Vicarious Liability of Principal Employer
In respect of certain statutory employment rights of contract labor engaged within the zone of work of the establishment for which their services are hired, the Principal Employer is charged with vicarious liability under Section 21 of the CLRA Act, 1970.
Compensation Under the Employees' Compensation Act, 1923
Compensation under the Employees' Compensation Act, 1923 for any injury sustained due to any employment accident, including death, is one such liability fastened on the Principal Employer (PE).
Insurance Coverage for Contract Labor
However, it is not obligatory for the PE to take up insurance for the contract labor for such a contingency, given the absence of an employer-employee relationship between the PE and the contract labor. Hence, it is sufficient that the PE ensures insurance coverage by making it an essential condition of the service contract between the contractor and themselves, compelling the contractor to obtain a suitable insurance policy under the EC Act for the respective project undertaken.