Esi Act For Contract Labour

Dear PTRC,
Number of employees for ESI coverage is 10 in the case of factories whereas it is 20 in the case of 'other establishments'.
Any labour involved voucher will attract ESI. Therefore, any payment made for housekeeping, gardeners, room cleaning arrangements etc will attract ESI.
If we include work of regular nature only under the purview of ESI/ EPF there will be no work coming under the regular nature. There will be a tendency to define all works as non perennial.
The matter of 240 days is a minimum fixed for the purpose of counting eligibility for various matters and as such that is a matter connected with service and not with contractors employees.
Regards,
Madhu.T.K

Thank you , Madhu for clarification. In case of contracts I have observed that ESI contribution is deducted at source by the principal employer when the bill is raised by contractor.But the workers employed by the contractor are not registered with ESI and hence do not get any benefits of the Act thought ESIC gets its share. What are your experience in this regard?
As for 240 days continuous employment would entitle employee to enjoy benefits of permanent employees like social security as per provisions of I D Act and the orders in the disputes under this Act.
I would like to introduce PTRC-Peoples Training & Research Centre, based at Vadodara, is a voluntary organization mainly working on the issue of Occupational Safety & Health. Members are most welcome to visit its website-www.ptrc.info
Jagdish Patel
Director

Mr.Srienivas' query ,"....A contractor engaged by the principal employer employs less than 20 unskilled workers,as per the contracted terms. Is the principal employer still right in insisting on PF/ESI coverage by the contractor?," is very pertinent. And let us assume that it is an establishment not using power in its manufacturing process.
Would anybody answer the query?
Thanks,
Sanu Soman

Dear Nawaj,
Mr. Madhu Sir is very right, please be sure to take PF & ESI submission challan every month from contractor with the bill he proves. If contractor is not able to provide the challan of current month then you can ask him the previous month challan. Same time you should always veryfy wheather the contractor is paying as per the Shop & Establishment Act of that state.
Thanks & regards
Sanjay Sharma

It is irrelevant whether the contractor has less than 20/ 10 workers. It is also irrelevant whether the Contractor has been covered by virtue of his place of office whether or not coming under coverage area of ESI. It is relevant only to the factory/ establishment where the contractor engages his workers. If the principal employer is covered by ESI/ EPF, all employees who work under his supervision whether directly or through contractor should be covered by ESI or EPF as the case may be.
The 240 days applies to employees on roll of the principal employer only. For the employees of contractor the employee- employer relationship is with their contractor and as such they can not have any claim of regularisation of employment with the principal employer for whom they work.
Regards,
Madhu.T.K

friends to simplify all your problem i like to inform u that if the principal employeer have the pf & esi code then contractor will engage 20 or less than 20 workers they have to give esi facility . if the contractor will not submit the esi return then principal employer will bound to submit the return. and to reply of MR madhu's state ment of 240 days applies to employees on roll of principal employeer is changed now. now the rule is day of joining employee will be eligible for pf, esi.

dear experts,
responsibility has been entrusted upon me to check and verify whether contractor is complying all the legal and statutary requirements or not. My company is a central govt. undertaking and therefore, subject to frequent audits. Apart from the case discussed i want to know that "can i compell the contractor to provide 240 days facility( i mean 240/12=12 days paid leave in the subsequent year) to his employees engaged in our factory".secondly "can i withhold his monthly bills for want of compliance to this 240 days facility."
NOTE: IT IS TO BE NOTED THAT CONTRACTOR HAS BEEN AWARDED MAINTENANCE CONTRACT(IRC).IT IS NOT A MANPOWER CONTRACT.

To my opinion Factory Act applies to all workers- irrespective of their status-whether permanent, contact, casual and so on.Only condition is, one should have worked for more than 24o days in previous calender year to be able to enjoy privilege leave or earned leaves in current year at the rate 1 for 20 days

Respected Madhu,
I am in full agreement with the views expressed by you. To quote " on the other hand if the operations /business have not commenced, then the workers engaged by the contractor will not fall under the Principal -contracor's employee relationship."In a recent case the ESIC at Chennai have upheld the similiar views in the matter.May I request you to kindly elaborate on the subject , whether any ESIC circular/ guideline is there?
with respects
sr laksminarasimman

Any social security legislation like ESI, is applicable on the employer and is meant for the workers employed by him in the PROCESS OF OPERATIONS and connected therewith. Hence, in the absence any such process, the coverage will not take place. I shall send copy of verdicts in this regard soon.
As a Principal employer, Nawaz has to ensure that the contractor is granting leave with wages to your employees engaged through contractor also.
Regards,
Madhu.T.K