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
Acknowledge(0)
Amend(0)
4771I 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
Acknowledge(0)Amend(0)
Dear Madhu ji,
Thank you very much for your insights on case laws. I would like to add to the view you shared:
Such work should be purely casual and incidental, not directly connected to the establishment's business. Only then, in my opinion, can it be argued that the person engaged is not a worker, absolving the employer from any contribution liability.
In one of the cases I recall, the court referred to the work as of an incidental nature. For instance, extinguishing a fire was deemed as such.
Thank you.
From India, Mumbai
Acknowledge(0)Amend(0)
Thank you very much for your insights on case laws. I would like to add to the view you shared:
Such work should be purely casual and incidental, not directly connected to the establishment's business. Only then, in my opinion, can it be argued that the person engaged is not a worker, absolving the employer from any contribution liability.
In one of the cases I recall, the court referred to the work as of an incidental nature. For instance, extinguishing a fire was deemed as such.
Thank you.
From India, Mumbai
Acknowledge(0)Amend(0)
Dear Nair ji,
Thank you for your posting.
Can I request you to provide the information on the said case laws? In my view, extinguishing fire or redemption after a fire incident is an exceptional circumstance, but annual painting/color washing, etc., is not an exceptional circumstance.
From India, Mumbai
Acknowledge(0)Amend(0)
Thank you for your posting.
Can I request you to provide the information on the said case laws? In my view, extinguishing fire or redemption after a fire incident is an exceptional circumstance, but annual painting/color washing, etc., is not an exceptional circumstance.
From India, Mumbai
Acknowledge(0)Amend(0)
Friends,
I am unable to agree with the views of learned advocate Madhu TK, and those judgments quoted do not answer the question raised initially. Firstly, High Court judgments are not the law of the land. The department may have filed an appeal against those judgments, and each judgment needs to be seen in the context of the facts in that particular case. Only Supreme Court judgments on the law will work as the law of the land.
In some of the cases referred to by Madhu, the payment to the loading/unloading persons, also called Hamalies, was made in the warehouses owned by the Government, the dealer, or some other persons, and not on the premises of the principal employer. If any work is done inside the premises of the employer covered under the 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 payroll, an individual voucher, or through the supply invoice indirectly, the person doing the work, even indirectly connected with the process of the employer, ESI contribution needs to be paid. Now the question is, why? Because the ESI department is duty-bound to pay all the benefits, specifically the death and disability benefit in case of any accident, and all that the disabled or dependent of the 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 an 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 vouchers. But the moment there is an accident, the liability on the department will start, and that can lead to deep scrutiny.
My advice as a former officer of ESIC and GM of a group of manufacturing industries is to cover all the people, keep proper records, pay contributions, and also educate the workers and their families by giving a small handout in their language and through training on how they can avail themselves of the various benefits. The HR executive should be proactive in case of any sickness, accident, etc., for workers or their family and ensure that they get all the services they are legally entitled to from the ESI Department.
In other words, comply with the law, fight for one's rights under the law, and do not seek shortcuts and subterfuges.
O Abdul Hameed
Formerly Additional Commissioner ESIC
oahamid@yahoo.com
From India, Coimbatore
Acknowledge(0)Amend(0)
I am unable to agree with the views of learned advocate Madhu TK, and those judgments quoted do not answer the question raised initially. Firstly, High Court judgments are not the law of the land. The department may have filed an appeal against those judgments, and each judgment needs to be seen in the context of the facts in that particular case. Only Supreme Court judgments on the law will work as the law of the land.
In some of the cases referred to by Madhu, the payment to the loading/unloading persons, also called Hamalies, was made in the warehouses owned by the Government, the dealer, or some other persons, and not on the premises of the principal employer. If any work is done inside the premises of the employer covered under the 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 payroll, an individual voucher, or through the supply invoice indirectly, the person doing the work, even indirectly connected with the process of the employer, ESI contribution needs to be paid. Now the question is, why? Because the ESI department is duty-bound to pay all the benefits, specifically the death and disability benefit in case of any accident, and all that the disabled or dependent of the 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 an 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 vouchers. But the moment there is an accident, the liability on the department will start, and that can lead to deep scrutiny.
My advice as a former officer of ESIC and GM of a group of manufacturing industries is to cover all the people, keep proper records, pay contributions, and also educate the workers and their families by giving a small handout in their language and through training on how they can avail themselves of the various benefits. The HR executive should be proactive in case of any sickness, accident, etc., for workers or their family and ensure that they get all the services they are legally entitled to from the ESI Department.
In other words, comply with the law, fight for one's rights under the law, and do not seek shortcuts and subterfuges.
O Abdul Hameed
Formerly Additional Commissioner ESIC
oahamid@yahoo.com
From India, Coimbatore
Acknowledge(0)Amend(0)
Premier Clay Products case is a Supreme Court judgment. I have specifically stated that this applies only where there does not exist any employee-employer relationship of even a casual nature. Coverage becomes mandatory in 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
Acknowledge(0)Amend(0)
Madhu.T.K
From India, Kannur
Acknowledge(0)Amend(0)
Dear all,
The comment that the High Court judgments are not the law of the land cannot be supported, as the judgment of the respective High Court is binding on the subordinate courts under it. The only difference is that the law laid down by the Supreme Court prevails all over the country. Even the other High Courts refer to and respect the views of another High Court; otherwise, there is no point in publishing the High Court judgments and relying on them. So, definitely, the High Court judgment cannot be lightly brushed off, and the legal principles stated therein carry meaning and weightage.
As Madhu Sir has pointed out, even the Supreme Court in Premier Clay Products has held the view that 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 burdening the employer with ESI liability on all and sundry wage payments. I know a practical case of 'petha labour' (the casual labor engaged for loading and unloading work) is used whenever coal is to be unloaded from a wagon (happening once every 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 labor 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
Acknowledge(0)Amend(0)
The comment that the High Court judgments are not the law of the land cannot be supported, as the judgment of the respective High Court is binding on the subordinate courts under it. The only difference is that the law laid down by the Supreme Court prevails all over the country. Even the other High Courts refer to and respect the views of another High Court; otherwise, there is no point in publishing the High Court judgments and relying on them. So, definitely, the High Court judgment cannot be lightly brushed off, and the legal principles stated therein carry meaning and weightage.
As Madhu Sir has pointed out, even the Supreme Court in Premier Clay Products has held the view that 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 burdening the employer with ESI liability on all and sundry wage payments. I know a practical case of 'petha labour' (the casual labor engaged for loading and unloading work) is used whenever coal is to be unloaded from a wagon (happening once every 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 labor 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
Acknowledge(0)Amend(0)
Dear Sir,
All payment figures reflect in the balance. When the enforcement officer visits your establishment, he will firstly ask for the accounts books and balance sheets. You will have to produce them before the enforcement office. Then, he will verify the figures you have shown in the balance sheet to determine any dues. It is important to adhere to the rules and regulations of all acts.
Thank you,
Ra Lawande
From United States, San Jose
Acknowledge(0)Amend(0)
All payment figures reflect in the balance. When the enforcement officer visits your establishment, he will firstly ask for the accounts books and balance sheets. You will have to produce them before the enforcement office. Then, he will verify the figures you have shown in the balance sheet to determine any dues. It is important to adhere to the rules and regulations of all acts.
Thank you,
Ra Lawande
From United States, San Jose
Acknowledge(0)Amend(0)
Dear Sir,
All payment figures are reflected in the Balance Sheet. When an enforcement officer visits your establishment, he will firstly ask for the accounts books and balance sheets. You will have to produce them before the enforcement office. Then, he will calculate the dues based on the figures you have shown in the balance sheet. It is better to follow the rules and regulations of all acts.
Ra Lawande
Attribution: [URL] https://www.citehr.com/460725-voucher-payment-employees-cover-under-pf-esi-pg2.html#ixzz2Zm5W6gXa
From United States, San Jose
Acknowledge(0)Amend(0)
All payment figures are reflected in the Balance Sheet. When an enforcement officer visits your establishment, he will firstly ask for the accounts books and balance sheets. You will have to produce them before the enforcement office. Then, he will calculate the dues based on the figures you have shown in the balance sheet. It is better to follow the rules and regulations of all acts.
Ra Lawande
Attribution: [URL] https://www.citehr.com/460725-voucher-payment-employees-cover-under-pf-esi-pg2.html#ixzz2Zm5W6gXa
From United States, San Jose
Acknowledge(0)Amend(0)
http://esic.nic.in/page.php?pid=MzIz
SERVICE CONTRACT
Amount paid to an organization for the maintenance of Machinery/Equipment as part of a service contract will not attract ESI contribution.
PAYMENT MADE TO LABOUR CONSULTANTS, LAWYERS, ENGINEERS, COUNSELS, CHARTERED ACCOUNTANTS:
The amount paid by the employer to labor consultants, lawyers, engineers, counsels, chartered accountants does not constitute wages as per the provisions under Section 2(22) of the ESI Act, and hence no contribution is payable.
From India, Pune
Acknowledge(0)Amend(0)
SERVICE CONTRACT
Amount paid to an organization for the maintenance of Machinery/Equipment as part of a service contract will not attract ESI contribution.
PAYMENT MADE TO LABOUR CONSULTANTS, LAWYERS, ENGINEERS, COUNSELS, CHARTERED ACCOUNTANTS:
The amount paid by the employer to labor consultants, lawyers, engineers, counsels, chartered accountants does not constitute wages as per the provisions under Section 2(22) of the ESI Act, and hence no contribution is payable.
From India, Pune
Acknowledge(0)Amend(0)Looking for something specific? - Join & Be Part Of Our Community and get connected with the right people who can help. Our AI-powered platform provides real-time fact-checking, peer-reviewed insights, and a vast historical knowledge base to support your search.