Is Our Railway Contractor Covered Under ESI? Seeking Clarity on Recent Amendments

Our company is a large steel manufacturing factory where the bulk of materials are received and sent through railway operations. For this purpose, we have engaged a contractor to oversee the operation and maintenance of the locomotive (i.e., used internally).

ESIC Amendment Overview

Referring to the ESIC Amendment dated 01/06/2010, it states, "For clause (12), the following clause shall be substituted, namely: '(12) factory means any premises, including the precincts thereof, wherein ten or more persons are or were employed on any day of the preceding twelve months, and any part of which manufacturing is being carried out or is ordinarily so carried on, but does not include a mine subject to the operation of Mines Act, 1952, or a railway running shed.'"

Query on ESI Coverage

My query pertains to whether engaging a railway contractor for internal railway operations is covered under ESI or not.

Please find attached the scanned copy of the Amendment dated 01/06/2010.

Regards,
Ahmad Siddiqui

I think the contractor is like any other contractor. For example, a crane contractor engaged for internal movement is a contractor for all purposes. Thus, the act is applicable to the contractor who is engaged for railway operations.

Regards,
Gajare MB Consultant Mumbai

In my opinion, ESI coverage for the contractor is necessary since he is working in your factory premises, and you are covered under the ESI Act. The excluding clause, which pertains to a mine or railway running shed, is not applicable in this case. The contractor is involved in the operation and maintenance of rail in a premises where manufacturing activity is ongoing, and it is not a location with regular rail movement. When the rest of the area is included in the coverage, excluding a minor portion from ESI coverage would not be logically sound. Due to the risky nature of this operation, it would be advisable to ensure coverage.

Regards,
KK