the salary of the employee. However, the employee
contributions may differ. Employees can contribute more than 12% of their
salary voluntarily. However, in such a case, the employer is not bound to
match the extra contribution of the employee.

For PF contribution, the salary comprises of components such as: basic

wages, DA, conveyance allowance and special allowance.

For the PF deduction, the maximum limit for salary of the employee is
Rs.15000, the employer is liable to contribute only on Rs.15000 that is
Rs.1800.

The statutory compliance for PF contribution has some less known facts,
associated with it. The PF is divided into EPF and EPS (Employee
Pension Scheme) contributions. The employees’ contribution goes
straight to EPF whereas from employer’s contribution, the 8.33% goes to
EPS subject to 1250 a month and the rest goes to EPF. The payroll
software provides take care about your ESI and PF deductions rules
automatically.
Contributions

 Employer’s contribution = 12%

Dividend to two types:

Employee Pension Scheme = 8.33%

Employee Provident Fund = 3.67%
 Employees contribution = 12%
 EDIL(Employee Deposit

Linked Insurance Scheme) = 0.5%

 Admin Charges = 0.5%

 Inspection Charges =0.5%

PF Process:

 Filling up PF form No.2 (PF & EPS Declaration form) and send it to
zonal office for submission to PF consultant.
 PF number will be provided by zonal office through PF MIS.

Withdrawal & Transfer Process:

 If an employee resigned, then he has to fill form 13 for Transferring

the PF and fund from previously company to present company.
 If an employee resigned, then he has to fill form 19 for withdrawal of
provident fund form 10c for withdrawal of pension scheme.
Death of an Employee:

 In case death employee, form 5(IF) for insurance refund, Form 20

for Provident Fund withdrawal Form 10D for pension withdrawal.

Form to be used under Provident Fund Scheme:

1. Form 2:- PF & EPS Declaration for every new Entrants

2. Form 19 & 10c:- Withdrawal form for left employee.
3. Form 13:- For Transfer of PF/EPS.
4. Form 31:-For application of advance from Fund.
5. Form 10D:-Application for pension (Death case).
6. Form 5(IF):-Insurance refund (Death Case).
7. Form 20:-Provident fund withdrawal (Death Case).
8. Form 12A:-Monthly return which is submitted along with triplicate
copy.
9. Form 3A & 6A:-Annual Return.
 Introduction of Concept
Statutory Compliance in HR, refers to the legal framework within which
organizations must operate, in the treatment of their employees, every
country several hundred of federal and state labour laws that companies
need to align, with.

Employees’ State Insurance Act, 1948

The employees’ State Insurance (ESI) Scheme, enacted in 1948 was the
first major legislation for social security in India. Based on the principle of
“pooling of risks and resources”, it guaranteed to provide full medical
facilities to the beneficiaries. In addition to this, it also promised adequate
cash compensation to insured persons for loss of wages or earning
capacity in times of physical distress arising out of sickness, employment
injury or unemployment.

The main benefits provided by the ESI are sickness benefit, maternity
benefit, dependent’s benefit and others like funeral expenses,
unemployment expenses, etc.

ESI has the potential to become a full-fledged social security system in

India. However, for that happen, several lacunae must be addressed. This
paper tries to outline the ESI structure, its operation, flaws and some
directions for improvement.

Article 41: Social security of Social Insurance Government of India passed

ESI Act to take care of benefits.
The ESI Act 1948, with the Preamble “An Act provide for certain benefits
to employees in case of sickness, maternity and employment injury and
to make provision for certain other matters in relation thereto”
encompasses certain health related eventualities such as sickness,
maternity, temporary or permanent.

Sec 1: Applicability

 Factories using power in the manufacturing process and employing

10 or more persons.
 Non-power using factories or establishments employing 20 or more
persons for wage.

Sec 2(4): “Contribution” means the sum of the money payable to the
corporation by the principal employer in respect of an employee and
includes any amount payable by or on behalf of the employee in
accordance with the provisions of this Act.

Total contribution: 6.5%

Employers contribution = 4.75%

Employees contribution = 1.75%

Latest amendment in ESI contribution
Revised ESI contribution Rates (Employer 3.25%, Employee 0.75%).

Govt. has notified to reduce the rates of ESI contribution by Employers

(4.75% to 3.25%) and by Employees (from 1.75% to 0.75%). The
changed/revised rates of ESI contribution shall be applicable w.e.f.1 July
2019.

ESIC Contribution Existing Rate (%) Revised Rate (%)

Employer’s Share 4.75% 3.25%
Employee Share 1.75% 0.75%
Total ESI Contribution 6.50% 4.00%

G.S.R. 423 (E).I Whereas a draft containing certain rules further to earned
the Employees’ State Insurance (Central) Rules,1950 were published in
the Gazette of India, Extraordinary, part-II, Section-3, Sub-section ( i ),
vide number G.S.R. 121(E), dated the 15th February,2019, as required by
sub-section (1) of the section 95 of the Employees’ State Insurance Act,
1948(34 of 1948), inviting objections or suggestions from all persons likely
to be affected thereby before the expiry of a period of thirty days from the
date on which the copies of the Official Gazette containing the said
notification was published were made available to the public.

And whereas, the copies of the said official Gazette were made available
to the public on the 15th February, 2019.

Sec 2(8): “Employment Injury” means a personal injury to an employee

caused by accident or an occupational disease arising out of and in the
course of his employment, being an insurable employment, whether the
accident occurs or the occupational disease is contracted within or outside
the territorial limits of India.

Sec 2(9):”Employee” means any person employed for wages in or in

connection with the work of a factory or establishment to which this Act
applies and;

1. Who is directly employed by the principal employer on any work of,

or incidental or preliminary to or connected with the work of, the
factory or establishment whether such work is done by the employee
in the factory or establishment.

Sec 2(14): “Insured person” means a person who is or was an employee

in respect of whom contributions are or were payable under this Act and
who is, by reason thereof, entitled to any of the benefits provided by this
Act.

Sec 2(15A):”Permanent partial disablement” means such disablement of

a permanent nature, as reduces the earning capacity of an employee in
every employment which he was capable of undertaking at the time of the
accident resulting in the disablement.

Provided: That every injury specified in Part II of the Second Schedule

shall be deemed to result in permanent partial disablement.

Sec 2(15B):”Permanent total disablement” means such disablement of a

permanent nature as incapacitates an employee for all work which he was
capable of performing at the time of the accident resulting in such
disablement.
Provided: That per total disablement shall be deemed to result from every
injury specified in Part I of the Second Schedule or from any combination
of injuries specified in Part II thereof where the aggregate percentage of
the loss of earning capacity, as specified in the said Part II against those
injuries, amounts to one hundred per cent or more.

Sec 2(20):”Sickness” means a condition which requires medical treatment

and attendance and necessitates abstention from work on medical
grounds.

Sec 46: Benefits

 Sickness Benefit ( 70% wages up to 91 days)

Sickness Benefits are two types

1. Extended Sickness Benefits

2. Enhanced Sickness Benefits (7 days wages for male, 14 days

Wages for female).

 Disablement Benefit
(a) A person who sustains temporary disablement for hot less than
three days (excluding the day of accident) shall be entitled to
periodical payment.
(b) A person who sustains permanent disablement, whether total or
partial, shall be entitled to periodical payment.
 Depends benefit (medical for wife and child)
If an Insured person dies as a result of an employment injury
sustained as an employee under this Act depends benefits payable
at such rates and for period and subject to such conditions as may
be prescribed by the central Government to his dependants
 specified in sub-clause (I), and sub clause (IA) and sub-clause (ii)
of clause (6A) of section 2.

In case the insured person dies without leaving behind him the
dependents’ benefit shall be paid to the other dependants of the
deceased at such rates and for such period and subject to such
conditions as may be prescribed by the Central Government.
 Funeral benefit (10000 for funeral expenses, latest approval 15000,
but not amendment).
 Rehabilitation benefits
 Medical benefits
 Medical benefit to retired insured person and his her spouse.

Sec 2*(14):”Insured person” means a person who is or was an employee

in respect of whom contributions are or were payable under this Act and
who is, by reason thereof, entitled to any of the benefits provided by this
Act.

Sec 2(15):”Occupier” of the factory shall have the meaning assigned to it

in the Factories Act, 1948.
Schedule II
List of injuries deemed to result in permanent total disablement.

[Section 2 (15A) and (15B)]

PART I: List of injuries deemed to result in permanent total disablement

S. Description % age of
NO. of loss of
injury earning
capacity
1. Loss of both hands or 100
amputation at higher sites
2. Loss of hand and a foot 100
3. Double amputation through 100
leg or thigh, or amputation
through leg or thigh on one
side and loss of other foot
4. Loss of sight to such an 100
extent as to render the
claimant unable to perform
any work for which eyesight
is essential
5. Very severe facial 100
disfigurement
6. Absolute deafness 100
Sec 53: Bar against receiving or recovery of compensation or damages
under any other law.

An insured person or his dependants shall not be entitled to receive or

recover, whether from the employer of the insured person or from any
other person, any compensation or damages under the Workmen’s
Compensation Act, 1923 or any other law for the time being in force or
otherwise, in respect of an employment injury sustained by the insured
person as an employee under this Act.

Sec 87: Exemption of a factory

The appropriate government may, by notification in the official Gazette

and subject to such conditions as may be specified in the notification,
exempt any factory or establishment or class of factories or
establishments in any specified area from the operation of this Act for a
period not exceeding one year and may from time to time by like
notification renew any such exemption for periods not exceeding one year
at a time.
The Employees’ Provident Fund and Miscellaneous
Provisions Act, 1952
The purpose of the Act is to take care of Employee after Retirement or
Superannuation.

Sec 2(a):”appropriate government” means

i. In relation to an establishment belonging to, or under the control of,

the Central Government or in relation to an establishment
connected with a railway company, a major port, a mine or an oilfield
or a controlled industry, or in relation to an establishment having
departments or branches in more than one state
ii. In relation to any other establishment, the State Government.

Sec 6: Contributions and matters which may be provided for in Scheme

Now its 12% has to be deducted from employer salary 12% from
employees.

Various Schemes under EPF Act

Sec 5: Employees Provident Fund Scheme,

1953, from this year the employees provident fund scheme has come.

Sec 6(a): Employees’ pension scheme. (1995/11/16)

Previously EPF is known as Employee Family Pension Scheme. This

Scheme is applicable, if his age is completed 58 years, Now 60 year.
Sec 6(c): Employees Deposit Linked Insurance Scheme

The EDLI scheme is an insurance scheme promulgated by the

Government among other social welfare initiatives for the employees of
the organised sector.

Contribution:
Employees contribution = 12%

Employers’ contribution dividend to two types:

 Employees’ Pension Scheme = 8.33%

 Employees Provided Fund = 3.67%

Total = 12%.

Employee Deposit Linked Insurance = 0.5%

Admin charges = 0.5%

Inspection charges = 0.5%

Sec 7(A): Determination of moneys due from employers

The Central Provident Fund Commissioner, any Additional Provident

Commissioner or any Regional Provident Fund Commissioner or any
Assistant Provident Fund Commissioner may, by order,

a) In case where a dispute arises regarding the applicability of this

applicability of this Act to an establishment, decide such dispute
b) Determine the amount due from any employer under any provision
of this Act, the Scheme or the Scheme or the Insurance Scheme
 As the case may be, and for any of the aforesaid purposes may
deem necessary.

Sec 7(B): Review of orders passed under Section 7A

Any person aggrieved by an order made under sub-section (1) of section

7A, but from which no appeal has been preferred under this Act, and who,
from the discovery of new and important matter or evidence his knowledge
or could not be produced by him at the time when the order was made, or
error apparent on the face of the record or for any other sufficient reason,
desires to obtain for a review to the officer who passed the order.

Provided: that such officer may also on his own motion review his order if
he is satisfied that it is necessary so to do any such ground.

Sec 7(D): Employees Provident Fund appellate Tribunal

The central government constitute 1 or more appellate tribunal to

exercise powers & discharge the functions conferred on such Tribunal by
this act a tribunal consist of one person appointed by central Govt.

Sec 10: Protection against attachment

The amount standing to the credit of a member in the function at the time
of his death & payable to the nomine subject to any deduction authorised
by in the rules, the nomine before the death of the member. This provision
is applicable to family pension as they apply in relation to any amount
payable.
Sec 17: Power to exempt

The appropriate government may, by notification in the official Gazette,

and subject to such conditions as may be specified in the notification,
whether prospectively or retrospectively, from the operation of all or any
the provisions of any Scheme.

Sec 17(B): Liability in case of transfer of Establishment.

Where an employer, in relations to establishment, transfers that

establishment in whole or in part by gift any other manner, the employer&
establishment is so transferred shall jointly be contribution in respect of
period up to the duty of transfer.
 Chapter- 2

PROFILE OF THEORGANIZATION

AUROBINDO PHARMA Limited is a pharmaceutical company. The

Company is engaged in producing oral and injectable generic formulations
and active pharmaceutical ingredients (APIs). It has developed over three
injectable penem products. The Company, through its subsidiary,
manufactures and sells nutritional supplements.

AUROBINDO PHARMA was founded in 1986. The company commenced

its operations in 1988-89 with a single unit that manufactured semi-
synthetic penicillin (SSP) at Pondicherry. The company became a public
company in 1992 and listed its shares in the Indian stock exchanges in
1995.

AUROBINDO PHARMA LIMTED is a pharmaceutical manufacturing

company headquartered in HITEC City, Hyderabad, India. The company
manufactures generic pharmaceuticals and active pharmaceutical
ingredients. The company’s area of activity includes six major
therapeutic/product areas: antibiotics, anti-retroviral, cardiovascular
products, Central nervous system products, gastroenterological, and anti-
allergic. The company markets these products in over 125 countries. Its
marketing partners include AstraZeneca and Pfizer.
The company commenced operations in 1988-89 with a single unit
manufacturing semi-synthetic penicillin (SSP) in Pondicherry.
AUROBINDO PHARMA became a public company in 1992 and listed its
shares in the Indian stock exchanges in 1995. AUROBINDO PHARMA
also has a presence in key therapeutic segments such as neurosciences,
cardiovascular, anti-retroviral, anti-diabetics, gastroenterology and
cephalosporin’s, among others.

AUROBINDO PHARMA features among the top 10 companies in India in

terms of consolidated revenues. AUROBINDO exports to over 125
countries across the globe with more than 70% of its revenues derived out
of international operations.

In 2014, AUROBINDO purchased generic operations of active in 7

western European countries for $41 million.

AUROBINDO PHARMA plans to expand its product portfolio with high

value production in oncology, hormones, bio similar and novel drug
delivery solutions like depot injections, inhalers, patches and films. It has
also set its sights on geographic expansion in new territories like Poland,
Italy, Spain, Czech Republic, Portugal and France as generic penetration
in these countries is low.

In 2017, AUROBINDO PHARMA inked a pact to acquire Portugal’s

Generis Pharmaceutics SA from Magnum capital partners for
consideration of 135 million. It also acquired four bio similar products from
Swiss from TL Biopharmaceutical AG.
AUROBINDO PHARMA Ltd. Signed a definitive agreement to purchase
the Aponte business in Poland, the Czech Republic, the Netherlands,
Spain and Belgium. The agreement is conditional on the receipt of
completion clearness for the transaction by the Dutch and Polish
authorities. As part of the proposed sale, Aponte will enter into a
transnational manufacturing and supply arrangement with AUROBINDO
to support the ongoing growth plans of these business.

Legal Issues:-
In December 2016, the attorneys general of 20 states field a civil
complaint accusing AUROBINDO PHARMA of coordinated scheme to
artificially maintain high prices for a generic antibiotic and diabetes drug.
The complaint alleged price collusion schemes between six
pharmaceutical firms including informal gatherings, telephone calls, and
text messages.

On 11 April 2018, AUROBINDO was featured in the Dutch documentary

television program Zambia. It details accusations against the company of
both environmental damage and poor working conditions for their
employees in Hyderabad, India.
 Company History
AUROBINDO PHARMA was born of a vision. Founded in 1986 by Mr. P.
V. Ramaprasad Reddy, Mr. K. Nithyananda Reddy and a small, highly
committed group of professionals, the company became a public venture
in 1992. It commenced operations in 1988-89 with a single unit
manufacturing semi synthetic penicillin (SSPs) at Pondicherry.

AUROBINDO PHARMA had gone public in 1995 by listing its shares in

various stock exchanges in the country. The company is the market leader
in semi-synthetic penicillin drugs. It has a presence in key therapeutic
segments like SSPs, cephalosporin’s, antivirals, CNS, cardio-vascular,
gastroenterology, etc.

Over the years, the AUROBINDO PHRAMA has evolved into a knowledge
driven company. It is R&D focused, has a multi-product portfolio with
multi-country manufacturing facilities, and is becoming a marketing
conglomerate across the world.

AUROBINDO PHARMA created a name for itself in the manufacture of

bulk actives, its area of core competence. After ensuring a firm foundation
of cost effective production capabilities and a clutch of loyal customers,
formulations segment, with a global marketing network.
AUROBINDO PHARMA has invested significant resources in building a
mega infrastructure for APIs and Formulations to emerge as a vertically
integrated pharmaceutical company.

VISION
“To become Asia’s leading generic Pharmaceutical Company and one
among the top 15 in the World, by 2020.”

MISSION
AUROBINDO’s mission is to become the most valued Pharma partner
for the World Pharma fraternity by continuously researching, developing
and manufacturing a wide range of pharmaceutical products complying
the highest regulatory standards.
 INDEX

S.no. Subject Page no.

1. Theoretical Framework/Introduction of
Concept
2. Profile of the Organisation

3. Title of the Study,

Need for the Study, Scope of the Study
Objectives of the Study
Data Collection Sources
 Primary data
 Secondary data

4. Data Analysis and Interpretation

5. Findings, suggestions.
conclusion
 Chapter-5

Findings:
 AUROBINDO PHARMA Organization ESI and EPF register to
online website.
 ESI and EPF All Transactions will be done in AUROBINDO
CORPORATE OFFICE.
 Employee not covered under ESI scheme are allowed to optional
for Mediclaim coverage.

Suggestions:

 Some companies followed traditional methods, AUROBINDO used

latest methods.

Form to be used under ESI Scheme:

 Form No.1:- ESI Declaration form for New Entrants

 Form No. 1B:- Changes in Family declaration
 Form No. 72:- Application for Duplicate Card
 Form MRO 266:-Application form change of name/Year of

Birth of insured person Woman

 Form No.6:- ESI half yearly return

 ESI Chillan:-Within 21 days from the case of every Month.
 Form 37:-For registering with Local ESI doctor.
 Conclusion:
ESI Act, 1948 and EPF Act, 1952 both are Social Security to Protect to
the Employees. Social security of social insurance Government of India
passed Employees” State Insurance Act 1948 to take care of Benefits to
Employees. The Purpose of this Employee’s Provident Fund Act 1952
take care of Employee after retirement or superannuation.

The Employees’ provident Funds and Miscellaneous provisions Act, 1952

is enacted to provide a kind of social security to the industrial workers.
The Act mainly provides retirement or old age benefits, such as Provident
Fund, Superannuation Pension, Invalidation Pension, Family Pension and
Deposit Linked Insurance.

EPF Act, 1952 matching contribution by the employer subject to the

maximum ceiling amount Rs.15000/- basic salary. EPF employees’
contribution 12% and employers’ contribution 12%. Employers’
contributions divided two types, Employee Pension Scheme (ESI) 8.33%,
and Provident Fund (PF) 3.67%. Government of India provide to the EDLI
0.5%, and other charges Admin charges 0.5%, inspection charges 0.5%.

Employee deposit Linked Insurance, under which dependent family will

be given RS. 602000/- in case employee demises while on duty.

ESI coverage employee having a gross monthly salary Rs.21000/- or less

will be covered under ESI scheme. Management will contribute 4.75% of
gross monthly wages towards employer contribution each month.
Employee contribution 1.75%. Total ESI contribution 6.5%.

The Government of India has taken a decision to reduce the rate of

contribution under the ESI Act from 6.5% to 4%. Employers’ contribution
being reduced from 4.75% to 3.25% and Employees’ contribution being
from 1.75% to 0.75%. Employees is eligible for medical support which
covers self and family to avail financial support by way of sickness
benefits.

ESI threshold wage had been increased from Rs.15000 to Rs.21000

(amounting to Rs.252000 yearly income) to allow in increase in the
number of people eligible for Employees’ State Insurance. The main
benefits provided by the ESI are sickness benefit, maternity benefit,
dependent’s benefit and others like funeral expenses, unemployment
expenses, etc.

For PF contribution, the salary comprises of components such as: basic

wages, DA, conveyance allowance and special allowance.

The Employees’ State Insurance Act, 1948 and The Employees’ Provident
Fund and Miscellaneous Provisions Act, 1952 both are social security to
employees.