Can Agencies from Non-ESI Areas Like Ahmednagar Provide Contract Workers in ESI Zones Like Pune?

Could someone help me to understand whether an agency/contractor whose registration office is in Ahmednagar, where ESIC registration is not applicable, can provide manpower on contract in areas of a city like Pune where ESI is applicable? Would such an agency/contractor be exempted from paying the ESI contribution, i.e., 4.75% of the wages of employees? Please help me understand this.

Thank you.

Regards

If the establishment where the workers are engaged is covered by ESI, it is mandatory to get them covered even if the Registered Office of your labor supply establishment is not covered. In such cases, the employees will have to take insurance numbers from the establishment's registration itself.

Regards,
Madhu.T.K

Thank you so much for your reply. Do you mean to say that employees should obtain their insurance number from the Principal Employer if the labor supplier is not covered? Could you please clarify this further?

Here, there are two issues:

1. If the Registered Office is in a Non-Implemented Area

If the registered office is in a non-implemented area and some of the employees are working in an implemented area, the responsibility of coverage for such employees will not fall on the contractor. However, if the contractor has any branch office in the implemented area with a sufficient number of coverable employees, the branch office can be registered with ESI separately, irrespective of the registered office's location.

2. Compliance by the Principal Employer

In case the branch office does not qualify for individual coverage due to fewer employees, the compliance regarding these employees should be made by the Principal Employer in whose premises these workers are working for wages, provided that the Principal Employer is already registered with ESIC.

Hope I clarified your doubt. If not, don't hesitate to raise the query or call me at [Phone Number Removed For Privacy Reasons] or email me at [Email Removed For Privacy Reasons].

Regards,

Thank you very much for your useful reply. The confusion is clear, but one doubt arises in my mind: if the Principal Employer has permanent employees with wages exceeding Rs 10,000, he does not need to register for ESI. However, if such a Principal Employer needs to hire employees on contract through a labor supplier whose office is registered in a non-implemented area like Khandvi (Ahmednagar) and does not have ESI registration, can the Principal Employer take contractual employees from such a labor supplier? What is the responsibility of the Principal Employer in such a case?

Sir, thank you very much for your useful reply. The confusion is clear, but one doubt arises in my mind: if the Principal Employer has permanent employees with wages exceeding Rs 10,000, he does not require to register for ESI. However, if such a Principal Employer needs to hire employees on a contract through a labor supplier whose office is registered in a non-implemented area like Khandvi (Ahmednagar) and does not have ESI Registration, can the Principal Employer take Contractual Employees from such a labor supplier? What is the responsibility of the Principal Employer in such a case?

Though the Principal Employer has all his employees earning more than Rs 10,000, one thing you should not forget is that a unit is coverable under the provisions of the Act if it has 10 coverable employees (including employees of the contractors/immediate employers/temporary/casual/daily workers). In this case, even though the contractor has no liability, by including all the contract workers, the Principal Employer (that Unit) will be coverable under the provisions of the Act.

Once that unit is coverable under the Act, ultimately, he will be held responsible for compliance regarding all his contractor employees as well.

Hope I cleared your doubt.

ESIS Applicability in Notified Areas

ESIS is applicable to a notified area. If the premises of the work fall within a notified area under ESIS and the Principal Employer is registered under the Act, then ESIS must be paid, irrespective of the number of employees of the Contractor, provided their salaries are less than Rs. 15,000.

If the Contractor has the requisite number of employees, he can apply for a separate code if he has a long-term contract and works with the Principal Employer. Otherwise, the amount of ESIS can be paid under the code of the Principal Employer.

Regards,
Ravindra Chaubal
[Phone Number Removed For Privacy Reasons]

Hi all,

Can anyone please suggest the procedure for ESI registration (for the company)? How does one register online?

Regards,
Pinky Basak

Hi,

Can someone help me out here? If an employee has a salary of less than 15K per month, is it mandatory for the employer to apply for the ESIC benefit for such employees? Also, are these employees eligible for PF benefits? I need more clarification regarding ESIC.

Thanks.

Dear Bina,

Yes, it is mandatory to pay ESIC benefits if the gross is 15K or less, and the number of employees is at least 20.

Dear Sir, Respected Inspector,

Coming to the point, the skilled laborers are to be provided to a principal employer in an area where ESIC is implemented. One of my competitors does not have ESIC Registration because his office is registered in a non-implemented area, so he claims to be exempted from ESIC.

The issue between him and me is that I have an additional expense of 4.75% contribution to ESIC, whereas he does not. Consequently, my rates are higher compared to his rates for the principal employer.

My suggestion to the principal employer is that the laborers should be provided in premises where ESIC is implemented, unlike my competitor who does not have ESIC Registration.

Even though I have all the required documents, just because of the highest rate due to the burden of ESIC contribution, I was disqualified. What are your suggestions in this regard? Is it fair to me?

Thank you.

Respected Inspector,

Coming to the point, sir, the laborers (skilled) are to be provided to a principal employer in an area where ESIC is implemented. One of my competitors is not having ESIC registration as his office is registered in a non-implemented area, so according to him, he is exempted from ESIC.

Now, the problem between him and me is that I am having an additional expense of 4.75% contribution to ESIC, whereas he is not. So, my rates are higher compared to his rates for the principal employer. My suggestion to the principal employer is that the laborers should be provided on premises where ESIC is implemented, whereas my competitor does not have ESIC registration.

Even though I have all the required documents, just because of the higher rate due to the burden of ESIC contribution, I was disqualified. What are your suggestions in this regard? Is it fair to me?

The only way you have to convince the principal employer is by quoting sections 40 & 41 of the ESI Act, which state that the principal employer will be primarily held responsible for non-payment of statutory ESI payment in respect of all his contract/immediate employees. Since you have a separate ESI Code No., you are diluting their responsibility towards statutory obligations. Furthermore, if any unit is depriving you of this point, immediately contact the area inspector and inform him about the non-coverage of such a unit. After all, the coverage will extend the statutory provisions to the poor workers.

You can further convince the employer by stating that when compared to workers' compensation, compliance under ESI will be much easier, extending the provisions to their family members as well.

Hope you will do your level best. Additionally, I hope that the concept of implemented and non-implemented areas will also be scrapped soon, and your problem will be solved.

Regards

Dear All,

Could you please let me know what type of documents and forms need to be filled out for applying for ESIC registration for my new setup?

Hemant.

I am working in a PSU, and a contractor associated with our company is working at "Kohdar village, Tehsil Meja, District Allahabad," depositing the ESIC on the ground that ESI is not applicable at that site. I wish to know whether this area is exempted or applicable. Please provide any notice/circular/list of non-applicable areas if available for documentary evidence in the office records.

Project Details

The name of the work is: Earthwork in formation, construction of bridges from km12/000 to 25/500 (outside plant in connection with the construction of a railway siding at Kohdar village, Tehsil Meja, District Allahabad).

Regards