Navigating ESI and Workers' Compensation for Daily Wage Laborers in Construction: What Are Your Options?

We are into construction, and we have deployed laborers directly to all sites and provide weekly payments.

1. Please let me know whether they should be covered under ESI. The issue is that laborers are changing daily - new laborers are constantly coming and going.

2. Should they be covered under a Workers' Compensation policy?

3. Is there an option to cover ESI or any alternative for ESI that provides coverage without specifying names, for example, based on the total number of laborers at specific sites?

Can I receive detailed rules on this matter and how can it be practically implemented?

Regards,

Mahesh
HR Executive

Dear Rajesh,

First of all, as of today, construction labor is not covered under the ESI. You have to cover them under the W.C. Act only.

For a construction agency, only office staff are coverable under the ESI Act. In case your workers are working in a covered unit, then their compliance may be done under that covered unit code no.

Thank you.

Dear Rajesh,

First of all, as of today, construction labor is not covered under the ESI. You have to cover them under the W.C. Act only. For a construction agency, only office staff is coverable under the ESI Act.

If your workers are working in a covered unit, their compliance may be made under that covered unit code number.

Dear Sir,

ESIC is compulsory if a company is covered under the ESIC Act. Alternatively, one can also opt for Employee Compensation.

Thank you.

Dear Rajesh,

In response to your query regarding the options available to cover ESI or any alternatives for ESI coverage without specifying names but rather as a total count of laborers at specific sites.

You have the option to avail coverage for one lakh in accidental insurance and twenty-five thousand for accidental expenses over a one-year period by enrolling in any of our schemes. This coverage is provided by the Government of India through our platform. [link removed]

Please feel free to reach out to me for further assistance.

Thank you.

Dear Ashish,

Whenever an area is implemented under ESI, it is mandatory as per the Act that the unit MUST be covered under ESI. By coming under the fold of ESI, the employer can benefit from relief under other Acts, such as the Workmen's Compensation Act and the Maternity Benefit Act.

In cases where the area is not under ESI implementation and the class of workers is not covered under ESI, you must comply with the Workmen's Compensation Act.

I hope I have clarified your doubt.

Dear all,

My manufacturing unit has been covered under the ESI Act. Now, we are engaging civil daily labor for construction only of the extension building in our plant area. For these workers, we are preparing "civil Bills" towards their payments on a weekly basis.

Questions:
1. Are the daily laborers covered under the ESI Act, PF, and professional tax? If yes, how do I, as an HR professional, manage to favor both the management and the labor?
2. How should these expenses be booked for accounting purposes?

Regards,
Venkat
EMAIL: lwofficer@gmail.com

QUOTE from skgiridhar@gmail.com:
Dear Rajesh,

Reply to your question -- Any option to cover ESI or any alternative for ESI as coverage without name, i.e., as a total number of laborers in particular sites.

You can cover one lakh accidental insurance and twenty-five thousand accidental expenses for a period of one year by joining anyone in our scheme, and the cover is given by the Government of India through us - <link outdated-removed> (Search On Cite | Search On Google)

Please feel free to contact me.

Thanks

If the area where your company is situated is covered by ESI, then you have to cover them under ESI. If your area is not covered, then you can ask the contractor to cover them under W.C. Policy, which can be taken as a group without giving a name. The contractor is solely responsible for the above. If he fails, then only the principal employer is responsible.

Thanks,
N. Kannabiaran
Cuddalore

Dear Mr. Rajesh,

ESI is compulsory for all workers if your area of work is covered under ESI scheme. Mr. Rajesh, it's a simple process: just fill out Form No. 1 for every worker and deduct the ESI share from their wages. Deposit it monthly in SBI Bank A/C No. 1. With this, you are free from the tension of accidents.

Thanks,
Pawan Bhatia
9812585353

I have some information regarding ESI. This information is gathered from the cite HR site. This PowerPoint presentation might help you.

Hi to all senior members,

I need your help regarding ESI. I am working in Noida, Uttar Pradesh. I want to submit ESI Form 01 for our employees and I would like to know which documents need to be attached with it.

Thanks & Best Regards,
Arjun.

Dear All,

There is a great difference between "the Construction company" and "all other company" with regard to ESI.

Suppose your company's core activity is construction (like DLF, Parsvnath etc.), then you need to pay ESI only for your office staff alone and not for the construction workers like masons, etc. They have to be covered under WC Act.

However, if your company is not a "construction company" (i.e., you are a manufacturing company or a service company), let us say you are engaging the services of a construction company/contractor for construction/extension of a facility at your factory/office, then you have to pay ESI even for the construction workers.

Many HR managers are of the opinion that if the construction company they engage for construction has to be covered under ESI and should have a code number, then they feel that they are absolved of the ESI liability because they think that the company would pay ESI in respect of its construction laborers. This is an absolutely false notion. The construction company can neither register its laborers under ESI nor pay any contributions in respect of them. Under the ESI Act, they are only bound to cover their office (administrative) staff and not the laborers.

The contribution is taxable in the hands of the client (principal employer) who is engaging the construction company. Because every person engaged for wages directly or through a contractor inside the premises of the company is coverable under ESI as per Section 2(9) of the ESI Act.

Hence, HR managers are cautioned that, especially in the case of civil construction contractors, even if they have independent code numbers under ESI, you are advised to deduct the contribution on the wage element out of the total payment made to the contractor. Because once the work is over, he is gone, and you cannot catch hold of him. Then you have to pay from your pocket.

The statutory authorities usually assume 1/3 of the total bill value as the wage element and deduct 6.5% on that wage element. Practically speaking, 2% of the entire bill value can be deducted from the construction contractor/company before releasing the payment (like TDS). Then the amount must be remitted under your ESI code and not under the construction contractor's code.

Prevention is definitely better than cure.

Regards,

Ramesh

Regards

Dear Ikhan,

As per your presentation, I have come to know that there are a lot of discrepancies in drafting. For example, the administrative charge in ESIC, which you have mentioned as 1.16 percent, is not applicable. Additionally, you mentioned employer exemption from ESIC contribution when a worker's daily wage is less than Rs. 50. This is not mentioned in the ESIC Act.

Please take care of all these types of issues in your posts as they create confusion. Ensure that you confirm information before posting and mention the reference for the same.

Thank you.

Please let me know whether they should be covered under ESI. The issue is that there is a constant turnover of daily laborers—new laborers are coming and going frequently.

Thank you!

Well, the rule was recently amended, and Rs. 15,000/- per month is the new limit for people to be covered under ESI. It is very important for an organization to comply with this rule as failure to do so can lead to serious legal consequences.

If you are facing an attrition problem, one solution is to hire a contractor and have your daily workers employed through that party. This is a practice that my organization follows. You can search on Google or visit Cite HR for more information on this topic.

I hope you are doing well.

Nikki