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Section 133: Penalties for failure to pay contributions

The Code on Social Security, 2020 (Act No. 36 of 2020) • Official Statutory Text & Plain English Practice Guide

Statutory Mandate
Chapter XII: Offences and Penalties
Competent Labour Forum
Act No. 36 of 2020
Section 132 All 163 Sections of Code on Social Security, 2020 Section 134

Legal Commentary & Landmark Judgments: Section 133

Section 133 of the Code on Social Security, 2020 lays down the primary penal sanctions for failure to pay social security contributions, failure to pay maternity benefits or gratuity, and illegal wage deductions, prescribing mandatory imprisonment and substantial fines.

  • Mandatory Imprisonment for Defaulting on Employee Contributions: Punishes an employer who deducts the employee's contribution from wages and fails to remit it to the fund with mandatory imprisonment of not less than one year extending up to three years, and fine of one lakh rupees.
  • Severe Penalties for Employer Contribution Default: Punishes failure to pay employer contributions with imprisonment of not less than six months extending to one year, or fine of fifty thousand rupees, or both.
  • Sanctions for Maternity & Gratuity Non-Payment: Imposes imprisonment of up to six months or fine of up to fifty thousand rupees for willfully denying maternity benefits or statutory gratuity.
Key Landmark Precedents:
  • Regional Provident Fund Commissioner v. Hooghly Mills Co. Ltd. (2012) 2 SCC 489: Supreme Court emphasized that deducting worker contributions and failing to deposit them with the fund is a breach of criminal trust amounting to aggravated economic fraud against the working class.
  • Organo Chemical Industries v. Union of India (1979) 4 SCC 573: Supreme Court held that employers who divert worker social security contributions to working capital must face strict penal retribution.
  • Municipal Corporation of Delhi v. Female Workers (Muster Roll) (2000) 3 SCC 224: Affirmed that denying statutory maternity payments exposes management to criminal prosecution under social security statutes.
Courtroom Practice & Strategic Litigation Guidance:

Deducting employee PF/ESI contributions from monthly wages and diverting those funds to meet cash flow needs constitutes a non-compoundable offense carrying mandatory imprisonment under Section 133; management must prioritize statutory remittances above all vendor payments.

Section 132 All 163 Sections of Code on Social Security, 2020 Section 134