Hello All,
I have 3 queries.
1) Who is responsible for contributing the 4.75% employer contribution for ESI. Principal employer to direct employer in the case of a contract worker?
2) Who is responsible for paying the premium and compensation for a Worker's Compensation Policy in the case of a contract worker. Principal or direct employer?
3) Who is responsible for providing medical ( medi claim insurance) to the contract worker in case the contractor (direct employer) doesn't have a medi claim policy for its employees. Is it ok if we only ask them to get Worker's Comp. I'm just concerned in case there is an illness that is non work related, who is responsible for it and who pays for it?

From India, Chennai

everything has to be cleared in works contract regarding these points otherwise principal is liable

Sir, both principal employer as well as immediate employer (contractor) are responsible for compliance in respect of employees of contractor under ESI Act, 1948. Kindly see sections 40 and 41 of said Act.
From India, Noida

Immediate employer is directly linked to pay the employer contribution, but in any case he fails to make payment then principal employer shall be liable to make payment alongwith intreest and penalties levied on the immieidiate employer.
From India, Chandigarh
The Contractor is directly responsible for the benefits and compensation of the employees working under his payroll, but in any case the contractor escapes from his liability, ultimately principal employer is liable for the payment of dues . Pl refer CLR Act for more clarity.
From India
Dear Mr Reddy you may check the section 13 of ESI Act 1948. However abstract is being given below:-
(13) “ immediate employer ” in relation to employees employed by or through him, means a person who has undertaken the execution on the premises of a factory or an establishment to which this Act applies or under the supervision of the principal employer or his agent, of the whole or any part of any work which is ordinarily part of the work of the factory or establishment of the principal employer or is preliminary to the work carried on in, or incidental to the purpose of, any such factory or establishment and includes a person by whom the services of an employee who has entered into a contract of service with him are temporarily lent or let on hire to the principal employer 1[and includes a contractor].

From India, Chandigarh
Hello Everyone,

Thank You for your responses.

Could you also specifically comment on point 3 in relation to a medi claim policy. If we have a handful of contract workers on our premises who do not fall under the ESI provision as their salaries are above 15000/month, I think the next best option would be to have the Contractors take a Worker's Compensation policy. Since Worker's Comp only covers injury, death, disablement caused during the course of work, a medi claim policy would also be good as it provides cover for general day to day illness and hospitalisation. Under ESI, the coverage is wide and it covers illness, hospitalisation as well as injury, death, disablement.

However, I am wondering if it is necessary to have the contract employees have a medi claim policy. It is a value add and a good benefit but as a company (principal employer), are we liable under law to have benefits in the form of a medi claim policy. Isn't it enough if they are covered under Worker's Comp. In this way, our liability to have the employees safety while working on the premises is covered.

Please comment.


From India, Chennai

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