DIPP to create new entities

The department further said the proposed entities could be trusts or private entities. The industry would have the option of asking the entity to provide pension-related services.

These service entities could have their own medical facilities or could tie up with other hospitals to assist the SMEs in availing services under the Employees State Insurance (ESI) Act. The move would not need an amendment to the ESI Act since there is already a provision for such an option.

"The proposed concept implies that, short of assuming the criminal liabilities of the companies, most business related statutory liabilities can be assumed by this entity," it said.

FE had earlier reported that this proposal is under process. As reported, the proposed entity can constitute a profitable business model and can function on commercial lines. Under the proposal, the outsourcing service entities can double up as insurance companies and provide a job loss policy cover in case of retrenchment.

The paper said that while large industries can engage professionals to comply with the statutory obligations, SMEs are largely single-man or family-managed entities. They do not have resources to employ full-time professionals to manage the legal compliance issues.