Madhu.T.K
Industrial Relations And Labour Laws
+4 Others

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Hello,
Please inform if some workmen visit factory and do work on job basis or contract basis and not on daily hour basis, like painter working on sqft basis , fabricator making shed on weight basis, is ESI or PF applicable to the company where he does this job ? Since workmen employed by painting contractor or fabrication contractor changes and there are no fixed workmen on whose name EISC and PF can be paid?
Best regards,
S. Desai

From India, Vadodara
ESI and EPF are applicable to all casual and temporary workers who are engaged to work within the premises of the factory/ establishment covered by ESI or PF, as the case may be. However, there are certain judgement which says that when a workman is engaged for any work not connected with the activity of the establishment, he need not be covered by ESI.

The Kerala High Court in Regional Director ESI Corporation Vs P R Narahari Rao (1986 Lab I C 1981) has observed that there is a distinction between "employment" and "engagement" and if a person is casually engaged for a process unconnected with the operations of the establishment, or some work which does not form the integral part of such operations, he may not be an employee since there would be no employer employee relationship between them. On the other hand, if a person is employed for a very short period of time but in connection with the processes or operations which are integral and connected with the business of the establishment,he is an employee entitled to coverage under the Act.

The Punjab and Haryana High Court in ESI Corporation Vs. Malhotra & Co, Chandigarh (1981 Lab I.C 475) has also given a similar verdict.

Therefore, if the painting work is not the main business of the establishment, you may not contribute to ESI/ EPF saying that the work to which he is 'engaged' is not the integral process of your business.

Regards,

Madhu.T.K

From India, Kannur
Thanks for your reply.
My query is also for persons who come to our factory to do polishing of our machines which we produce and sell. So they contribute towards our line of production or final product that we produce. These people work on contract basis and charge us per machine, XYZ amount and not on per day or per hr basis. These people come with their own polishing machines, welding machines and carry out work at our premises as they don't have their own premises to do the work. Also people who do the work are not the same every time and keep changing.
Will this come under ESIC and PF calculations?

From India, Vadodara
Since the polishing or painting work is directly connected to your business and as the work is carried out within your factory premises, any amount paid shall be treated as wages and therefore, it will attract ESI and PF. The payment whether lumpsum or rate per hour or day has no relevance. If the contractors have hired the polishing machine or compressor for spray painting, the hire charges included in the lump sum amount paid per piece of machine painted or polished, as the case may be, will be allowed to be deducted provided he has sufficient proof of it.
Regards,
Madhu.T.K

From India, Kannur
Hi Mr. Madhu
I am person working for a Hotel which is under construction. During the progress of construction we engage some contractors like civil and electrical etc. who bring their
personnel to work in the site to complete the entrusted contract. They keep on changing the labour whenever they need. In this scenario
a) What is the liablity for our company.
b) is contractor supposed to pay Pf Esi to the labour he brought.
c) If he does not pay how our company will be liable for that
d) And when labour getting changed almost every day how to pay the amount
And we directly employ some people who are not taken into Pay roll and but we treat them as NMRs. Is there any specific rules for this NMR system if so what are those
HOpe it is clear and request you to kindly clarify in depth for which I will be very thankful to you.
thanks
Murthy
andhra pradesh

From India, Visakhapatnam
You are liable to pay contributions only after coverage and the coverage takes place only after commencement of production or rendering of service. That means, during construction period when there is no operation your establishment will not be covered and as such the contractor(s) are not liable for contribution towards ESI or EPF.
Though I did not get what is NMRs, I can understand that it is an engagement before actual production/ service has taken place. As stated above, ESI and EPF will be applicable only after commencement of business for that raising of first invoice is taken as date of commencement of production/ service. Till then no contribution is payable.
Regards,
Madhu.T.K

From India, Kannur
Dear Mr. Madhu,
Thanks for your reply.
What is the amount of contribution I have to make for the polisher who work in our premises? Is it 12% for PF and 4.75% for ESIC? What about the contractor's contribution? What happenes is contractor is not ready to part with his contribution as If I deduct 12% of his share of PF from his bills, he will refuse to work and leave. What can be done if contractor don't want to pay their share?
Regards,
S. Desai

From India, Vadodara
Dear Mr.madhu
thanks for the clarification on contractors pf and esi.
But NMR is Non Muster Roll where employees are not taken into regular pay roles and just attendence is noted in a note book and a consolidated or daily wages pay is paid. That means they are not regularised employees and have no right to claim anything like bonus or leaves etc etc.
But my doubt is how many employees can be taken on this basis and how long they can be continued like this and what is the applicablity of Labour laws in this point of view. If any labour department person come and ask us and say this is illegal what we have to say. And how the minimum wages act is also applicable in this case.
hope it is clear about my doubts and request you to kindly clarify if you have idea.
thanks
Murthy
Andhra pradesh

From India, Visakhapatnam
Desai,

Contribution of ESI/EPF is primarily the responsibility of the principal employer for whom the contract employees work. The principal employer can definitely recover the amount paid by him by way of deduction from the bill amount payable to the contractor. If he refuses to deduct the amount, let the contract be terminated, there is no other way other than bearing the cost by the principal employer by himself. That is your choice; if you want to retain the contractor by making him happy, you can bear the cost of ESI and EPF.

Murthy,

Non Roll engagement is permitted provided the work is not perennial/ regular in nature and is not connected with the primary operations of the establishment. But you can not escape from payment of minimum rates of wages fixed for that category of employees, payment of contributions towards ESI and EPF. Though the non pay roll employees need not be regularised, they should not be denied of statutory minimum wages, ESI and EPF. Moreover, they should also be paid bonus at par with regular employees.

As already stated if you engage casuals in non operative areas there is no legal complication. But you are not expected to engage casual workers in works of regular nature. If engaged, there is every chance that the Labour Department will intervene and ask you to regularise their service.

Regards,

Madhu.T.K

From India, Kannur
Dear Mr. Madhu,
Many thanks for your info.
Please inform what is the amount above which PF , ESIC , Bonus is not applicable? For example If I pay a polisher to polish our machines and if I pay him Rs. 7000 in one month and 9000 in 2nd month , will PF be applicable? Will EISC be applicable? If for such person who are not employed but work in our premises on contract basis that is if they charges us per job, will bonus be applicable? Is there any celing or slab over which I don't have to deposit, my own share or their share for PF and EISC?
Best regards,
S. Desai

From India, Vadodara

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