Navigating ESI Act Registration: Is It Necessary for Our Transmission Line Project?

Dear Sir, My company has undertaken to lay transmission lines for approximately 500 km, covering around 15 districts of Uttar Pradesh. EPC contractors have been awarded the work and have been issued Form V.

Question on ESI Act Registration

My question is whether registration under the ESI Act 1948 is necessary for us as a Principal Employer, or if the Workmen's (Employees') Compensation Act 1923 will suffice. Where precisely is ESI applicable? Our work will span kilometers in different districts.

Kindly shed some light on this and assist me.

Regards,
Nitin

ESI Registration and Contractor Responsibilities

First of all, you should have ESI registration, and then the contractor should also have their own ESI registration. In respect of employees engaged through the contractor, the contractor will take care of contributions, etc. As the principal employer, it will be your responsibility to ensure that the contractor is paying the contributions on time. If the contractor fails to pay the contributions, it will become your liability to pay it in the first instance and recover the amount so paid from the amount payable to the contractor.

ESI Applicability and Alternatives

If the work is being carried out in a place that is not an ESI notified area, then ESI will not be applicable. In such a scenario, you may opt for a policy under the Employees' Compensation Act.

Regards,
Madhu.T.K

We have our office in Lucknow, which is an ESI-notified area. However, the work will be carried out in different remote areas of various districts, which may or may not be ESI-notified areas. Furthermore, we do not have any office establishments there. Therefore, getting registered under ESI would be a difficult task to comply with. I am still confused. Please guide.

Regards,
Nitin

ESI Coverage Decision Based on Work Location

In such a scenario, the office to which the employees are attached will decide whether the employees come under ESI or not. If they work for at least seven months in an area not notified by ESI, you can exclude them from ESI; otherwise, you will have to provide them with coverage.

Regards,
Madhu.T.K

Is it the office of the company that decides the criteria for the applicability of the ESI Act, or is it the location of work? Suppose a company has its office in an ESI-implemented area, and employees are working in an area where the ESI scheme is not implemented. In that scenario, all the workers attached to this office shall be covered by the Act, even those working in non-implemented areas. I don't think so because then where will they get benefits, as there are no ESI facilities, even though they are paying contributions every month.

Secondly, if the office is in a non-implemented area but employees are working in an implemented area, then only those employees working in the implemented area need to be covered under the scheme.

As per my understanding, it's the job location as well as the office location that decides the applicability of the scheme. Could you shed some light on this?

I think if the employer doesn't have an office in an implemented area, then a code or sub-code can be taken at the address of any employee for compliance purposes.

Doubt on ESI and EC Act Applicability

Third, I have one more doubt: Where the ESI Act is applicable, does the EC Act not apply? As per my understanding, there are no such provisions in both acts. It is only Section 61 of the ESI Act that bars entitlement to similar and the same kind of benefits provided by the ESI Act under any other act. But in the case of death, the ESI Act does not provide any compensation to the family or dependents; it only prescribes dependent benefits in terms of periodical payments, i.e., pension.

However, the EC Act, which provides compensation for dependents in the event of death during the course of employment, does not provide any kind of pensionable benefits.

So, would it be better to take an EC policy in the case of death to receive compensation and also cover the employee under the ESI Act for treatment or specialized facilities for dependents or family members?

I understand that for compensation for permanent disability/temporary disability, an employee can only benefit under one act, ESI/EC Act, and Section 61 of the ESI Act will come into operation. But in the case of death, Section 61 cannot bar compensation for death.

Please share your views on this!

Regards,
Sanjay Kumar

Clarification on Compensation Under WC Act and ESI Act

Your apprehensions about the quantum of compensation payable under the WC Act and ESI Act are valid. However, the reality is that concerning employees covered by ESI, the responsibility for compensating employment injuries and deaths resulting from employment injuries lies solely with ESIC. ESIC is committed to ensuring payment according to the Workmen's Compensation Act and not below that standard.

Coverage for Employees in Non-Implemented Areas

In terms of the coverage of employees working in non-implemented areas, I believe the same notification that applies to touring employees should be applicable. Please find the attachment.

Regards,
Madhu.T.K

Dear Madhu, Thank you for your reply. You missed the attachment.

Dependent Benefit and Compensation Under EC Act

Secondly, is the dependent benefit, i.e., periodical payment, equal to the quantum of compensation payable under the EC Act? The kind of compensation under the EC Act is one-time, based on the formula given in the Schedule. However, the rate of dependent benefit provided under the ESI Act is something different as per Regulation 58.

I have also gone through Section 53 of the ESI Act, which provides a bar against any compensation to the injured person or dependent from the employer under the EC Act. But the last wording of this section is again confusing: "in respect of Employment Injury by accident arising out of employment."

So, again, it is a bar against the compensation for injury, not for death compensation.

Regards, Sanjay Kumar

Understanding the Employees' Compensation Act

Obviously, the Employees' Compensation Act provides compensation to employees who have experienced employment injury or death due to employment injury only. That is why Section 53 has reproduced it as "...resulting from employment injury."

Regards,
Madhu.T.K

Since this relates to ESI, a similar notification must be present in all states.

Madhu.T.K