Harsh Kumar Mehta
Consultant In Labour Laws/hr
Labour Laws & Ir
Manager - Hr & Ir
Gm-finance &accounts
+1 Other

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Dear Sir,
Kindly for ward your opinion whether ESIC Act is applicable to the construction workers ( contract labours) who performed the work only limited period i.e. 5 to 10 days in a month or not more than 3 months in a year( 30 days).since the establishment is covered under the aforesaid act and concerned authorities are insisting for coverage.

From India, Mumbai
Dear Narayanswamy,
In general the ESI ACT is not applicable to Construction workers or industry. However, now a days on case to case basis the ESIC authorities are covering the construction industry also into ESI Act.

From India, Bangalore
To this effect ESIC instruction 4/99 casts:
References have been received from Regional Directors seeking clarification regarding coverage of construction agencies/offices of builders particularly on the point as to whether the construction workers working in the construction sites are to be taken into consideration for the purpose of the coverage of the construction agencies/offices of builders under Section 1(5) of the ESI Act as a ‘shop’.

The matter was examined at Hqrs. Office and it is informed that it has been the policy of the ESI Corporation not to cover the workers engaged by the construction agency who belong to the unorganized sector due to the peculiar characteristics of the construction industry and the peculiar nature of employment of workers engaged in it. In construction industry the work is carried out through the construction workers at the construction sites where the projects are situated. The workers engaged in it are mobile and migratory in nature. The criteria and duration of employment also vary from the work to work. Due to the nature of employment and the nature of work place involving the construction workers, enforcement of the ESI Act in respect of such workers and organizing Medical and other facilities for them which are normally available under the ESI scheme will be difficult. Therefore the existing scheme under the ESI Act is neither applicable nor workers engaged in construction sites. Hence, the following actions may please be taken for coverage of construction agency/offices of the Builders:-
  • Such construction agencies which are employing 20 or more persons in their offices and the offices are situated in implemented areas are coverable under the Scheme. However, it may be ensured that the criterion of 20 or more persons is applicable to such employees only who are coverable under Section 2(9) of the ESI Act.
  • Such workers who are engaged by construction agencies and are working on the site of the project should not be considered for the purpose of coverage of an establishment dealing with construction activities.
  • Such construction workers are to be taken into consideration for coverage under Section 2(9) as ‘employee’ who are engaged directly in a covered factory by the principal employer or through an immediate employer.
  • Only employees of the construction agencies who are posted in the office are to be taken into consideration for the coverage of the unit.
  • Some of the regular employees of the construction agencies mostly technical staff such as Engineers, Supervisors etc. who are regular employees of the construction agency but are normally sent to the work-site periodically, are to be taken into account for the purpose of coverage of the establishment under Section 1(5).
In respect of those employees who are though regular employees of the construction Agency but remain on tour at the Site(s) of the construction in non-implemented areas for a period of more than 7 months in a year, contribution may not be charged subject to the employer seeking exemption under Section 88 of the ESI Act in respect of those employees.

Sunil Sethi

From India, Delhi
Dear sir
I am working in a construction Company , undertaking construction works in a Industrial projects (where factory act is applicable) . Will ESI ACT is applicable to Employees on rolls of the Construction company whoes salary is below 10000 .

From India, Hyderabad
Dear Viswanath,
Plz go through the explanatory note on the applicability of ESI Act on construction industry by Sh Sunil Sethi for your query.

(Labour Law & Legal Consultants)

From India, Delhi
Dear Swamy,
Pl refer to the circular issued by ESIC dated 03/01/2011 to extend & coverage of Construction site workers under ESIC. ESIC services will be available to these mobile and migratory workers with no geographical manner with the implementation of IT roll out "Any time and anywhere".
Further the scope of Medical care is wide now and can be availed by site workers.In other words, ESI Scheme is not restricted to our own dispensaries but the medical services can be availed at empanelled private dispensary and diagnostic service centres where ESIC is unable to provide the services.
If any construction worker at site cannot avail ESIC Schme, they can be granted exemption in suitable cases.
Thanks & Regards,

From India, Chennai
Dear sir,

ESI coverage

Ours is a Hospital covered under ESI area in 2012. We are incurring lot of repairs on buildings, also constructing new buildings recently. ESI inspector claims ESI is payable on labour portion of building bills( Bills value includes material and labour and profit of contractors) since the workers are employed by us as Principal employer. The contractors state they are not under the purview of ESI Act due to risk and migrant labour are employed at the site.
The letter issued by ESI on 14th June 1999, exempts construction agencies from covering ESI, due to employment of migrant labour. One of the clause states that "Such construction workers are to be taken into consideration for coverage under Sec 2(9) as employee who are engaged directly in a covered factory by the principal employer or through an immediate employer"
My query

1.Can we tell ESI inspector that ours is a Hospital and does not fall under the above clause and it applies to a only covered factory ?
2.As a principal employer, we have to deduct ESI and remit ?

Please clarify


From India, Vellore
Dear sir, Greetings for the day, Enclosing the circular for the matter the doubts will be get cleared. Thanks & Regards, From, Sumit Kumar Saxena
From India, Ghaziabad

Attached Files
File Type: pdf ESIC circular for Construction Workers.pdf (454.1 KB, 811 views)

1. Sir, the parawise reply of your questions, in my opinion, may kindly be treated as follows:-

(1) No. The objection of Social Security Officer of ESIC is correct. When your hospital is covered under ESI Act, 1948, you are required to cover and make compliance in respect of all employees including employees engaged for repair and maintenance as well as for construction or extension of premises of your hospital. It makes no difference, if your hospital is not a factory. Once covered under section 1(5) of said Act, all employees as defined under the definition in said Act are coverable and compliance is required to be made. The only exception is employees getting wages exceeding to coverage limit which is presently Rs.15000/-. per month.

(2) Yes. However, you cannot deduct employees contribution from the wages of said employees engaged for repair, maintenance and extension of building etc. for the past periods and for past periods contribution,both employees' share as well as employers' share is to be deposited by the principal employer. However, for future period, you can make compliance in respect of all such employees on the same pattern as your are making in respect of your other employees. However, in respect of employer's share of contribution in respect of said repair, maintenance and construction workers, you can recover the same from contractors, if otherwise within agreement.

2. In my opinion, the said Act does not make any distinction between migrant or non-migrant worker. All employees are required to covered and compliance to be made irrespective of the fact that any of the employee may be from other State.

From India, Noida
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