Are Municipal Workers Covered by the ESI Act? Seeking Clarity on Contractor Inclusion

Municipalities are covered under the ESI Act either under the definition of a Factory u/s. 2(9) or under the definition of an establishment u/s. 1(5) of the ESI Act. However, there is no blanket exemption of coverage for Municipalities under the provisions of the ESI Act, as per my interpretation.

Learned members may kindly shed some light on this subject, considering various contractor workers who are employed in Municipalities across different departments.

Applicability of the ESI Act to Government Employees and Contract Labor

Section 1(4) of the ESI Act specifies that it shall not apply to government employees who are otherwise in receipt of benefits substantially similar or superior to the benefits provided under the Act. Section 1(4) is reproduced below:

THE EMPLOYEES’ STATE INSURANCE ACT, 1948
[Act No. 34 of 1948]
19th April, 1948
An Act to provide for certain benefits to employees in case of sickness, maternity, and employment injury and to make provision for certain other matters in relation thereto.

(4) It shall apply, in the first instance, to all factories (including factories belonging to the Government) other than seasonal factories. Provided that nothing contained in this sub-section shall apply to a factory or establishment belonging to or under the control of the Government whose employees are otherwise in receipt of benefits substantially similar or superior to the benefits provided under this Act.

Coverage of Contract Labor under the ESI Act

However, what is not applicable to government employees does not ipso facto exclude applicability to contract labor, as they are NOT in receipt of benefits substantially similar or superior to the benefits provided under the ESI Act. The Municipal Corporations resort to outsourcing water pumping stations, sewage filtration plants, etc., on contracts, and the contract labor engaged in such places do not get any benefit of government health and other schemes, so their coverage under ESI is called for.

But it seems there is no point blank judgment which clearly states that municipalities are covered under the ESI Act.

But there are judgments regarding the coverage of Sewage pumping stations and water pumping stations as factories under the Factories Act of 1948. By further extension, they would be covered under the ESI Act as well.