Section 39 of ESI Act : Section 39: Contributions

Explanation using Example

Imagine a scenario where XYZ Textiles Pvt. Ltd. employs 100 workers. As per the Employees State Insurance Act, 1948, XYZ Textiles is responsible for deducting the employee's contribution from their wages and adding the employer's contribution, before paying the total sum to the Employees' State Insurance Corporation (ESIC).

For the month of March, the company must calculate the contributions based on the prescribed rates by the Central Government. Let's say the rate is 3% for the employee's contribution and 4.75% for the employer's contribution. If a worker earns ₹10,000 per month, the employee's contribution would be ₹300 and the employer's contribution would be ₹475, making the total contribution ₹775.

This amount should be paid for each worker by the last day of March. However, if XYZ Textiles delays the payment and pays on the 10th of April instead, the company would be liable to pay interest at the rate of 12% per annum on the due contributions until the payment is made. This interest can be recovered by ESIC as if it were an arrear of land revenue or through the methods specified in sections 45C to 45-I of the Act.