Navigating Employee Compensation Claims: Are We Liable for Hospitalization Costs?

Dear Respected Seniors and Fellow Members,

Greetings of the day! I need your advice on the case given below.

Summary

An employee of our organization was deputed with our client (principal employer). During the course of his employment, he met with an accident while driving a vehicle on the road, which led to his hospitalization. He suffered grievous injuries and was admitted to an ESI Hospital. There, he was treated and given all the medical help he required. However, after some time, our client, i.e., the principal employer, did not pay the salary because the employee was hospitalized, and consequently, our company stopped submitting the contribution to ESIC.

As a result of the above, the employee was restrained from receiving treatment from ESIC and had to seek medical assistance from a private hospital, incurring substantial expenses. Now, through the Labour Commissioner, he is demanding a significant amount of money as compensation from us.

Questions

1. Is the employee justified in the claim he made?

2. Secondly, are we, as the immediate employer, liable to pay any compensation because we did not receive any amount from our client, i.e., the principal employer, for ESIC contribution? If yes, or not, then why?

3. Is the employee justified in the claim as he was covered under ESIC, and hence, employee compensation cannot be invoked since, as per ESIC, the Employee Compensation Act is not applicable if ESIC is applicable.

4. If we or the principal employer are liable for any claim to be paid to the employee, on what basis can we reduce the amount requested by the employee?

5. Can I get a judgment/case law to support our case?

I would request all of my learned friends to answer the query point by point if possible to bring a clear picture to this and also please feel free to raise any point in this case that I missed or any other input/suggestion you have for this case.

Thanks in Advance

Regards, Learner (Rohit)

Employer's Responsibility in Employee Accident Cases

First of all, as the employer of the person who met with the accident, you should not have stopped payment of contributions even if the Principal Employer has stopped payment of wages. The Principal Employer, who has no employer-employee relationship with your employee (who met with the accident), can certainly stop paying for the days during which he remained absent. But as your employee, you should not have stopped paying his salary and ESI contributions. By making that mistake, if the injured employee had to seek treatment from outside, you are liable to compensate him under the provisions of the Workmen's Compensation Act. This is why the employee has approached the Labour Commissioner/Commissioner for Workmen's Compensation. Amidst all of this, the main question is why did the ESI stop giving him treatment?

Your claim that you did not make payment because you did not receive it from the Principal Employer is not maintainable because it is not the responsibility of the Principal Employer to pay ESI for an employee who has not reported for work. It is, without exception, your responsibility. If you believe that you cannot keep an employee who is not engaged, then terminate him. However, terminating an employee while he is undergoing ESI treatment is not possible. If you think that you, as the Contractor, are to be supported by the Principal Employer for everything, you are mistaken. If you believe that the Contractor is only supposed to collect a substantial amount of service charges from the Principal Employer, you are mistaken. It is to handle such incidents that you are compensated for.

Naturally, the ESIC should not have ceased his treatment. Therefore, you can visit there and inquire why that happened and take action against ESIC. On the other hand, if the employee has voluntarily discharged himself from the ESI Hospital (which may also occur), then consider it as evidence. Present this to the Labour Commissioner and state that he is covered by ESI and you will not be liable as per the provisions of other laws (Workmen's Compensation Act). If the Labour Department is satisfied, you will be absolved from the proceedings. In that case, you can take further steps against the employee on the grounds that he fraudulently represented and made false statements against the employer, constituting misconduct. Based on this, you can terminate him following an inquiry. It is also advisable to inform the ESIC about the incident. Conversely, if the ESIC discharged him forcefully, file a representation against the Corporation.

In any case, the Principal Employer bears no responsibility since you have ceased contributions from your end.

Regards,
Madhu.T.K

Thank you for taking the time to reply to this! I have two queries.

Firstly, Employee Coverage Under Workmen/Employee Compensation Act

In this case, the employee was precluded from continuing treatment under ESIC. Does that mean he will automatically come under the Workmen/Employee Compensation Act? If yes, could you please share the relevant statutory aspect or case law to support this?

Secondly, Action Against ESIC

On what basis can I take action against ESIC, as ESIC can argue that since contributions were not received, they were not liable to continue treatment? Is there a way out in our favor?

Please reply!

Thanks,

Rohit

ESIC Treatment and Employer Liability

ESIC cannot send an inpatient out just because contributions in respect of the employee have not been paid by the employer. Moreover, even in the case of an employee becoming out of coverage while undergoing treatment, the ESIC is said to continue giving him treatment until his treatment is over, provided contributions in respect of him have been paid for at least half of the working days in the contribution period. This is a case of accident benefit, and the question of contribution and benefit period will not arise.

In case, due to any hidden rules (a thorough reading of all the provisions is required to arrive at a decision, for which you are advised to consult a good lawyer), the ESIC is justified in refusing treatment, then as an employer, you are liable under the Workmen's Compensation Act.

Regards,
Madhu.T.K