Skip to content

Labour Laws and Practice · Social Security Legislations

Inspection and Penalties under the Code on Social Security, 2020

Updated 11 October 2026 · Fact-checked

The Code on Social Security, 2020 is enforced through Inspector-cum-Facilitators, who advise employers, inspect establishments and can seize records. Section 133 lists the offences and sets the punishment. Section 137 requires a written chance to comply before prosecution, except for a repeat violation within three years. Answer by stating provision, facts, conclusion.

Understand Registration, Contributions, Inspection and Penalties

The Code on Social Security, 2020 replaces the older inspector model with an Inspector-cum-Facilitator. The name shows the dual role: the officer advises employers and employees on compliance, and also inspects and enforces. Section 122(5) gives both functions.

Inspection is meant to be rule-based, not arbitrary. Section 122(2) lets the Government notify an inspection scheme, which may provide for web-based inspection and electronic calling of information. Section 122(3) allows randomised selection of inspections. Section 122(4) lists design factors: a unique number for each establishment (the same as its registration number), each Inspector-cum-Facilitator and each inspection; timely upload of inspection reports; special inspections; and the nature of work and workplace.

The powers are in section 122(6). The Inspector-cum-Facilitator may examine any person found in the premises who is reasonably believed to be an employee. He may require a person reasonably believed to be the employer to produce documents or give information. He may search, seize or copy registers, wage records or notices relevant to an offence the employer is believed to have committed. He may also report defects or abuses not covered by any law to the appropriate Government. A person asked for documents or information is deemed legally bound to give them (section 122(7)), and search and seizure follow the Code of Criminal Procedure, 1973 so far as may be (section 122(8)). Section 146 deems the Inspector-cum-Facilitator and other officers to be public servants.

Penalties sit in section 133. It lists offences from (a) to (q), such as non-payment of contribution, deducting the employer's contribution from wages, obstructing an inspector, failing to pay gratuity, compensation or maternity benefit, failing to file returns, and false returns. Punishment is graded: the gravest are non-payment of deducted employee contributions, then gratuity default, then a middle group, then fine-only offences.

Section 137 is the safeguard. Before prosecution, the Inspector-cum-Facilitator must give the employer a written direction with a time limit to comply. If the employer complies in time, no prosecution starts. No such chance is given if the same kind of violation is repeated within three years of the first. Appeals on specific matters, such as maternity benefit orders, are under section 72. Section 141 creates the Social Security Fund, partly fed by composition of offences. This page does not cover registration provisions beyond what the text supplied states.

Key rules to remember

Section 133 – non-payment of employee's contribution deducted from wages
Clause (a) offence, deducted amount not paid: imprisonment 1 year minimum, up to 3 years, plus fine of ₹1,00,000
The proviso lets the court impose a lesser term for adequate and special reasons recorded in the judgment.
Section 133 – failure to pay employer's contribution (other cases)
Clause (a), any other case: imprisonment 2 months minimum, up to 6 months, plus fine of ₹50,000
The same proviso on lesser sentence applies.
Section 133 – gratuity default
Clause (g): imprisonment up to 1 year, or fine up to ₹50,000, or both
Gratuity default has its own punishment tier.
Section 133 – middle tier
Clauses (d), (f), (i), (k), (l), (o): imprisonment up to 6 months, or fine up to ₹50,000, or both
Covers penalising a woman employee, obstructing an inspector, denying maternity benefit, not producing registers, building worker cess default, and dishonest false returns.
Section 133 – fine-only tier
Clauses (b), (c), (e), (h), (j), (m), (n), (p), (q): fine up to ₹50,000
Includes deducting employer's contribution from wages, failing to file returns, compensation default and residual contraventions.
Section 137 – prior opportunity
Written direction with time limit; compliance in time means no prosecution; repeat of same violation within 3 years means no opportunity
Three years run from the date of the first violation.
Section 72(3) – appeal period
Appeal within 30 days from communication of the order
Applies to orders of the Inspector-cum-Facilitator on maternity benefit complaints.

How to solve Registration, Contributions, Inspection and Penalties questions

Use this order for any question on inspection, offences or penalties under the Code.

  1. 1Identify the act complained of and match it to a clause of section 133 (a) to (q).
  2. 2Find the punishment tier for that clause: imprisonment with fine, imprisonment or fine, or fine only.
  3. 3Check whether the facts show a deduction from wages. This moves clause (a) to the harsher tier.
  4. 4Check the Inspector-cum-Facilitator's powers under section 122 for any action taken, such as seizure or demand for documents.
  5. 5Apply section 137: was a written direction given with a time limit, did the employer comply, and is it a repeat within three years?
  6. 6If the issue is maternity benefit or dismissal during absence, apply section 72: complaint, inquiry, order, appeal within 30 days.
  7. 7State the conclusion in one clear line with the amounts and terms.
  8. 8Add a practical compliance advice line, for example keeping registers ready and filing returns on time.

Quickest way: Clause, tier, safeguard

When to use it: Use for short case questions where you must name the offence and punishment quickly.

  1. Write the clause letter from section 133.
  2. Write its tier: gratuity alone, middle six-month tier, or fine only; for clause (a) decide deducted or not.
  3. Write the section 137 check in one line.
  4. Close with the conclusion and the amount.

Common mistakes in Registration, Contributions, Inspection and Penalties

  • Treating all section 133 offences as carrying imprisonment

    Students remember the long list and the jail terms together.

    Fix: Remember the fine-only group: (b), (c), (e), (h), (j), (m), (n), (p), (q).

  • Mixing up the two tiers of clause (a)

    Both involve contribution default.

    Fix: If the employee's share was deducted from wages and not paid, the minimum is one year and fine ₹1,00,000. Otherwise two months to six months and ₹50,000.

  • Forgetting the section 137 chance to comply

    Students jump straight to prosecution.

    Fix: Always check for a written direction with a time limit, and the three-year repeat exception.

  • Calling the Inspector-cum-Facilitator a mere inspector

    Old terminology carries over.

    Fix: Mention both functions under section 122(5): advising on compliance and inspecting.

  • Quoting the appeal period wrongly

    Different laws have different periods.

    Fix: Under section 72(3) it is thirty days from communication of the order, to the authority prescribed by the appropriate Government.

Worked examples

Example 1

Sunrise Textiles Ltd, Surat, deducted the employees' provident contribution from wages for six months but did not deposit it. An Inspector-cum-Facilitator found this during inspection. State the offence and punishment.

Show the solution
  1. Provision: section 133(a) covers an employer who fails to pay a contribution he is liable to pay.
  2. Facts: the employees' share was deducted from wages and not paid.
  3. Tier: this is the case of failure to pay the employee's contribution which has been deducted, so the harsher tier applies.
  4. Punishment: imprisonment not less than one year and up to three years, and also fine of ₹1,00,000.
  5. The court may impose a lesser term only for adequate and special reasons recorded in the judgment.
  6. Section 137: the officer must first give a written direction with a time limit to comply, unless the same violation was repeated within three years of the first.

Answer: Sunrise Textiles commits an offence under section 133(a). Punishment is imprisonment of one to three years and fine of ₹1,00,000, subject to the court's power to reduce the term for recorded special reasons and to the section 137 prior opportunity to comply.

Example 2

Kaveri Foods Pvt Ltd refused to produce its wage register when an Inspector-cum-Facilitator asked for it. After a written direction giving 15 days, it again refused. Advise on consequences.

Show the solution
  1. Provision: section 122(6)(b) lets the Inspector-cum-Facilitator require the employer to produce documents. Section 122(7) deems the person legally bound to do so.
  2. Offence: section 133(k) covers failing to produce on demand any register or document kept under the Code.
  3. Tier: clause (k) is in the middle group, so imprisonment up to six months, or fine up to ₹50,000, or both.
  4. Section 137: a written direction with a time limit was given. Kaveri Foods did not comply within it, so the bar on prosecution does not arise.
  5. The officer may also search, seize or copy relevant registers under section 122(6)(c), with the Code of Criminal Procedure, 1973 applying so far as may be.

Answer: Kaveri Foods may be prosecuted under section 133(k) with imprisonment up to six months, or fine up to ₹50,000, or both, since it did not comply within the time set in the section 137 direction. The records may also be seized.

Exam tips

  • Learn the section 133 tiers as a table in your head: heavy clause (a), gratuity, middle six-month group, fine-only group.
  • In case questions, name the clause letter and the section 137 step; examiners reward both.
  • State the powers of the Inspector-cum-Facilitator with sub-section numbers from section 122(5) and (6).
  • Close every answer with a practical compliance point, such as keeping registers available and meeting direction deadlines.
  • Do not quote section numbers you are unsure of; write the rule in plain words instead.

Practice questions from Social Security Legislations

Registration, Contributions, Inspection and Penalties in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Registration, Contributions, Inspection and Penalties: frequently asked questions

Who is an Inspector-cum-Facilitator under the Social Security Code?

He is an officer appointed by notification by the Central Government or the appropriate Government under section 122. He advises employers and employees on compliance and inspects establishments assigned to him under the inspection scheme.

Can an employer be prosecuted without any prior notice?

Generally no. Section 137 requires a written direction with a time period for compliance. If the employer complies in time, no prosecution starts. The chance is not given if the same violation is repeated within three years of the first.

What is the punishment for not paying deducted employee contributions?

Under section 133(a), imprisonment of at least one year and up to three years, plus fine of ₹1,00,000. The court may give a lesser term for adequate and special reasons recorded in the judgment.

What is the appeal period against an order on maternity benefit?

Under section 72(3), the aggrieved person may appeal within thirty days from the date the order is communicated, to the authority prescribed by the appropriate Government. The decision of that authority is final.