With the New Labour Codes fully in force, ESIC compliance has become one of the most scrutinized areas during labour audits. Inspectors are now empowered to demand detailed wage records, challans, and proof of compliance with the new wage definition (Section 2(88), Code on Social Security, 2020).
For HR managers and staffing agencies, audit readiness is no longer optional, it’s essential. Here’s a step-by-step checklist to ensure you’re prepared.
1. Wage Records & Salary Structuring
- Maintain updated salary registers reflecting Basic + DA calculations.
- Apply the 50% rule to allowances and document adjustments.
- Ensure appointment letters reflect the revised wage structure.
2. ESIC Registration & Insurance Numbers
- Verify every eligible employee has an Aadhaar-linked ESIC Insurance Number.
- Maintain a central database of insured persons for portability across assignments.
- Cross-check with staffing agency records to avoid duplication.
3. Monthly Challans & Contribution Proof
- File ESIC challans on time, based on recalculated wages.
- Retain digital and physical copies of challans for at least five years.
- Provide compliance certificates to principal employers confirming contributions.
4. Payroll Software & Automation
- Update payroll systems to calculate ESIC on “Wages,” not gross salary.
- Automate alerts for employees crossing the ₹21,000 wage ceiling.
- Integrate ESIC contribution reports into HR dashboards for audit visibility.
5. Fixed-Term & Contract Employees
- Ensure FTE employees receive pro-rata ESIC benefits from day one.
- Cover contract and temporary staff if wage and establishment thresholds are met.
- Document compliance clauses in staffing agreements.
6. Audit-Ready Documentation
- Maintain:
- Salary registers
- Appointment letters
- ESIC Insurance Number records
- Monthly challans
- Compliance certificates
- Keep records accessible for labour inspectors under the OSH Code and CSS.
ESIC Audit Checklist (Quick Reference)
- Wage definition applied (Basic + DA + 50% rule)
- Appointment letters updated
- ESIC Insurance Numbers verified
- Monthly challans filed and stored
- Compliance certificates issued
- Payroll software updated
- Contract/FTE employees covered
Disclaimer: This content is for educational purposes and reflects the legal framework of the Indian Labour Codes as of 2026. It does not constitute legal advice. Employers and staffing agencies should consult with a qualified labour law expert at Key4Comply to ensure their audit documentation meets statutory requirements.