ESI Contributions on External Job Works: Is This Common in Your City and How Do You Handle It?

Of late, ESI inspectors here in Chennai are charging ESI contributions on amounts paid for job works done outside the employer's premises. Is this action accepted in other towns/cities? Is there any way to resolve this problem?

Dear Ramesh,

Though you have not clearly mentioned the details, yes, that's true in other cities as well. However, there are certain manipulations that one has to do while working outside the employer's premises, which may be carried out by the Incharge where they are working other than the employer's premises. Additionally, one has to provide certain declarations on one's behalf. Such declarations vary from place to place and depend on factors such as the type of work, number of employees, skill of employees, etc.

Regards,
KIRAN ARORA

Hi Ramesh
Coverage of workers engaged by the outside agencies / job contractors in connection with the work of the principal employer.
The Hon'ble Karnataka High Court
Hon'ble Madhya Pradesh High Court
Hon'ble Supreme Court of India
Hon'bel Madaras High Court
have given their clear cut judgments that the workers of the outsourcing agencies / job contractors does not come under the definition of section 2 (9) of the ESI Act and no contribution is payable.
If u want any further info let me know.
Regards
Sushma

Hi, Ramesh,

At present, all the actions on outside labor charges are stayed by the DG ESIC. Kindly prove to the inspector that there was no supervision of the company during the process at outside. If further information is needed, please contact me at 09821078457.

Hiren Chheda

Dear Friends,

I think it is a good topic for discussion, but I am not getting it clearly. Can anyone help me understand? According to me, it is about employees working outside the premises of the employer. Please clarify this and help me understand your replies to the question that has been posted.

Regards,
Amith R.

Hi Amit,

The topic is really very serious and interesting.

If the principal employer has engaged some workers through a contractor or outside agencies, it is the responsibility of the outside agency to deposit the ESI Contribution of the workers engaged by the contractor.

However, what the ESI authorities are doing is issuing notices to the principal employer for not submitting the ESI Contribution of the workers engaged by outside agencies. In fact, this is the responsibility of the outside agencies/job contractor, but in ESI, nobody bothers about it.

In the case of outsourcing work/job entrusted to outside parties where no supervision is involved by the principal employer or by his agent, the persons to whom the outsourcing has been done or their employees will not become the employees of the principal employer automatically. Hence, any amount paid to the contractors to whom the job work is entrusted, no contribution is payable on the said amount by the principal employer.

However, ESI authorities are not taking care of the judgments given by the various High Courts and the Honorable Supreme Court of India; they are only minting money by issuing notices to the principal employer.

I hope the matter is clear to you.

Best Regards,

Sushma

Dear Sushma,

Thank you for clarifying this for me. In such cases, what remedies are available for employers? It is crucial to understand how to address these situations to assist the employer in navigating potential challenges that may arise in the future. Let's collaborate to explore possible solutions and share them here so that everyone can be informed. If anyone has insights on this matter, please feel free to respond. I look forward to your feedback.

Additionally, I have a query regarding the maintenance of all relevant documents submitted by the contractor. Can the employer retain and present these documents during an inspection by the ESI inspector? Kindly provide clarification on this matter and explain the potential outcomes in such instances.

Regards,
Amith R.

Hi Amit

In the case of my company we are fighting against the ESIC in High Court and The Hon'ble Court was pleased to order deposit of 50% of the demand.

Our Labour Law Consultant is preparing to fight against ESIC in the Hon'ble Supreme Court of India and for this purpose he is contacting with the employers.

Amit as you are talking about remedy so dear all the judgments of various Hon'ble High Court and Hon'ble Supreme Court are there. But they (ESI Corporation) are not ready to listen or see anything. They are just minting the money and harassing the employer mentally and physically.

I think you are interested in this topic. So for your reference here is the copy of circular. I think it will be useful for most of the cite members.



Respected Members

We feel pleasure to announce that the ESI Authorities at Head Quarter, Kotla Road, New Delhi-110001 has agreed to implement the judgments of the Hon'ble High Court and Hon'ble Supreme Court of India for not claiming ESI contribution on job work got done by outsourcing agencies and independent contractors doing work for the principal employer outside the premises. We also thank to Sh. Mangat Ram Singhal, Minister of Industries and Labour N.C.T Delhi who was kind enough to take up the matter with the Director General on our behalf and convinced the Director General and high official of the ESI Corporation for implementation of the judgments the Hon'ble High Court and Hon'ble Supreme Court of India that ESI Contribution is not payable by the principal employer for the work executed by outside agencies/ Labour Contractor. It has been reliably learned that ESI authorities at Kotla Road have instructed the Regional Directors not to proceed with claiming contribution as stated above. However final notification from the ESI Head Quarter is expected soon. We will appraise further developments shortly.

We thank our Labour Law Advisor Sh. R.C. Malhotra- Ex Officer of ESI Corporation for his cooperation / knowledge for drafting all correspondence on our behalf with the higher authorities.

With Regards

Yours Sincerely

H.D. Joshi

Hony. General Secretary

Thanks & Regards

Sushma

Hi Sushma,

ESIC has issued final directions on outside labor charges, and I am herewith attaching the scanned copy of the same. However, if the document is not clear, please contact me at 09821078457.

Regards,

Hiren Chheda

Hi Hiren,

I also have the same issue and want to upload that notification for Amit, but I am not able to upload it.

Thank you,
Sushma

Hi Sushma / Hiren,

Could either of you please email me the latest notification/circular from ESI regarding contributions for outsourced jobs? My ID is [IMG]https://www.citehr.com/misc.php?do=email_dev&email=dmlrYXNjY29AZ2 1haWwuY29t[/IMG].

Thanks in advance,
Vikas