Who Covers ESI, Worker’s Comp, and Medical Insurance for Contract Workers?

Hello All, I have 3 queries.

1) Who is responsible for contributing the 4.75% employer contribution for ESI? Is it the principal employer or the direct employer in the case of a contract worker?

2) Who is responsible for paying the premium and compensation for a Worker's Compensation Policy for a contract worker? Is it the principal employer or the direct employer?

3) Who is responsible for providing medical (medi claim insurance) to the contract worker if the contractor (direct employer) does not have a medi claim policy for its employees? Is it acceptable to only ask them to get Worker's Comp? I am concerned about non-work-related illnesses; who would be responsible for them, and who would cover the costs?

Thanks,
N

Everything has to be clarified in a works contract regarding these points; otherwise, the principal is liable.

Sir, both the principal employer and the immediate employer (contractor) are responsible for compliance regarding the employees of the contractor under the ESI Act, 1948. Please refer to sections 40 and 41 of the said Act.

Immediate employer is directly linked to pay the employer contribution. However, in any case, if he fails to make payment, then the principal employer shall be liable to make payment along with interest and penalties levied on the immediate employer.

The contractor is directly responsible for the benefits and compensation of the employees working under his payroll. However, in any case where the contractor escapes from his liability, the principal employer is ultimately liable for the payment of dues. Please refer to the CLR Act for more clarity.

Dear Mr. Reddy, you may check Section 13 of the ESI Act 1948. However, an abstract is provided below:

Immediate Employer Definition

(13) "Immediate employer" in relation to employees employed by or through him, means a person who has undertaken the execution on the premises of a factory or an establishment to which this Act applies or under the supervision of the principal employer or his agent, of the whole or any part of any work which is ordinarily part of the work of the factory or establishment of the principal employer or is preliminary to the work carried on in, or incidental to the purpose of, any such factory or establishment and includes a person by whom the services of an employee who has entered into a contract of service with him are temporarily lent or let on hire to the principal employer [and includes a contractor].

Thank you for your responses. Could you also specifically comment on point 3 in relation to a medi claim policy? If we have a handful of contract workers on our premises who do not fall under the ESI provision as their salaries are above 15,000/month, I think the next best option would be to have the contractors take a Worker's Compensation policy. Since Worker's Comp only covers injury, death, and disablement caused during the course of work, a medi claim policy would also be good as it provides cover for general day-to-day illness and hospitalization. Under ESI, the coverage is wide and it covers illness, hospitalization, as well as injury, death, and disablement.

However, I am wondering if it is necessary to have the contract employees have a medi claim policy. It is a value-add and a good benefit, but as a company (principal employer), are we liable under law to have benefits in the form of a medi claim policy? Isn't it enough if they are covered under Worker's Comp? In this way, our liability to ensure the employee's safety while working on the premises is covered.

Please comment.

Regards, N