I would like to high light some points regarding the issue. That is when a casual worker is engaged (not employed) for a work not directly connected with the business of the establishment, the payments made to him shall not attract ESI contribution. The verdicts in ESIC, Trichur Vs. Poopally Foods, Alleppy [1985 (1) LLJ 10(Ker)] , Parle Bottling Co (P) Ltd Vs. Regional Director, ESIC, Bombay [ 1995 III LLJ (suppl) 394(Bombay] and ESIC Vs. Premier Clay Products [2001 III LLJ (suppl) 1356 (SC)], show that coolies and others who help permanent workmen and salesmen in loading and unloading of materials and other goods can not be regarded as employees.
I would like to draw the following interpretation of the terms ‘employed’ and ‘engaged’ of Punjab and Haryana High Court in Employees State Insurance Corporation v. Malhotra and Co., Chandigarh, (1981 Lab I.C. 475),
“In fact, a clear distinction must be made between a casual worker and a person engaged for a specific item. The distinction is between employment and an engagement. If a person is engaged casually for a process unconnected with the operations of the establishment or some work which does not form integral part of such operations, he will not be an employee. There is no relationship of employer and employee. The employer has no control to take disciplinary action. He would only be engaged for the purpose”.
The Kerala High Court in the case of Regional Director, E.S.I. Corporation v. P. R. Narahari Rao, (1986 Lab I.C. 1981) took note of this distinction and held as under:
"The oft repeated distinction is that between an "employment" and "engagement". If a person is engaged casually for a process unconnected with the operations of the establishment, or some work which does not form the integral part of such operations, he may not be an employee since there would be no employer-employee relationship between them only in consequence of the casual engagement for purposes unconnected with the main operations of the establishment. On the other hand, if a person is employed, though casually and for a very short period of time, but in connection with the processes which are integral and connected with the incidental or preparatory to the operations of the establishment, then he may be an employee entitled to coverage under the Act. The Courts have made a still further distinction to the effect that in case of employment, however, short it be, the employer shall have the right of disciplinary control, right of supervision and oversight of the quality of and the manner in which the work is to be performed etc. Further ramifications have been evolved by the decisions to the effect that the employer shall have control over the employee in the sense that the latter shall be obliged to report for duty at specified working hours and seek and obtain permission for absence on any account, and that the employer shall have the power to grant or refuse leave etc."
Therefore, a casual labour who has no fixed time for reporting or in respect of whom no disciplinary action can be taken by the employer or who is free to do do work of his own once he completes the work for which he is engaged by the employer, is not a worker and for whom the employer has no liability to pay contribution.
Regards,
Madhu.T.K
From India, Kannur
4244I would like to draw the following interpretation of the terms ‘employed’ and ‘engaged’ of Punjab and Haryana High Court in Employees State Insurance Corporation v. Malhotra and Co., Chandigarh, (1981 Lab I.C. 475),
“In fact, a clear distinction must be made between a casual worker and a person engaged for a specific item. The distinction is between employment and an engagement. If a person is engaged casually for a process unconnected with the operations of the establishment or some work which does not form integral part of such operations, he will not be an employee. There is no relationship of employer and employee. The employer has no control to take disciplinary action. He would only be engaged for the purpose”.
The Kerala High Court in the case of Regional Director, E.S.I. Corporation v. P. R. Narahari Rao, (1986 Lab I.C. 1981) took note of this distinction and held as under:
"The oft repeated distinction is that between an "employment" and "engagement". If a person is engaged casually for a process unconnected with the operations of the establishment, or some work which does not form the integral part of such operations, he may not be an employee since there would be no employer-employee relationship between them only in consequence of the casual engagement for purposes unconnected with the main operations of the establishment. On the other hand, if a person is employed, though casually and for a very short period of time, but in connection with the processes which are integral and connected with the incidental or preparatory to the operations of the establishment, then he may be an employee entitled to coverage under the Act. The Courts have made a still further distinction to the effect that in case of employment, however, short it be, the employer shall have the right of disciplinary control, right of supervision and oversight of the quality of and the manner in which the work is to be performed etc. Further ramifications have been evolved by the decisions to the effect that the employer shall have control over the employee in the sense that the latter shall be obliged to report for duty at specified working hours and seek and obtain permission for absence on any account, and that the employer shall have the power to grant or refuse leave etc."
Therefore, a casual labour who has no fixed time for reporting or in respect of whom no disciplinary action can be taken by the employer or who is free to do do work of his own once he completes the work for which he is engaged by the employer, is not a worker and for whom the employer has no liability to pay contribution.
Regards,
Madhu.T.K
From India, Kannur
Dear Madhu ji,
Thanks a lot for your inputs with case laws.
I only wish to add to your following view:
Such work should be of purely casual and incidental and not be connected to the business of the establishment. Then only, in my view, you can take this stand the person engaged is not a worker for whom the employer has no liability to pay any contribution.
In one of the cases, I remember it reading, the court described the work of incidental nature. According to it, extinguishing fire is an incidental one.
From India, Mumbai
Thanks a lot for your inputs with case laws.
I only wish to add to your following view:
Such work should be of purely casual and incidental and not be connected to the business of the establishment. Then only, in my view, you can take this stand the person engaged is not a worker for whom the employer has no liability to pay any contribution.
In one of the cases, I remember it reading, the court described the work of incidental nature. According to it, extinguishing fire is an incidental one.
From India, Mumbai
Dear Nair ji,
Thanks for your posting.
Can I request you to provide the information of said case laws?
In my view, extinguishing fire or redemption after a fire incident is an exceptional circumstance but annual painting / colour washing etc, is not an exceptional circumstance.
From India, Mumbai
Thanks for your posting.
Can I request you to provide the information of said case laws?
In my view, extinguishing fire or redemption after a fire incident is an exceptional circumstance but annual painting / colour washing etc, is not an exceptional circumstance.
From India, Mumbai
Friends
I am unable to agree with the views of learned advocate Madhu TK and those judgements quoted does not answer the question raised initially. Firstly High Court judgements are not law of the land, the department may have filed appealed against those judgement and each judgement need to be seen in context of the facts in that particular case. Only Supreme judgement on law will work as the law of the land. In some of the cases referred by Madhu, the payment to the loading/unloading persons, also called Hamalies, were paid in the warehouses owned by Government, the dealer or some other persons and not in the premises of the principal employer. If any work is done inside the premises of the employer covered under ESI act, whether it is for a few minutes or regularly and whether the consideration for this work is paid through a wage register, a pay roll, an individual voucher or through the the supply invoice indirectly, the person doing the work even indirectly connected with the process of the employer, ESI Contribution need to paid. Now the question is Why ? Because ESI department is duty bound to pay all the benefit specifically the death and disability benefit in case of any accident and all that the disabled or dependent of deceased need to prove is that the person was inside the premises and doing some work indirectly or remotely connected with the work of the employer when he met with accident.
Now some HR or accounts executives want to hide such payment and hoodwink the department, they may even succeed since the ESI officials often are not smart enough to find out such subterfuge, or may take some bribe or may not have time and energy to go through all voucher, but the moment there is accident, the liability on the department will start and that can start o deep scrutiny.
My advises as a former officer of ESIC and GM of group of manufacturing industry is to cover all the people, keep proper record, pay contribution and also educate the workers and their family by giving small handout in their language and through training as to how they can avail of the various benefits and the HR execut8ve should be pro-active in case of any sickness, accident etc for workers or his family and ensure that they get all the services they are legally entitled to from ESI Department.
In other words comply under the law and fight for once right under the lay and do not seek short cuts and subterfuges.
O Abdul Hameed
Formerly Addl Commissioner ESIC
From India, Coimbatore
I am unable to agree with the views of learned advocate Madhu TK and those judgements quoted does not answer the question raised initially. Firstly High Court judgements are not law of the land, the department may have filed appealed against those judgement and each judgement need to be seen in context of the facts in that particular case. Only Supreme judgement on law will work as the law of the land. In some of the cases referred by Madhu, the payment to the loading/unloading persons, also called Hamalies, were paid in the warehouses owned by Government, the dealer or some other persons and not in the premises of the principal employer. If any work is done inside the premises of the employer covered under ESI act, whether it is for a few minutes or regularly and whether the consideration for this work is paid through a wage register, a pay roll, an individual voucher or through the the supply invoice indirectly, the person doing the work even indirectly connected with the process of the employer, ESI Contribution need to paid. Now the question is Why ? Because ESI department is duty bound to pay all the benefit specifically the death and disability benefit in case of any accident and all that the disabled or dependent of deceased need to prove is that the person was inside the premises and doing some work indirectly or remotely connected with the work of the employer when he met with accident.
Now some HR or accounts executives want to hide such payment and hoodwink the department, they may even succeed since the ESI officials often are not smart enough to find out such subterfuge, or may take some bribe or may not have time and energy to go through all voucher, but the moment there is accident, the liability on the department will start and that can start o deep scrutiny.
My advises as a former officer of ESIC and GM of group of manufacturing industry is to cover all the people, keep proper record, pay contribution and also educate the workers and their family by giving small handout in their language and through training as to how they can avail of the various benefits and the HR execut8ve should be pro-active in case of any sickness, accident etc for workers or his family and ensure that they get all the services they are legally entitled to from ESI Department.
In other words comply under the law and fight for once right under the lay and do not seek short cuts and subterfuges.
O Abdul Hameed
Formerly Addl Commissioner ESIC
From India, Coimbatore
Premier Clay Products case is a Supreme Court judgement. I have specifically stated that this applies only where there does not exist any employee employer relationship of even a casual nature and coverage becomes mandatory in such cases where casual workers are engaged even for a day but for an operation connected with the business of the employer.
Madhu.T.K
From India, Kannur
Madhu.T.K
From India, Kannur
Dear all, The comment that the High Court judgements are not law of the land cannot be supported, as the judgement of the respective High Court is binding on the subordinate courts under it . The only difference is that the law laid by the Supreme Court prevails all over the country. Even the other High Courts refer and respect the views of another High Court, otherwise there is no point in publishing the high court judgements and relying on them. So definitely the High Court judgement cannot be lightly brushed off and the legal principles stated therein carries meaning and weightage.
As Madhu Sir has pointed out even the Supreme Court in Premier Clay Products has held the view that the casual employees are not covered for ESI purposes.
Unfortunately what is happening is that the assessing/recovery officers of ESI want to show their contribution collection prowess, without due regard to the practical realities or the legal interpretation, hastily burden the employer with ESI liability on all and sundry wage payments. I know a practical case of 'petha labour' (the casual labour engaged for loading and unloading work) is used whenever coal is to be unloaded from wagon (happening once in two months) and the duration of work is only 1-2 days. Now ESI authorities are insistent that the principal employer is liable to pay the ESI contribution for the petha labour employed through the contractor. Pertinently no attempt is made by ESIC to identify the beneficiaries, so while there is no actual ESI benefit accruing to anyone, the effort is for achieving the contribution target set for each assessing authority or to enrich themselves. This is a very sorry state of affairs and I am sure all the employers would have such countless stories to tell.
KK
From India, Bhopal
As Madhu Sir has pointed out even the Supreme Court in Premier Clay Products has held the view that the casual employees are not covered for ESI purposes.
Unfortunately what is happening is that the assessing/recovery officers of ESI want to show their contribution collection prowess, without due regard to the practical realities or the legal interpretation, hastily burden the employer with ESI liability on all and sundry wage payments. I know a practical case of 'petha labour' (the casual labour engaged for loading and unloading work) is used whenever coal is to be unloaded from wagon (happening once in two months) and the duration of work is only 1-2 days. Now ESI authorities are insistent that the principal employer is liable to pay the ESI contribution for the petha labour employed through the contractor. Pertinently no attempt is made by ESIC to identify the beneficiaries, so while there is no actual ESI benefit accruing to anyone, the effort is for achieving the contribution target set for each assessing authority or to enrich themselves. This is a very sorry state of affairs and I am sure all the employers would have such countless stories to tell.
KK
From India, Bhopal
Dear Sir,
All payment figures reflect in Balance. when enforcement officer visits to your establishment, he will ask firstly accounts books, balance sheets. You will have to produce it before the enforcement office. Then he will dues on what figures you have shown in balance sheet. it is better to follow the rules and regulations of all acts.
ra lawande
From United States, San Jose
All payment figures reflect in Balance. when enforcement officer visits to your establishment, he will ask firstly accounts books, balance sheets. You will have to produce it before the enforcement office. Then he will dues on what figures you have shown in balance sheet. it is better to follow the rules and regulations of all acts.
ra lawande
From United States, San Jose
Dear Sir,
All payment figures reflect in Balance Sheet. when enforcement officer visits to your establishment, he will ask firstly accounts books, balance sheets. You will have to produce it before the enforcement office. Then he will calculate dues on what figures you have shown in balance sheet. it is better to follow the rules and regulations of all acts.
ra lawande
attribution https://www.citehr.com/460725-vouche...#ixzz2Zm5W6gXa
From United States, San Jose
All payment figures reflect in Balance Sheet. when enforcement officer visits to your establishment, he will ask firstly accounts books, balance sheets. You will have to produce it before the enforcement office. Then he will calculate dues on what figures you have shown in balance sheet. it is better to follow the rules and regulations of all acts.
ra lawande
attribution https://www.citehr.com/460725-vouche...#ixzz2Zm5W6gXa
From United States, San Jose
http://esic.nic.in/page.php?pid=MzIz
SERVICE CONTRACT
Amount paid to an organisation for maintenance of Machinery/Equipments as part of service contract will not attract ESI contribution.
PAYMENT MADE TO LABOUR CONSULTANTS, LAWYERS, ENGINEERS, COUNSELS, CHARTERED ACCOUNTANTS:
The amount paid by the employer to labour consultants, lawyers, engineers, counsels, chartered accountants does not constitute wage as per provisions under Section 2(22) of the ESI Act and hence no contribution is payable.
From India, Pune
SERVICE CONTRACT
Amount paid to an organisation for maintenance of Machinery/Equipments as part of service contract will not attract ESI contribution.
PAYMENT MADE TO LABOUR CONSULTANTS, LAWYERS, ENGINEERS, COUNSELS, CHARTERED ACCOUNTANTS:
The amount paid by the employer to labour consultants, lawyers, engineers, counsels, chartered accountants does not constitute wage as per provisions under Section 2(22) of the ESI Act and hence no contribution is payable.
From India, Pune
Community Support and Knowledge-base on business, career and organisational prospects and issues - Register and Log In to CiteHR and post your query, download formats and be part of a fostered community of professionals.
Whether Employees Terminated For Misconduct Entitled To Payment Of Statutory Dues.docx
Amendment to Payment of Bonus Act 2015.jpg
Online payment of PF mandatory from 1.1.2016.pdf