Harsh Kumar Mehta
Consultant In Labour Laws/hr
Management Consultancy
+3 Others

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When ESI Act under Section 1 itself clearly says primarily all organisations including government are coverable under ESI Act... by virtue of engaging of private security agencies and outsourcing personnel... Is ESI Institutes are not coverable under ESI Act?
In the same scenerio is there any blanket exemption for all Central Government or State Government and PSUs etc., from the statutory liability of coverage as Principal Employers under respective Labour Laws, in the light of engaging of different part time and outsourcing workers...

The Act is not applicable to factories or undertakings under the control of the Central or State Government, if they have benefits substantially similar or superior to those extended by the Act. That is the reason it is not applicable to PSUs.
HR & Labour Relations Adviser
Navi Mumbai

Here the point is that whats about the contract workers engaged for security and outsourcing...they will not been provided substantially similar or superior and cant they been covered by considering such government organisation as Principal employers.... please go through in between the lines of my querry please..
First of all, every Government establishment is not exempted from ESI Act, as is clearly provided in Section 1 (4) of the Act as follows:
(4) It shall apply, in the first instance, to all factories (including factories belonging to
the Government) other than seasonal factories.
Provided that nothing contained in this sub-section shall apply to a factory or
establishment belonging to or under the control of the Government whose employees are
otherwise in receipt of benefits substantially similar or superior to the benefits provided under this
So ipso facto being a Government factory or establishment does not exclude it, but the test of providing employees benefits substantially similar or superior to the Act holds the key.
Furthermore, Section 90 of the Act mandates that exemption of a factory or establishment or class of factories or establishments belonging to Government or any local authority is subject to the condition that employees of such factory or establishments are otherwise in receipt of benefits substantially similar or superior to the benefits provided under this Act. It is very difficult to fulfill this criteria particularly looking particularly to the medical benefit criteria. Secondly the same criteria applies to other organisations too, if we see Section 87, reproduced below.
87. Exemption of a factory or establishment or class of factories or establishments. —
The appropriate Government may by notification in the Official Gazette and subject to such conditions as may be specified in the notification, exempt any factory or establishment or class of factories or establishments in any specified area from the operation of this Act for a period not exceeding one year and may from time to time by like notification renew any such exemption for periods not exceeding one year at a time.
Provided that such exemptions may be granted only if the employees’ in such factories or
establishments are otherwise in receipt of benefits substantially similar or superior to the benefits
provided under this Act :

But what’s the conclusion part...
Once the establishment is in a ESI covered area, the issue of ESI coverage for every employee including contract labour be it in security or any other outsourced activity, comes up sooner or later. Unless one is notified as an exempted establishment as per the Act, the compliance has to be there. The norms of exemption are uniform be it government sector or private sector establishment.
1. Sir, in ESI Act, 1948 and rules/regulations framed thereunder there is no blanket exemption to ESIC or government offices. The policy makers laid down criteria of "benefits substantially similar or superior" under proviso to section 1(4) of said Act. However, so far as ESIC is concerned, regular and direct employees are already enjoying social security benefits similar or higher as applicable to central government employees including medical facilities, provident fund and pension after retirement. I understand that the persons engaged through contractors or immediate employers in any of its offices including ESIC Model Hospitals for security, data services, repair and maintenance etc. are already covered under above Act as well as other labour laws and I understand that the compliance in respect of such contractor/immediate employees is being watched by the officers concerned.
2. Even otherwise also under provisions of above Act, the said Act has no universal application. Initially it covers "factories" under section 1(3) and that too in notified areas and under section 1(5) it covers certain establishments which the appropriate State Govts. have declared coverable by notifications. A majority of State govts. have extended the provisions of above Act to "shops" etc. only.
3. In some of the government units which qualify as "factory" or "shop" or any other specified establishments, the appropriate govts. have granted exemptions on the basis of "benefits substantially similar or superior". However, in such government establishments like Oil Companies, Govt. Transport Workshops, KV substations of electricity boards etc. etc. the employees under category of casual, temporary, work-charge, as well as engaged through any contractor or immediate employer are not exempted and are covered/coverable under provisions of above Act. Therefore, I understand that it will not be fair to conclude that there is any blanket exemption under above Act to any government or PSUs. Important question is whether such unit is situated in implemented area and also whether it falls in category either of factory or as declared by the appropriate government under section 1(5) as mentioned above.
4. I may also submit that the provisions of social security benefits (like ESI benefits) have not been extended to all category of employees in India including in unorganised sector. More than 90% of work-force (including in unorganised sector) is still deprived of any protection under social security laws.

Good information sir. Yes, its applicable to all and blanket exemption cant be taken...
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