Are Construction Workers at Vendor Factories Exempt from the ESIC Act? Seeking Clarity

Dear Sir/Madam,

We are in the construction industry, and our workmen are working in a vendor factory where the Factory Act is applicable. We are also exempt from ESIC as a construction industry.

Kindly suggest whether our workers who work at the vendor factory are exempt from the ESIC Act.

Regards,
A Singh

The construction industry is not exempt from ESIC, especially if the work is done in a factory. You will need to get registered or ask the Principal Employer to cover the workers under his own code as contract workers.

Hi Alok, Please note that the construction industry is not exempt. As of today, there is a stay from the Honourable Supreme Court regarding contributions to the ESI amount, and ESIC is not extending any benefits to construction workers. However, from an organizational perspective, registration under ESIC is mandatory. ESIC may apply if your workers are working on the factory premises, and the HR/Compliance person or authorized personnel might insist on contributions to ESIC.

In some factories, ESI is not mandatory for construction workers, but most factories are requiring ESIC contributions.

Applicability of ESIC in the Construction Industry

As per the Employees' State Insurance (ESI) Act, 1948, the applicability of ESIC (Employees' State Insurance Corporation) is based on the number of employees employed in an establishment. The Act applies to factories or establishments where 10 or more employees are employed. However, for certain specified industries or establishments, the threshold for the number of employees may be lower or higher.

Since you are in the construction industry and your workmen are working in a vendor factory where the Factory Act is applicable, it is essential to determine the total number of employees working in the establishment, including both your workmen and other employees of the vendor factory. If the total number of employees, including both yours and the vendor factory's employees, is 10 or more, then the vendor factory would be required to comply with the ESI Act.

Exemption from ESIC in the Construction Industry

As a construction industry, if you are exempted from ESIC, it means that you are not required to provide ESIC coverage to your own employees. However, if the vendor factory meets the criteria for ESIC applicability based on the number of employees, they would have to provide ESIC coverage to their employees, including your workmen who are working at their premises.

In summary, the exemption from ESIC as a construction industry does not automatically exempt your workmen from ESIC if they are working in a vendor factory that falls under the purview of the ESIC Act due to the number of employees. The vendor factory would be responsible for providing ESIC coverage to its eligible employees, including your workmen, if the threshold for ESIC applicability is met.