Contract Workers and ESI: Are They Considered Employees in a Factory Setup?

Hello, this is my first post here, and I hope to learn a lot from this site. My boss ordered me to hire the Company Car driver on a contract of 11 months. That is all fine and dandy, but the only problem is that if he still counts as an employee of the Company, then his ESI filings need to be made as we are a factory setup. Please do let me know if he will be considered an employee even though on a contract. Also, do people on a probationary period count as employees as well?

Hello Kaur_D, ESI is compulsory for entities employing 10 or more persons (earlier it was 20, revised to 10). ESI contribution is required for all employees earning wages less than Rs. 21,000 per month. However, when counting workers, only permanent employees are considered, not hourly or daily wage contract workers.

Even though he is on an 11-month contract job (FTC), he should still be considered your employee since he can only be classified as a 'temporary employee.' Therefore, he should also be covered by the ESI scheme, and proper contributions should be remitted.

On the contrary, if he were to be employed through a labor contractor, then it's a different question.

For counting the number of employees for the coverage of ESI, all employees, whether directly employed or employed through a contractor, will be counted as employees of the establishment. For coverage of establishments, employees with a salary of more than Rs. 21,000 will also be counted, though you need to register only those employees whose salary does not exceed Rs. 21,000. The same thing applies to EPF coverage as well.