ESIC Flags Misuse of Monthly Contribution Filings Showing Zero-Day Workers

The Employees’ State Insurance Corporation (ESIC) has issued a circular addressing a growing concern related to the filing of Monthly Contributions (MCs) that reflect a large number of tagged employees with zero contribution days—a practice that could potentially be misused to avoid statutory compliance.

⚠️ Key Concern Highlighted:

ESIC’s internal analysis of the March 2025 contribution data from large establishments has revealed:

• Many employers have filed MCs with numerous employees tagged to their establishments.
• However, a significant number of these tagged employees are consistently shown with zero contributory days.
• The usual remarks for these zero-day workers include:
  • “On Leave”
  • “No Work”

🚩 Red Flags Raised by ESIC:

The Corporation suspects that such filings may involve:

Employees shown as “on leave” indefinitely, though they might have:

• Left employment
• Exceeded the ESI wage ceiling
• Not been formally removed from the employer’s payroll records

Fictitious tagging of workers to:

• Keep them eligible for ESIC benefits without actual contribution
• Shift liability to ESIC in case of any medical or accidental events
• Possible violation of Section 85(e) of the ESI Act, 1948, which classifies the submission of a false return as a punishable offense.

📜 Legal Provisions Referenced:

• Section 9 of ESI Act: Defines an “employee” under insurable employment.
• Section 85(e): Filing a false return is a punishable offense.
• Section 103-A(1): Clarifies medical benefit eligibility based on employment continuity.

🔍 Action Points from ESIC:

All regional ESIC offices have been instructed to:

1. Review the MC data of large employers, particularly those showing a large number of employees with zero contributory days.
2. Engage with such employers to:
   • Identify employees who have left employment
   • Ensure they are removed from future MC submissions
3. Correct data anomalies to maintain integrity and compliance with the ESI Act.

📢 Implications for Employers:

Employers must:

• Ensure accurate reflection of workforce status in their monthly ESI filings.
• Avoid keeping ex-employees or ineligible workers on MCs just for perceived benefit coverage.
• Understand that misreporting could lead to penalties or legal action under the Act.

✅ Conclusion: Clean Data, Clear Compliance

ESIC’s circular is a strong reminder of the importance of accurate and honest reporting under the ESI framework. As the system is designed to offer social security to genuine insured persons, maintaining clean, updated employee data is critical for employers and the credibility of the scheme.