Penalties under the Code on Social Security, 2020 — What Employers Should Know
Code in force from 21 November 2025 · Social Security (Central) Rules, 2026 notified vide G.S.R. 344(E) dated 8 May 2026 · Covers PF, ESI, Gratuity, Maternity Benefit, Employees' Compensation and BOCW Cess
1. What the penalties are
| If you do this | Section | Punishment |
|---|---|---|
| Deduct PF or ESI from an employee's wages and fail to deposit it Money deducted from wages is treated as having been entrusted to you by the employee | 133 | Jail: minimum 1 year, up to 3 years and fine of ₹1,00,000 |
| Fail to pay any contribution you are liable to pay (the employer's own share of PF or ESI) | 133 | Jail: minimum 2 months, up to 6 months and fine of ₹50,000 |
| Fail to pay gratuity to an employee entitled to it | 133 | Jail up to 1 year, or fine up to ₹50,000, or both |
| Fail to provide maternity benefit; dismiss, discharge, demote or penalise a woman employee contrary to the ESI or maternity provisions; obstruct an Inspector-cum-Facilitator or ESIC/EPFO officer; fail to produce registers on demand; fail to pay BOCW cess; dishonestly file a false return or statement | 133 | Jail up to 6 months, or fine up to ₹50,000, or both |
| Deduct the employer's own contribution from employee wages; reduce wages or benefits to offset the Code; fail to file returns or furnish information; fail to pay employees' compensation; breach a condition of exemption under Section 143; fail to pay administrative or inspection charges; any other contravention for which no special penalty is provided | 133 | Fine up to ₹50,000 No jail |
For the two contribution offences the court may impose a shorter jail term, but only for adequate and special reasons recorded in the judgment.
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- 2. Repeat offences
- 3. Section 135 — Who can actually be prosecuted
- 4. Section 136 — How a prosecution starts
- 5. Compounding — and what cannot be compounded
- 6. Contractor defaults — the principal employer cannot step aside
- 7. Assessment, interest, damages and recovery
- 8. EPF Scheme, 2026 — interest and damages on late payment
- 9. What actually happens — the chain
- 10. Who pays when a company defaults
- 11. Records — and why they decide the case
- 12. Common mistakes that lead to penalty
- 13. If you receive a notice
- 14. Six actions that prevent most of this