Confused About E.S.I and Contractor Workers: Should They Be in Our Employee Register?

Hi Akshima, I am very confused. I have read all related discussions, but I am not clear about my doubt. We have 9 employees on the company's payroll and 15 workers through a contractor. The contractor issues us a bill after deducting workers' E.S.I at 4.75%. He provides us with a photocopy of the E.S.I challan.

Questions Regarding E.S.I and Employee Records

Please provide me with detailed information on the following:
1. Should his employees be recorded in the Form 12 register where we record our employees?
2. Are we eligible for E.S.I?

Thank you.

Best regards, Akshima

Being the principal employer, even though you have only 9 employees on your direct roll, you will be covered by ESI because, for coverage purposes, all employees, whether directly employed or through contractor(s), are counted. Your contractor is right as he is producing challans regularly.

What is Form 12 of ESI?
Is it the Accident Book?

Regards,
Madhu.T.K

Thank you, sir. Form 12 is the attendance register for workers. I agree with your point, but the contractor is depositing E.S.I for his workers himself and giving us a receipt of the deposited E.S.I slip.

Clarification Needed on E.S.I Registration

Sir, please clear my doubt. As you said, we are required to get registered in E.S.I, then we have to get our workers registered. If we include all workers' names (direct workers & contractor workers), there would be double registration by us and also by the contractor. Please illustrate.

Thanks,
Akshima

I only meant that your establishment will be covered by ESI, and it does not mean that you should cover the contract employees once again. You can enroll your direct employees and maintain the register of payment of contribution in respect of them only. In the attendance register, you can include the names of direct or payroll employees only. For contract workers, you can maintain a separate register.

Regards,
Madhu.T.K

Contractor-Employed Workers and ESI Compliance

The workers are employed and paid for by the contractor. Your company has contracted with the contractor for the supply of a specified number of workers at a specified rate. As such, these workers are not direct employees of your company. Therefore, their names should not appear in the company's attendance register.

As for the submission of the ESI challan by the contractor, please ensure that they deposit the amount on their firm's behalf, showing the workers as their employees. If the depositor's name on the challan is listed as your company's name, there may be issues in the future. The best approach is for you to reimburse the contractor for the amount deposited on account of ESI (on their behalf, with proof of deposit) and issue a consolidated bill to the company.

Under no circumstances should the names of these workers appear in any document bearing the company's name, except for the bill raised by the contractor.

Regards,
TR Chhabria

Hello, my friend. Don't be confused because you have 9 employees in your company and 15 employees through the contractor. Therefore, you need to maintain separate payroll for your company employees and suggest to your contractor to maintain all the documents with respect to contract labor.

As per the Factories Act 1948

Form-12 is the Adult Register. This Adult Register should be maintained separately between company employees and contractor employees.