Navigating PF and ESIC Benefits for Short-term Contract Laborers in Civil Works Projects

I am working with an engineering firm that is involved in Water Treatment, Sewage Treatment, and Water Supply projects for Civil Works at various locations in India. We are employing a large number of contract laborers for the work, who are hired through a local contractor or a contractor. These laborers are paid on a weekly or fortnightly basis in cash. We aim to ensure compliance with PF and ESIC for these workers through a Contracting Agency appointed by us, but we are encountering some challenges.

Most of the workers are engaged for a duration of 3 months or less. How can these workers avail benefits of PF and ESIC? Additionally, these workers often request advances due to various reasons.

If we include the advance amount in the contract labor bill, would the workers still be eligible for benefits?

I look forward to a suitable response.

Regards,
Sulakshana

Coverage of Workers Under EPF and ESI

As per statute, workers engaged for even one day are to be covered by EPF and ESI. Therefore, the contractors cannot escape from their liability (or rather the liability of you as the principal employer) to contribute towards these social security schemes. However, they can exclude employees engaged at project/construction sites from the coverage of ESI because, as per ESIC notification, employees engaged at construction sites are excluded from coverage. No such exemption is, however, available for EPF. If the workers are not prepared and their demand is very high, you will have to bear the entire cost of ESI and EPF.

Regards,
Madhu.T.K

Dear Mr. Madhu,

As per statute, workers engaged for even one day are to be covered by EPF and ESI. Therefore, the contractors cannot escape from their liability (or rather the liability of you as the principal employer) to contribute towards these social security schemes. However, they can exclude employees engaged at project/construction sites from ESI coverage because, according to the ESIC notification, employees engaged at construction sites are excluded from coverage. No such exemption is, however, available for EPF. If the workers are not prepared, and at the same time, their demand is very high, you will have to bear the entire cost of ESI and EPF.

Thanks for your response and guidance, which shall be very helpful. Also, please let me know under which clause the exemption is provided under ESIC and whether these laborers should be covered under Workmen's Compensation.

Regards,
Sulakshana

ESI and Workmen's Compensation for Construction Workers

There is a notification in this respect which I had posted on CiteHR itself, perhaps many months back. You can search for it by entering these words: "ESI on construction workers."

In respect of any employee not covered by ESI schemes, the employer is liable to compensate following the provisions of the Workmen's Compensation Act. The same applies to construction workers as well. Therefore, it is advised to take insurance for all employees who are engaged at your sites.

Regards,
Madhu.T.K