ESI Coverage for Contractual Construction Workers: Are Subcontractor Employees Eligible?

ESI applicability for construction workers on contractual projects: If the principal employer is covered under ESI and gives construction work to a subcontractor, then are the subcontractor employees also eligible for ESI?

Construction workers working at sites are not covered by ESI, whereas workers who report to the office of the construction company are covered.

Regards,
Madhu.T.K

Sir,

To correct you, there has been a recent circulation in January 2011 from the Director of ESIC at Panchdeep Bhawan, Delhi to all SOs and ROs, stating that now construction site workers shall be covered under the ESI Act and can avail medical benefits. With this circulation, the ESI Authorities have rescinded their own circular from the year 1999.

The survey for the same is ongoing, and the coverage of such site work will now commence.

Responsibility for ESI Payment

Who is responsible for paying ESI, the contractor or the principal employer?

Regards,
Avinash Pawar

Yes, the construction workers at the site are also covered as per the new policy of ESI. The primary responsibility for coverage and payment of contributions lies with the contractor. However, if the contractor fails to pay, the principal employer should pay on behalf of the contractor and can deduct the amount paid from the contractor's payable amount.

Regards, Madhu.T.K

Yes, the construction workers at the site are also covered as per the new policy of ESI. The primary responsibility of coverage and payment of contribution is on the contractor. Still, if the contractor does not pay, the principal employer should pay on behalf of the contractor and can deduct the amount paid from the amount payable to the contractor.

Managing Worker Changes

Regarding the situation where workers keep changing, for example, one day Ram is working, and the next day, Shyam is working, it can be challenging to manage. Especially when there is no specific information about the workers.

Regards,
Madhu.T.K

There is no practical way out but to engage a regular employee to do the work related to ESI, whose primary, rather sole duty will be to call each new employee to the cabin and register him under ESI and take a printout of a temporary ID card and hand it over to that employee. It is up to him to decide whether to continue on the site and if continuing, to go to the ESIC with his family members, take a photograph, and get a smart card. I do not think that these daily wagers will come with their photographs when they come for their work. If so, we are stuck. But one thing is clear, even if you do not register, we should be prepared to pay the contribution at the prescribed rate of 6.5% of wages paid. That's all.

Regards, Madhu.T.K

If we have an EC (WC) Policy in place of ESI, are we still mandatorily liable to pay the ESI contribution? An early reply is awaited.

Regards,
Sandeep K. Rai

Yes, even if you have a Workers' Compensation (WC) policy, you must ensure the coverage of eligible employees under ESI. In fact, for employees covered by ESI, you do not need to take any WC policy because any liability concerning such employees will be handled by the ESIC.

Regards,
Madhu.T.K

No matter what you have, WC or EC eligible employees are always covered under ESI. WC is for those who are not covered under ESI and meet with an accident or death.

Regards,
Siddhartha Guhathakurta
GM-HR

Dear Sir,

As per the new ruling of the Supreme Court, where the Building Association of India filed a case and obtained a stay order until further notice, the construction workers have been excluded from ESIC contribution and benefits. Kindly find the notification for further reference.