To begin with, treat me as a principal employer. To do away with the resposibility under Contract Labour Act, we have awarded MAINTENANCE CONTRACT to a Contractor for carrying out certain maintenance activities for our installation for the period of 2 years. In this regard contractor has deployed 55 technician.
We only certify his monthly bills solely on the basis of jobs done in the month.
There is no mention of manpower/labour in the tender documents/contract signed between us and contractor.
Please clarify what are our responsibilities in this case with regard to ESI/Workmen Compensation/Minimum Wages Act/Contract Labour Act/PF Contribution etc.

From India, Calcutta
If installation work is an extension of operations being carried out, then ESI, EPF etc will be applicable. On the other hand, if the operations/ business has not yet commenced, then workers engaged by the contractor will not fall under the Principal- contractor's employee relationship.

The contractor having an employee strength of 55 shall have separate licence issued by the District Labour Officer under the Contract Labour (Abolition & Regulation) Act. Since he himself comes under the definition of establishment, he should have taken registration under the Shops and Establishments Act also. Being a registered entity, he would have EPF and ESI coverage, though the employees engaged at work site are not covered by ESI.

If the relationship with that of the contractor is that of Principal employer- contractor, then you have to ensure that:

1. The contractor has obtained licence under the Contract Labour Act.

2. The contractor has covered all employees under the EPF.

3. The contractor is paying minimum wages to his employees in time.

4. The contractor is maintaining all safety measures.

5. No payment is made to contractor unless he gives statement of payment of wages, remittances of all statutory dues.



From India, Kannur
Dear Madhu Sir,
To make it more clear, we are engaged in transmission/distribution of Natural Gas by unerground pipeline to consumers of Agra, Firozabad, Mathura ,Dholpur. And at each location a station is there i.e total 05 station. several machines, valves,regulators, generators,skids etc are there in each station. In-charge of these stations (we call it installations) is our regular employee. While Labour Intensive Jobs i.e regular maintenance of various machinieries at each stations(Installations) are outsourced by awarding the aforesaid Maintenance Contract to the Madhya Pradesh based Contractor.
I hope this will help in understanding the situation of ours more clear.

From India, Calcutta

ESI coverage is area specific. It may be applicable in some of your stations and not in all. As principal employer you need to ensure that Contractor has filled up ESI registration forms for all his employees from the day one of ones' employment in areas covered by ESI Act. Areas not covered by ESI,you need to ensure that Contractor has covered all his employees under insurance for W.C.Act. As a principle employer it is the responsibility of your company to compensate any employee for any disability arisen in course and out of employment
From India, Coimbatore
ESI will be applicable on contractor. It is a libility of contractor to contribute towards ESI act. As in-charges are your regular employee, and deputed for various stations at different states. I hope these employees are getting payment from your primary station, in this case if at your primary station has more than 20 employee whose Gross pay in 10,000 or less than 10,000, you have to contribute towards ESI.
Further; if you have taken separate registration under shos & establishment act at several states where your installations are working and you are paying them from that respective stallation, then you have to separate ESI code to be taken for each state if there 20 or more workmens are employed with the 10,000 or less than 10,000 gross pay.
Further; Principal employer is responsible for ensuring that his contractors are making legal compliance. If contractor fails to contribute towards PF or ESI, Principal employer has to pay for these.
I hope it may solve your query.

From India, Gurgaon
Dear Madhu,
This is with reference to your opinion that ".... the employees engaged at work site are not covered by ESI'.
I would like to know whether contract workers will be covered under the ESI if the site comes in the covered area.Would you please clarify?

From India, Madras
Employees engaged in construction sites are exempted vide a notification by the ESI Corporation in this regard. The notification is available in this site itself. Please search it. It may also be available in the website of ESIC.

From India, Kannur
I have a related querry. A contractor engaged by the principal employer employs less than 20 unskilled workers,as per the contracted terms. Is the principal employer still right in insisting on PF/ESI coverage by the contractor? PF/ESI coverage happens even if the employee strength has subsequently fallen to less than 20, but in this case, the contractor never started off with 20.However, the principal employer's own employees and other contracted workers are far above 20.
Pl. clarify.

From India, Lucknow
A very intelligent, interesting, illuminating discussion on Contract Labour.
Please continue.
Dear Mr. Madhu T.K., I would like to know the legal position in case of arrangements with Cleaning Service companies (for cleaning premises, washrooms etc.), and Office service (such as Photocopying, Fax, Courier & Messenger services, Driver, Housekeepers in company guest-houses etc.). Kindly give your opinion.
I also request our legal experts to provide their suggestions and opinions; as the sword of "perennial", "non-perennial", "240 days of continuous service" etc, always hangs over the employer, in addition to other contingent liabilities.

From India, Delhi

It is 10 and not 20, as mentioned by Anurag, that the ESI Act is applicable. If the number has crossed 10 or more on any one day in the calender year ESI Act is applicable.If teh number goes down, still the Act will continue to remain applicable. Pl.correct
From India, Coimbatore

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