Section 128 of The Code on Social Security, 2020
Where an employer makes default in the payment of any contribution which he is liable to pay in accordance with the provisions of Chapter III or Chapter IV, as the case may be, or any scheme framed thereunder or in the transfer of accumulations under Chapter III, or in the payment of any charges payable under any other provision of this Code, the Central Provident Fund Commissioner or the Director General of the Corporation, as the case may be, or such other officer as may be authorised, by notification, by the appropriate Government, may levy on, and recover from, the employer by way of damages, an amount not exceeding the amount of arrears, in such manner as may be specified in the regulations for the purposes of Chapter IV and in respect of Provident Fund Scheme, Pension Scheme and Insurance Scheme, such levy and recovery shall be in the manner as may be specified in the respective schemes framed by the Central Government: Provided that before levying and recovering such damages, the employer shall be given an opportunity of being heard: Provided further that the Central Board or the Corporation, as the case may be, may reduce or waive the damages levied under this section in relation to an establishment for which a resolution plan or repayment plan recommending such waiver has been approved by the adjudicating authority established under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) subject to the terms and conditions as may be specified by notification, by the Central Government.
Summary
- This provision empowers social security heads, such as the Central Provident Fund Commissioner or the Director General of the Employees' State Insurance Corporation, to recover damages from employers who default on contributions or charges.
- The damages levied on the employer cannot exceed the total amount of arrears, which means unpaid overdue balances.
- The recovery and levy of damages must be done in accordance with the regulations for state insurance or the respective schemes for provident fund, pension, and life insurance.
- Before any damages are levied or recovered, the defaulting employer must be given a reasonable opportunity of being heard.
- The damages can be reduced or waived entirely if a resolution plan or repayment plan recommending such waiver is approved under the Insolvency and Bankruptcy Code, 2016.
- Any such reduction or waiver is subject to specific terms and conditions specified by the Central Government by notification.
Practical examples
FAQ
1. What is the maximum penalty for damages that can be levied on an employer under Section 128 of the Code on Social Security, 2020?
Under Section 128 of the Code on Social Security, 2020, the amount of damages levied on a defaulting employer cannot exceed the total amount of arrears.
2. Does an employer get a chance to explain themselves before damages are recovered under Section 128 of the Social Security Code?
Yes, under Section 128 of the Social Security Code, the employer must be given an opportunity of being heard before any damages can be levied and recovered.
3. Who has the power to levy damages on a defaulting employer under Section 128 of the Code on Social Security, 2020?
Under Section 128 of the Code on Social Security, 2020, the power is vested in the Central Provident Fund Commissioner, the Director General of the State Insurance Corporation, or any other officer authorized by government notification.
4. Can damages under Section 128 of the Social Security Code be reduced or waived if a company is bankrupt?
Yes, under Section 128 of the Social Security Code, damages can be reduced or waived if a resolution plan or repayment plan recommending a waiver has been approved under the Insolvency and Bankruptcy Code, 2016.
Test yourself
Q1.Under Section 128 of The Code on Social Security, 2020, what is the absolute legal limit on the amount of damages that can be levied on a defaulting employer?
Q2.Under Section 128 of The Code on Social Security, 2020, what procedural step must be taken before an officer can levy and recover damages from a defaulting employer?
Q3.Under Section 128 of The Code on Social Security, 2020, what legal framework's approved resolution plan can lead to a reduction or waiver of the levied damages?
Q4.Suppose an employer is aggrieved by an order under Section 128 of The Code on Social Security, 2020 relating to Chapter III. Under Section 23 of the same Act, where can they appeal, and is there any cross-provision restriction?