Are Loaders and Unloaders Eligible for ESI Coverage at ABC & CO? Let's Discuss

Please clarify, ABC & CO is a running wholesale rice business. Here, 30 employees are working in the establishment, and they are covered under the ESI Act. However, for the transportation of rice packages, they have engaged loaders and unloaders from outside who are available to anyone. ABC & CO does not include their names in the salary register, and there is no contract agreement between both parties.

Question on ESI Coverage

My question is, should ESI cover those employees?

Thank you.

Regards.

The persons engaged for the loading and unloading work, which is related to or connected with the activities of the establishment covered under the said Act, are also covered under the Employees' State Insurance Act, 1948, and the rules and regulations framed thereunder. The principal employer is required to ensure compliance in respect of these individuals as per the provisions of the said Act.

ESI and PF Loopholes and Court Judgments

It's a loophole under ESI as well as PF. Both acts provide that even if any employee works for a single day, ESI & PF shall be payable in respect of such employee.

However, in a number of judgments, the Apex Court has clearly contended that if the identity of employees is not established, meaning thereby if an employee works for hours and leaves, like a loader/unloader, then ESI shall not be applicable.

Case Study: Hassan Milk Cooperative Society vs. AD ESI

In the case of Hassan Milk Cooperative Society vs. AD ESI, the Apex Court has pointed out that in cases where employees are involved in the distribution of milk through transporters at different outlets, the principal employer shall not be liable for ESIC contributions. Furthermore, if the beneficiary itself is not identifiable, then the ESI Act will not be applicable, and contributions shall not be payable in respect of such employees.

Specific Cases: Rickshaw Pullers and Truck Operators

For rickshaw pullers, hathrairy pullers, and truck operators (who bring labor with them), no contribution is payable on the lump sum amount paid by the employer, including loading/unloading charges, and no separate wages are paid by the employer.

So it's a matter of debate.