Navigating ESI Coverage and Accident Reporting: What Should Employers Know?

Questions Regarding ESI Coverage

1. If a contract laborer is paid Rs. 600 per day, resulting in monthly wages of Rs. 15,600 (i.e., 600*26), will he be exempt from ESI coverage? If the same individual receives wages of Rs. 12,000 for 20 days at Rs. 600 per day in the following month, will he once again fall under the purview of ESI?

Furthermore, if a contractor indicates that his laborers are receiving monthly wages of Rs. 18,000 to be outside the scope of ESI, but consistently pays them below Rs. 15,000 gross per month due to proportional deductions for absenteeism (e.g., pays Rs. 12,000 for 20 days of attendance, calculated as 18000/30*20), will the individual be exempt from ESI coverage?

Accident and ESIC Involvement

2. My second question pertains to one of our contracted laborers who had an accident within our factory premises during work and was taken to an ESI hospital for treatment. The contractor holds their own ESI code. The incident was reported to ESI through an accident report submitted by the contractor. Now, ESIC officials wish to visit the accident site and have requested the contractor to make arrangements. Since the contractor has their own ESI code, they should directly engage with ESIC. Why is ESIC involving us and requesting to visit our premises? As the Principal Employer, what should be our stance?

Regards,
DG

Applicability and Coverage Under the ESI Act

For applicability and coverage under the ESI Act, it's the monthly salary, i.e., ₹15,000 gross per month. "Month" means 26 days of salary. So, if any employee's per-day salary multiplied by 26 exceeds ₹15,000, then ESI is not applicable. If on any day or days the employee's gross salary is less than ₹15,000, considering the daily wages for 10/20/22 days, then ESI shall still not be applicable. The employee shall be out of coverage based on their monthly wages.

ESI Authority Rights and Inspections

Regarding your second question, even though the contractor has a separate ESI Code and is completing all formalities, the ESI authorities have the right to inspect the cause of accidents, conduct spot verifications, etc. There is no harm in this; it falls within the rights of the ESI authorities as employees/workers in your establishment/factories are covered by the Factories Act as well as the ESI Act. You are the principal employer for such employees.

Regards