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Dear Respected Seniors and fellow Members,

Greetings of the day!

Need your advise on the case given below.


An employee of our organization was deputed with our client (principal employer) and during the course of his employment, he met with an accident while driving a vehicle on road which led to his hospitiliastion. He suffered greivous injury and was admitted to ESI Hospital. Over there he was treated and given all hte medical help he required. However, after some time our client ie principal employer did not give the salary coz the employee was hospitalised and hence our company consequently stopped submitting the contribution to ESIC.

As a result of the above, the employee was restrained from taking the treatment from ESIC and hence he had to take medical assistance from some pvt hospital and hence incurred substantial expenses on it. Now he through Labour Commissioner is demanding a mammoth amount of money as compensation from us.


1 Is the employee justified in the claim he asked for?

2 Secondly, do we as immediate employer are liable to pay any compenation coz we did not get any amount from our client ie principal employer for esic contribution. if yes, or not then why so?

3 Is the employee justified in the claim as he was covered under ESIC and hence employee compensation cannot be invoked since as per ESIC, Employee compensation act is not applicable if ESIC is applicable.

4 if we or principal employer liable for any claim to be paid to the employee, on what basis we can reduce the amount asked by the employee

5 Can i get a judgement/case law to support our case

I would request all of my learned friends to answer teh query point by point if possible for u to bring a clear picture to this and also please feel free to raise any point in this case which i missed or any other input/ suggestion u have for this case

Thanks in Advance


First of all, being the employer of the person who met with the accident you should not have stopped payment of contributions even if the Principal employer has stopped payment of wages. The Principal Employer who has no employee employer relationship with your employee (who met with the accident) can certainly stop paying for the days during which he remained absent. But he being your employee should not have stopped paying his salary (?) and ESI contributions. Having done that mistake if the injured employee had to take treatment from outside, you are liable to compensate him under the provisions of Workmen's Compensation Act. That is why the employee has approached the Labour Commisioner/ Commissioner for Workmen's Compensation. Pending all these, the main question is why the ESI stopped to give him treatment?

Your claim that you did not make payment because you did not get it from the Principal employer is not at all maintainable because it is not the responsibility of the Principal employer to pay ESi of an employee who has not come for work. It is invariably you own responsibility and if you think that you can not retain a worker who is not engaged, then terminate him. (Terminating an employee while he is undergoing ESI treatment is NOT possible) If you think that you (the Contractor) are to be fed by the Principal Employer for each and every thing, you are mistaken. If you think that the Contractor is just to collect a handsome amount of SERVICE CHARGES from the Principal employer, you are mistaken. It is to shoulder such incidents that you are paid.

Naturally, the ESIC should not have stopped his treatment. Therefore, you can go there and enquire why that happened and take a call against ESIC. If on the other hand, if the employee has taken a voluntary discharge from the ESI Hospital (it may so happen also) then take it as evidence and show the Labour Commissioner and submit that he is covered by ESI and you will not be liable as per provisions of other law (Workmen's Compensation Act) If the Labour Department is convinced, you will be released from the proceedings. If so, you can initiate further steps against the employee on the ground that the employee has fraudulently represented and made statement against the employer and is a misconduct and on the ground of that you can terminate him following an enquiry. You can also inform the ESIC about the incident. On the other hand, if the ESIC has forcefully discharged him file a representation against the Corporation.

In any case, the Principal Employer has no responsibility since you have stopped contributions from your end.



Dear Madhu Sir
thanks for taking out time to reply to this!
have two queries,
Firstly, in this case employee was precluded from continuing taking treatment under ESIC so does that mean he will automotically come under Workmen/Employee Compensation Act, if yes, can u please share with me the relevant statuory aspect/ case law to support this
Secondly,On what basis can i take an action against ESIC as ESIC can plead that since contributions were not received and hence they were not liable to continue treatment, is there a way out in this in our favour
Please reply!

ESIC can not send an inpatient out just because contributions in respect of the employee has not been paid by the employer. More over, even in the case of an employee becoming out of coverage while undergoing treatment, the ESIC is said to continue giving him treatment till his treatment is over, provided contributions in respect of him has been paid at least for the half of the working days in the contribution period. This is a case of accident benefit and the question of contribution and benefit period will not arise also.
In case due to any hidden rules (a thorough reading of all the provisions is required to be made to arrive at a decision for which you are advised to consult a good lawyer also) the ESIC is justified in refusing treatment, then as an employer you are liable under the Workmen's Compensation Act.

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