ESIC Amnesty Scheme 2025 – Practical Guide for Employers

Updated based on the 2025 Amnesty Scheme notification and the employer documentation process.

The ESIC Amnesty Scheme 2025 is a time-bound mechanism that enables employers to settle long-pending ESI cases, avail reduced penalties, and regularise statutory compliance through an out-of-court settlement process.

Quick snapshot:Litigation cut-off: cases filed up to 31 March 2025Scheme window: 1 Oct 2025 – 30 Sep 2026Coverage, contribution & damages disputes coveredProsecution withdrawal subject to payment & compliance

ESI litigation Out-of-court settlement Employer checklist

What is ESIC Amnesty 2025?

The ESIC Amnesty Scheme 2025 is an initiative approved in the 196th meeting of ESIC to withdraw certain prosecution and court cases and to settle employer disputes relating to coverage, contribution and damages under the ESI Act, 1948.

It aims to reduce litigation backlog, improve employer goodwill and support the government’s Ease of Doing Business agenda by allowing structured settlement of old disputes within a clearly defined time frame.

Objectives and Duration

Resolve long-pending ESI disputes
Reduce court case backlog
Provide financial relief to employers
Reinforce a smoother compliance regime

The New Amnesty Scheme 2025 allows eligible employers to settle disputes with ESIC. It is in force from 1 October 2025 to 30 September 2026 and applies to cases filed on or before 31 March 2025.

Who Can Benefit?

Employers and insured persons involved in eligible court or prosecution matters concerning coverage, contribution, or damages or offences under sections 84, 85, 85A can participate.
Entities who have availed earlier ESIC amnesty schemes may also participate, provided they meet the new scheme’s conditions.

Disputes Covered Under the Scheme

Coverage disputes

Cases where employers challenged applicability of ESI coverage.
Scheme distinguishes between closed units and running units based on age of closure, pendency, and assessment status.
Closed units older than five years with prolonged litigation and no assessment may have cases withdrawn.
Recently closed or running units must produce records, pay accepted dues with interest, and are given relief from damages.

Contribution disputes

Cases arising from determinations under sections 45A and 45AA or recovery proceedings challenged in ESI Court, High Court, or under Article 226.
Employers must seek court permission for out-of-court settlement.
Payment of both employer and employee contribution shares with interest, using actual wage records or alternatives like EPFO and Income Tax data.

Damages and prosecution cases

For damages-only disputes where contribution and interest are already paid, cases may be withdrawn on payment of 10% of the damages determined by ESIC, including higher court appeals.
Prosecution cases under sections 84, 85, 85A and certain old criminal matters may be withdrawn if conditions are met, e.g., refund of excess benefits or payment of contribution and interest.

Key Exclusions and Conditions

Serious offences like fraud, forgery, or criminal conspiracy are excluded.
Coverage disputes where employers voluntarily registered via Form-01 before the relevant period are excluded.
Cases filed after 31 March 2025 are outside the scope.
Contribution assessments already made on actual basis or under specific earlier instructions are generally excluded.

Minimum payment rule: Where no records or alternative documents are available in contribution disputes, the employer is typically required to pay at least 30% of the assessed contribution along with interest.

Benefits for Employers

Employers can obtain legal closure of legacy ESI disputes, avoiding prolonged litigation and associated costs, while often paying only contributions and interest or a reduced portion of damages instead of full penalties.

Regularising past defaults helps improve compliance history, reduce future enforcement risk, and enhance organisational credibility with regulators, courts, and financial stakeholders.

Step-by-Step Process to Apply

Identify all pending ESI-related cases (court cases, contribution demands, damages disputes, or prosecution matters) filed on or before 31 March 2025 and verify that they fall within the scheme’s scope.
Collect all relevant records including wage registers, attendance sheets, salary slips, ESI contribution registers, challans, bank statements, and any previous correspondence or court orders relating to the disputed period.
Compute liability based on available records. Where records are missing, use alternative evidence such as EPFO, GST, or Income Tax data to support contribution calculations.
If a court case is pending, file an application for out-of-court settlement under the ESIC Amnesty Scheme 2025 and obtain a formal order permitting settlement.
Submit the ESIC Amnesty application along with affidavits, undertakings, covering letter, and payment proof for contributions, interest, and any required portion of damages to the Regional or Sub-Regional Office.
Cooperate with field-level review committees and authorised officers, respond to any clarifications, and ensure future compliance. Once completed, the case is withdrawn and treated as settled within the six-month disposal period.

Core Documentation Set

Mandatory ESIC Forms

ESIC Amnesty Scheme 2025 application form in the prescribed template.
Application for Out-of-Court Settlement addressed to the Regional/Sub-Regional Office.
Affidavit confirming facts, dues, and authenticity of records submitted under the scheme.
Undertaking for future statutory compliance and confirmation that no fraud or forgery is involved.
Covering Letter summarising case details, amounts paid, and enclosures.

Establishment and Case Records

Establishment master details: ESI Code, authorised signatory ID proofs (Aadhaar/PAN).
Pending case documents: Copies of court cases, prosecution complaints, section 45A/45AA orders, and earlier court orders.
Wage, attendance, and salary records: ESI registers, muster rolls, and contractor lists (if applicable).
Contribution, interest, and damages challans along with supporting bank statements.
Alternative records: EPFO, Income Tax, GST, audited financials (if primary wage records are incomplete).

Employer Sanity Check Before Submission

All eligible cases are filed on or before 31 March 2025 and fall within the notified categories.
No element of fraud, forgery, or criminal conspiracy is involved.
Court permission order for out-of-court settlement is attached wherever a case is pending.
Payment challans and computation sheets match the figures declared in the application and affidavit.

Note: Ensure all records are complete and accurate before submission. Missing documents or discrepancies may delay processing or affect settlement approval.

Role of ESIC Authorities

Under the ESIC Amnesty Scheme 2025, Regional and Sub-Regional Directors are empowered to approve withdrawal or settlement of eligible cases. Their decisions are supported by a structured committee consisting of legal officers, finance officers and a panel advocate, ensuring that every application is reviewed with balanced legal and financial scrutiny.

ESIC headquarters is coordinating with High Courts and lower courts to expedite permission orders and ensure quicker disposal of pending matters. Field offices have been instructed to widely publicise the scheme, guide employers proactively and complete all eligible settlements within six months of receiving the application—making the process faster, more transparent and employer-friendly.

Key Definitions

Coverage dispute

Cases where the applicability of ESI coverage to employees or an establishment is disputed by the employer.

Contribution dispute

Disputes arising from determinations under sections such as 45A and 45AA, or challenges to recovery demands.

Damages dispute

Cases centring on levy of damages/penalties for past defaults where contribution/interest may already have been paid.

Prosecution case

Matters involving criminal prosecution under sections such as 84, 85, 85A of the ESI Act; withdrawal may be permitted subject to conditions.

Closed unit

A unit that has ceased operations. The scheme treats older closed units (typically >5 years) differently from recently closed units.

Running unit

An operational unit which must usually produce contemporaneous records to support settlement.

Frequently Asked Questions (FAQ)

Who is eligible to apply under the ESIC Amnesty Scheme 2025?

Employers and insured persons with eligible court cases, prosecution matters, contribution or coverage disputes filed on or before 31 March 2025 can apply. Serious offences like fraud or forgery are excluded.

What if I don’t have full wage registers for the disputed period?

If primary records are missing, alternative documents such as EPFO records, Income Tax filings, GST returns or audited financials may be accepted. Where no acceptable records exist, a minimum payment (typically 30% of assessed contribution) plus interest is generally required.

Do I need a court order to settle if a case is pending?

Yes. If a case is pending, you must file an application before the concerned court seeking permission for an out-of-court settlement and obtain a formal order permitting settlement before ESIC accepts the amnesty application.

How much do I need to pay for damages-only disputes?

For damages-only disputes where contribution and interest have already been paid, settlement may be allowed on payment of 10% of the damages determined by ESIC (subject to scheme rules and higher court appeals).

How long does ESIC take to process an application?

Field-level review committees and authorised officers are instructed to complete eligible cases within a six-month disposal period from the date of application, subject to completeness of records and cooperation.

What documents should I include with my application?

Include the ESIC amnesty application form, court permission order (if applicable), affidavit, undertaking, wage/attendance/payroll records (or alternative records), payment challans and a covering letter summarising amounts paid. See the full checklist in this article.

Real-Life Examples

Example 1 : Closed unit with long-pending litigation

A unit closed in 2015 has an unresolved coverage dispute with litigation pending since 2016 and no formal assessment. Under the scheme, the employer may apply for withdrawal; such older closed-unit cases are commonly considered for withdrawal subject to eligibility checks.

Example 2 : Contribution dispute with incomplete records

An employer faces a contribution demand but primary wage registers for 2018–2019 are unavailable. The employer submits EPFO and Income Tax records and pays 30% of the assessed contribution plus interest per scheme rules; the case is processed and settled after field verification.

Example 3 : Damages-only appeal in higher court

A damages-only case (contribution & interest already paid) is pending in a higher court. The employer pays 10% of the damages as part of the amnesty settlement and obtains withdrawal of the damages claim as accepted under the scheme.