Dear Korgaonkarji,
(1) Thanks for expressing your concern about non-coverage of construction sites under provisions of ESI Act, 1948. In this connection, I may submit that the said Act initially covers only "factories" as defined under Section 1(3). However, it enables and empowers the appropriate Governments to extends the provisions of said Act to other class or classes of establishments Sec. 1(5). You may also be well aware that different State Governments have exercised their powers under this enabling provisions and have extended the provisions of Act to other classes of establishments including to "shops". By virtue of various court judgments, the offices of the builders/construction agencies which falls in implemented areas and employ minimum number of employees as mentioned by me in my comments as above are treated as shops and coverable under said Act. Therefore, I may mention that said Act no where states about coverage or non-coverage of "construction project sites" and therefore, one cannot find answer to this question in the Act.
(2) I personally feel that the instructions issued by the ESIC vide circular 4/99 as referred by you are correct on account of the reasons explained in the circular itself. In case, there is any deviation from said circular at any level-locally or at region basis, any employer or his official can point out the violation, in my opinion, to the highest authorities in ESIC.
(3) Further, I think, the main reasons for non-coverage of the "construction site projects" is that such establishments are treated as separate class of establishments and generally fall under unorganised sector. The construction site started today will definitely mean that the employees engaged therein will be engaged from unorganised sector in groups and will be found nowhere once said project is completed. In social security schemes, the existence of recordings of contributions, the clarity on eligibility conditions of insurable employment, satisfying of the terms and conditions of payments of different benefits under such schemes are essential factors. Therefore, difficulties are faced by the social security providing organisation in claiming the contributions, in maintaining records relating to payments and eligibility conditions and satisfying the facts about eligibility of payments of benefits. The situation where the payments of contributions in respect of any employee is difficult to ascertain and the terms and conditions to satisfy the eligibility for payments of benefits under social security schemes is not adhered to, makes the schemes not financially viable.
(4) The case of "construction projects sites" is not an isolatory case. Similar is the position in respect of coverage of "home workers" generally employed in beedi manufacturing units. Such home workers in beedi manufacturing industry are also not covered under Act even though there may be some court judgments declaring such home workers doing work in the supervision of principal employer and qualified to be as "employee" under some other enactments viz.EPF & MP Act, 1952.
(5) I feel that policy makers may be keeping in mind the conditions under which construction workers work and may be feeling urgent need for social security benefits to such workers, but in view of prevailing conditions in India, perhaps it will take a long time to reach at a stage where social security benefits will be available to all working class.
(6) I think, as a practitioner and expert in labour laws, you can send your views to the appropriate authorities on coverage of "construction project sites" for the welfare of such workers.