Section 57: Interest and Damages for Delayed Payment

Overview

Section 57 of the Code on Social Security, 2020, applies across all social security benefits and schemes covered under the Code. This includes provisions relating to Provident Fund (PF), Employees’ State Insurance (ESI), gratuity, maternity benefit, building and other construction workers welfare, and other applicable schemes. It doesn’t deal with a specific benefit directly, but rather with the consequences of failing to pay contributions or dues related to any of these benefits on time.

Who is Covered?

• This section applies to all employers and establishments covered under the various social security schemes administered under the Code.
• All employees who are eligible for benefits under these schemes are indirectly affected, as timely payment of contributions ensures the availability of those benefits. There are no specific eligibility conditions related to Section 57 itself; eligibility is determined by the individual scheme (e.g., PF requires a minimum length of service).

Benefits and Contributions

• The benefits received by employees (PF, ESI, gratuity, maternity benefits, etc.) are dependent on the regular and timely contributions made by employers and, in some cases, employees.
• Employer contributions vary depending on the scheme. Employee contributions are also scheme-specific. The government may also contribute to certain schemes. Section 57 ensures these contributions are made promptly.

Procedure and Compliance

Employers are responsible for deducting contributions from employee wages (where applicable) and remitting the total amount (employer’s share + employee’s share) to the relevant social security authorities within the prescribed timelines. These timelines are defined by the specific scheme regulations. If payment is delayed, Section 57 allows the authorities to levy interest on the outstanding amount. In cases of wilful default or repeated delays, additional damages may also be imposed. The exact calculation of interest and damages will be determined by the rules framed under the Code. Employers should maintain accurate records of contributions and payments to demonstrate compliance.

Practical Examples

• Example 1: An employee, Ms. Sharma, works for a company covered under the PF scheme. Her employer delays the remittance of her PF contributions by one month. The PF authorities will levy interest on the delayed amount, reducing the overall return on Ms. Sharma’s PF account.
• Example 2: A construction company repeatedly delays the payment of ESI contributions for its workers. The ESI authorities, after issuing notices, impose both interest and damages on the company, in addition to requiring the outstanding contributions to be paid. This impacts the company’s finances and potentially its ability to operate.

Disclaimer

This article is for basic understanding of social security law and should not be treated as legal advice. The Code on Social Security, 2020, is a complex piece of legislation, and specific situations may require consultation with a qualified legal professional.