Rajesh N

Dear Seniors, Kindly let us know whether construction Company is coming under the preview of ESI Act Please provide the notification if have Regards, Rajesh
From India, Hyderabad
Harsh Kumar Mehta
Consultant In Labour Laws/hr
General Manager-hr
Freelancer In Hr &indirect Taxes For
Korgaonkar K A
Hr - Incharge
Manager- Hr Compliance
+4 Others


Dear Rajesh, Yes, a construction company comes under coverage of ESIC act if deploys 20 or more employees.
From India, Gurgaon
korgaonkar k a

Dear Aniltoexcel, Can you please elaborate your answer as to how and why the construction company comes under ESIS?
From India, Mumbai
Harsh Kumar Mehta

If the construction agencies are employing 10 ( or 20 depending on State Govt. notification under section 1(5), number of employees in their offices and the office is situated in an implemented area, it is coverable. However, workers engaged by these agencies and working on the site of the construction project should not be considered either for the coverage of the establishment or for their own coverage as employees. If these construction workers are engaged in a covered factory or establishment, they are to be considered to be the employees of that covered factory/establishment which engaged them.

From India, Noida
korgaonkar k a

Dear Harsh Kumar ji,
I completely agree with first part and last part of your answer. But the middle one which deals with construction project site, there is an ambiguity. There are three issues according to me. First is, where is written in the Act that construction project sites are excluded from ESIS? Secondly, can any circular like 4/99 change any enactment? And thirdly, where it is written in the circular 4/99 that construction project sites are excluded from coverege of ESIS.
The circular 4/99 is interpreted by many Inspectors differently and demand notices are served by them to construction project employers for ESI contribution of construction employees other than casuals and temporary labours even though practice of Law is ESI is not applicable to construction project site. This practice of Law is even accepted by Central Ministry.
Please be noted, if RMC plant is installed at project site ESI is made applicable since RMC plant falls under the Factory Act.

From India, Mumbai
Harsh Kumar Mehta

Dear Korgaonkarji,

(1) Thanks for expressing your concern about non-coverage of construction sites under provisions of ESI Act, 1948. In this connection, I may submit that the said Act initially covers only "factories" as defined under Section 1(3). However, it enables and empowers the appropriate Governments to extends the provisions of said Act to other class or classes of establishments Sec. 1(5). You may also be well aware that different State Governments have exercised their powers under this enabling provisions and have extended the provisions of Act to other classes of establishments including to "shops". By virtue of various court judgments, the offices of the builders/construction agencies which falls in implemented areas and employ minimum number of employees as mentioned by me in my comments as above are treated as shops and coverable under said Act. Therefore, I may mention that said Act no where states about coverage or non-coverage of "construction project sites" and therefore, one cannot find answer to this question in the Act.

(2) I personally feel that the instructions issued by the ESIC vide circular 4/99 as referred by you are correct on account of the reasons explained in the circular itself. In case, there is any deviation from said circular at any level-locally or at region basis, any employer or his official can point out the violation, in my opinion, to the highest authorities in ESIC.

(3) Further, I think, the main reasons for non-coverage of the "construction site projects" is that such establishments are treated as separate class of establishments and generally fall under unorganised sector. The construction site started today will definitely mean that the employees engaged therein will be engaged from unorganised sector in groups and will be found nowhere once said project is completed. In social security schemes, the existence of recordings of contributions, the clarity on eligibility conditions of insurable employment, satisfying of the terms and conditions of payments of different benefits under such schemes are essential factors. Therefore, difficulties are faced by the social security providing organisation in claiming the contributions, in maintaining records relating to payments and eligibility conditions and satisfying the facts about eligibility of payments of benefits. The situation where the payments of contributions in respect of any employee is difficult to ascertain and the terms and conditions to satisfy the eligibility for payments of benefits under social security schemes is not adhered to, makes the schemes not financially viable.

(4) The case of "construction projects sites" is not an isolatory case. Similar is the position in respect of coverage of "home workers" generally employed in beedi manufacturing units. Such home workers in beedi manufacturing industry are also not covered under Act even though there may be some court judgments declaring such home workers doing work in the supervision of principal employer and qualified to be as "employee" under some other enactments viz.EPF & MP Act, 1952.

(5) I feel that policy makers may be keeping in mind the conditions under which construction workers work and may be feeling urgent need for social security benefits to such workers, but in view of prevailing conditions in India, perhaps it will take a long time to reach at a stage where social security benefits will be available to all working class.

(6) I think, as a practitioner and expert in labour laws, you can send your views to the appropriate authorities on coverage of "construction project sites" for the welfare of such workers.

From India, Noida


If I am not wrong,the below act throws some light on welfare of such workers engaged in Construction activity.Also Sec 22, extract gives Idea abt assistance/benifits that can be extended to such workers.

However I wonder If employers follow this act or not.Because I have not seen any such worker in this domain getting benifts in accordance.

Pls enlighten us to rise for the welfare of such workers.




22. Functions of the Boards.- (1) The Board may-

(a) provide immediate assistance to a beneficiary in case of accident;

(b) make payment of pension to the beneficiaries who have completed the age of sixty years;

(c) sanction loans and advances to a beneficiary for construction of a house not exceeding such amount and on such terms and conditions as may be prescribed;

(d) pay such amount in connection with premia for Group Insurance Scheme of the beneficiaries as it may deem fit;

(e) give such financial assistance for the education of children of the beneficiaries as may be prescribed;

(f) meet such medical expenses for treatment of major ailments of a beneficiary or, such dependant, as may be prescribed;

(g) make payment of maternity benefit to the female beneficiaries; and

(h) make provision and improvement of such other welfare measures and facilities as may be prescribed.


From India, Vadodara

Dear all,
Workers engaged in actual construction work are not covered under The ESI Act. We are consultants for client in business of construction. The employees are covered under Employee Compensation policy. There has been no inspection since last 5-6 years. Attaching circular issued by the Corp.
Shrikant Prabhudesai

From India, Mumbai

Attached Files (Download Requires Membership)
File Type: pdf ESI Notification construction.pdf (180.6 KB, 556 views)


As Mr.Bijoy Majumdar said, the gap left by ESI in coverage of construction labour seem to have been filled by the BOCW Act by enacting certain welfare provisions for the migratory labour engaged in construction sites.
In-House HR & IR Advisor

From India, Mumbai


As harsh states, it is the prerogative of the state governments. In tamilnadu the coverage ceiling for shop is reduced from 20 to 10, whereas in Maharashtra it is still 20.

In tamilnadu, new sectors like hospitals, educational institutions etc have been brought into the ambit of esi coverage by the way of extension of esi scheme by the tn state govt. but in Maharashtra it is yet to issue such notification, hence educational institutions are not yet covered in maharastra.

Similarly the scheme can be introduced to agricultural sector, but no state government has endeavoured into it. Similarly construction workers, plantation workers etc are yet to be brought into coverage, due to non issue of notification by the state governments.

The top policy makers could have possibly thought that due to nomadic nature of job in these sectors, it would not be pragmatic to bring such sectors into the ambit of esi. Moreover the state governments have already formulated specific schemes (as bijay states above) which acts as a suitable alternative to esi scheme, so that social security is not denied to to workers in such sectors.



From India, Madras

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