Harsh Kumar Mehta
Consultant In Labour Laws/hr
General Manager-hr & Admin
Hr Generalist With 8+ Years Exp. Good In
Hr & Compliance Incharge
Labour Law Consulting & Outsourcing
Corporate Legal Counsel
Disha G.
Human Resource
Asst Manager - Hr
Premkumar Nair
Manager (hr)-retired
Agm - Hro, Compensation & Benefit Mgt,
Asst Manager Hr & Admin
+2 Others

Dear Seniors,
We have appointed new Canteen Contractor who provides lunch for us daily. But he is not covered under ESI, He has got 4 employees how should i cover them under ESI scheme. i want the contribution deducted in his bill to be paid in those 4 employees name. I cant take them in my Company roll
Hi Friend For 4 employees The contractor need not cover ESI, Since as per ESI ACT 10 or more employees working in a organization has to be covered under ESI.
If the main factory/establishment in which Mr.MUBASHIRA.S.M,is employed is covered or coverable under ESI Act, then the employees of Canteen even though engaged through any contractor are also to be covered and compliance made under said Act. The compliance is to be made as the compliance in respect of direct employees is made by the factory/establishment, though separate record can be maintained in respect of said canteen contractor.

Even if the factory/establishment is employing less than 10 persons, and if by adding 4 contractor employees, the total strength becomes 10 or more persons, the said factory/establishment qualifies for coverage under said Act and compliance is to be made.

In respect of compliance to be made under above Act and rules/regulations framed thereunder, there is no difference between direct/regular or casual or contractor employees. All are "employees" as defined under said Act provided their wages are upto wage limit as defined under Rules/Regulations framed under said Act.

Harsh Kumar Mehta.
As per act no need to cover for 4 employees but still you need them to be covered under the ESI for ESI benefits if this is the case
you can make that canteen contractor to be register under the ESI & then those 4 of them will covered & get the ESI benefits
for 10 or more workers its compulsory obligation for that employer/contractor below that also you can get register pay the EE & ER shares and get the befits from the ESIC.
now you can register online there after you can produce the the online generated C-11 form to the regional ESIC branch manager.
but with out registrations & paying shares to ESIC you can't deduct money from the contractor's bill with the ESI name.( you may know this but its a reminder point)
Dear Bala, Harsh & Ram.
Thanks for your immediate reply & sorry to say Am Ms Yaar not Mr.
We usually deduct 6.5% for our contractors who work for us for 2 or more hours or Max 1 or 2 days for example hamali work like loading unloading or painting & etc.
And pay the same amount as Misc or Labour Charges to ESI. In this case the amount deducted will be on bill Amount but the employees involved in the process will not get any benefit.
The problem is the canteen employees will work with us for whole month i just want the 4 employees involved in the process to get the benefits of ESI.
Dear Naziya,

First of all please confirm whether your establishment is coverable under the Act including these contract labour also. Secondly, check up whether the canteen contractor as an establishment is covered under the ESI Act. If the contractor is not, you may not be able to force him to register his establishment. However, as clarified by Mr. Harsh Kumar Mehta, after including the contract labour, part time hamals, etc., if your establishment falls under the coverage, please register your establishment under the Act and remit the ESI contributions of all employees including the contract labour. However, you may recover the employer and employee contributions from the respective contractors bills.

Once you cover under the Act, you have to remit the actual contributions as prescribed under the ESI Act and not as miscellaneous or labour charges, and comply with all other statutory requirements such as maintenance of documents and filing of Returns.

If the contractor's establishment is coverable taking all his employees deployed in his establishment and in other Firms on contract, you can insist on compliance under the ESI Act by him and seek documents thereof as a precondition of passing of bills.

With best wishes,
if contractor has only 4 employees ,yu can talk to another contractor in ur company who can pay contributions for these 4 people,,
and yu can reimburse his bills for the same.
When yu start paying contributions for those 4 people yu have the risk of givng them an oppurtunity to claim permanency .
When ESI is not an option try complying with Employees compensation Insurance available with many insurance companies.
Or you can cover them in personal accident policy or a mediclaim policy through the contractor and the same can be reimbursed in his bills,
Note: Insurance and mediclaim cannot be used as a substitute for a statutory compliance,but it solves the risk of accident and other compensation that employer has to shoulder responsibilities.
Dear Friends,
Sorry to post my reply to this issue, if you really know the legal status and applicability of law then your most welcome, otherwise kindly don't give wrong opinion or statement for those who posted opinion. if have any doubt or question on applicable laws and provision ... kindly post your mail to:
Veda Legal Resources Pvt.Ltd
Veda Management Consultants
Veda Team
Mr .Veda, We would want to know which of those opinion in wrong. so that it cud be ignored. regards, Mahendran.I
I agree with the views expressed by Veda Team. I have already indicated in my remarks that ESI Act makes no difference between contractor employees or regular employees. It is a system of social insurance and is compulsory and some official is required to check the compliance made and principal employer is responsible for any failure of compliance.
It makes no difference if you cover the employees through personal medi-claim insurance/any Insurance company since still compliance is to be made under ESI Act. Further compliance of ESI has no relation with grant of status of permanency status to any contract employees.
With regards;
Harsh Kumar Mehta
Mr. Mahendran,
Just have a look the post which has bee posted by you....
When yu start paying contributions for those 4 people yu have the risk of givng them an oppurtunity to claim permanency .
When ESI is not an option try complying with Employees compensation Insurance available with many insurance companies.
Or you can cover them in personal accident policy or a mediclaim policy through the contractor and the same can be reimbursed in his bills,
Even Supreme Court also given very clear cut judgement stating that, contract worker can not claim permanency from the company based on ESIC & EPF contribution paid by the Company or principal employer. so then where is question of permanency??? How cum ESIC can be option in this case ????
Dear sir, I want to know whether mother and father in law of women employee comes under definition of family under ESIC act. Rajneesh Kulshreshtha
these all doubts will get cleared if u file online monthly returns & if u upload new employees data to a online ESIC portal.
as per my experience with the ESIC portal (Means this is the final judgment step that these persons will get benefit or not)
if she did't uploaded the the spouse details then she can add her father & mother names
if a female person uploaded her spouse then tshe cant upload her Father & mother means they won't get the benefits. hear she can upload her Father-in-law & Mother-in-law
like this the ESIC portal works according to this only the the ESI Pehachan card will generate & ESI hospital also work
Hi, Rajneesh Kulshreshtha

Clause (6A) of Section 2 of the ESI Act says that a “dependant” means any of the relatives of a

deceased insured person, namely :-

(i) *A widow, a minor legitimate or adopted son, an unmarried legitimate or adopted daughter;

(ia) widowed mother;

(ii) if wholly dependent on the earnings of the insured person at the time of his death, a legitimate or

adopted son or daughter who has attained the age of ** twenty five years and is infirm;

(iii) if wholly or in part dependent on the earnings of the insured person at the time of his death –

(a) a parent other than a widowed mother,

(b) a minor illegitimate son, an unmarried illegitimate daughter or a daughter legitimate or adopted or

illegitimate, if married and a minor or if widowed and a minor,

(c) a minor brother or an unmarried sister or a widowed sister, if a minor,

(d) a widowed daughter-in-law,

(e) a minor child of a predeceased son,

(f) a minor child of predeceased daughter where no parent of the child is alive, or

(g) a paternal grand parent if no parent of the insured person is alive.

* w.e.f. 1.6.2010, item (i) above has been changed to read, “A widow,a legitimate or adopted son who has

not attained the age of twenty five years, an unmarried legitimate or adopted daughter.”

** w.e.f. 1.6.2010

The Family excludes the following:

i) Married daughter even if minor,

ii) Minor brothers and sisters even if dependent,

iii) Parents who are not dependent,

iv) Grand children, even if dependent,

v Mother – in – law and father - in – law of an Insured woman even if dependent.[/COLOR]

Details of the scope of family have however been elaborated in the chapter III,

Medical Benefit, and should be kept in mind.

(c) New born babies: For the addition of new born babies in Family Identity Card, IP

has to apply to Local Office through his employer in the Form 1-B with in 15 days of

the birth.

(d) In case of death of IP, his family is entitled to Medical Benefit upto the date IP would

have continued to be entitled for the same if he had survived.
Dear Sir,
If your factory/estb in ESIC coverage area, every employees who are drawing salary upto Rs. 15000/- p.m. should be registered under ESIC Act. But your canteen contractor is not registered under ESIC Act, advisable, you don't registered all 4 canteen employees under your code no as they may claim as your company's employees, definitely they will challenge in court as all of them are covered under your company code, legally they will your employees.
Recommended - You have to suggest canteen contractor that hire third party payroll/ outsourced the payroll and enroll them under their ESIC code, then you will be safe and contractor also will safe and all employees will be enrolled under ESIC.
N. Dilip
Vidarbha Industries
Labour Law Consulting, Auditing, Payroll Outsourcing
Navi Mumbai
Cell # 86555 76111

if we see from the angle of covering under ESI and administrative convenience, we may need to bear with heavy penalities and liablity under the word compliance in case of any eventuality. Hence, advise canteen contractor to registered with ESI. This will protect your company n employer.
You can pay the employees ESI contribution only ( Not PF) in your company's Account and the amount of 6.5% can be charged to the caterer , since ESIC provides not only medical benefits but also covers hospital expenditure and 50% salary is paid by ESIC in case of sick leave.
In a nut shell it is better to cover under ESI act, also even if the employee leave the job he/she will get six month medical benefits.
Hi Freidns thanks for your valuable reply. Please also note that In our company ESI is not applicable in our unit where I am setting and our one of the unit is in under cover of ESI which is 40 km away from my present location. So, Please guide me how can I pay ESI.?
Also guide me for all ESI related work. Because I am not aware about ESI. and now i have to work....
Our consultant doing all these activities but he not maintain any records and even I am newly joined this company before 3 months so I am not aware about any thing. So, please guide me what should I do?
I want to take over the all activities related to ESI from consultant. SO, please help me... and please keep in mind I am not aware about any thing about this act and process so, please.. help me for this serious matter.
Hi Disha

As per your first question, you have to enroll all employees of the unit which is in ESI Coverage area, and take Workmen Compensation Policy of all employee who are working in the unit which is not in ESI coverage area (you have to confirm first otherwise enroll all employees under ESIC).

Secondly, if you wants to take over all compliance work form your consultant, take password of ESI to file monthly contribution online, other related documents and record which he have. And you will get all record online which work done by consultant.

You have to go on www.esi.nic.in website of ESI log in overthere (put 17 digit your estb code no in Log in id and password) and click 'file monthly contribution' then put the gross salary and worked days -click the submit button - new window will appear - create challan / pay online, choose whatever you wants to do. if any problem call to nearest ESI office customer care/facilitation center.


Dilip Nandanwar

Vidarbha Industries

(Labour Law Consulting, Payroll Outsourcing, Auditing, Contracting)

Navi Mumbai

Br. Off. - Nagpur

Cell # 86555 76111
Dear All,
The above same problem came to me, I contact ESI Top offfical which they said. You have to add the canteen employees in your role & print out handover the form No.1.What the amount you recovered from vendor,the amount adjusted to the statement.If the employee go out another company he should give the number accordingly.Otherwise there is no way in ESI software.
If any clarification feel free to contact me,
Asst Manager - Human Recourse
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