Dear All,
I have recently joined a manufacturing unit in Karnataka established in 2008.
For the material(glass) unloading company is paying in cash to the local contractor (No ESI Registration).
unloading of material requires 2 - 3 hrs, 5 - 7 workers and wages paid is Rs. 6000 per trip.
(Minimum 1 trip and maximum 3 trip in a month depend upon the requirement.)
So, Kindly advice regarding ESI Application.
From India, Lucknow
5I have recently joined a manufacturing unit in Karnataka established in 2008.
For the material(glass) unloading company is paying in cash to the local contractor (No ESI Registration).
unloading of material requires 2 - 3 hrs, 5 - 7 workers and wages paid is Rs. 6000 per trip.
(Minimum 1 trip and maximum 3 trip in a month depend upon the requirement.)
So, Kindly advice regarding ESI Application.
From India, Lucknow
Dear Rashmi,
ESIC shall applicable on loading & unloading nature of work irrespective of how many times you do this work.
It is applicable on total billing as per standerd rate.
Even, it is applicable, if you get it done through Mathadi kamagar union too.
Regards,
Tushar Swar
From India, Mumbai
ESIC shall applicable on loading & unloading nature of work irrespective of how many times you do this work.
It is applicable on total billing as per standerd rate.
Even, it is applicable, if you get it done through Mathadi kamagar union too.
Regards,
Tushar Swar
From India, Mumbai
Sir,
You can advise your contractor to maintain attendance and payment of wages register of such labourers doing loading and unloading work and deduct and pay ESI contribution as per rate applicable. Otherwise you will be required to pay contribution on total amounts @ as applicable as per ESI Central Rules.
From India, Noida
You can advise your contractor to maintain attendance and payment of wages register of such labourers doing loading and unloading work and deduct and pay ESI contribution as per rate applicable. Otherwise you will be required to pay contribution on total amounts @ as applicable as per ESI Central Rules.
From India, Noida
If Rs 6000 is paid for one trip for which 6 persons are normally engaged, then the daily rate shall be taken as Rs 1000. Then following the notional wage concept adopted by the ESI Corporation to arrive at the monthly wages of daily rated workers by multiplying the daily wages by 26 and deciding their coverage based on this notional wages per month, these unloading workers will become out of coverage because their notional wages will be Rs 26000 for a month which is above the ceiling fixed under the ESI Act/ Regulations.
Regards,
Madhu.T.K
From India, Kannur
Regards,
Madhu.T.K
From India, Kannur
Dear Mr. Swar,
Thank you for quick reply.
I understand on loading and unloading ESI is applicable.
My question is the per day wages for Karnataka is Rs. 221.17 and company is paying the wages of 850 to 1200 per day.So, whether ESI is applicable in this case or not.
Secondly, If ESI is applicable, the company should pay the 6.5% ESI from 2008 on the total unloading charges or they should pay only for current year. (There is no ESI inspection from date of enrollment.)
From India, Lucknow
Thank you for quick reply.
I understand on loading and unloading ESI is applicable.
My question is the per day wages for Karnataka is Rs. 221.17 and company is paying the wages of 850 to 1200 per day.So, whether ESI is applicable in this case or not.
Secondly, If ESI is applicable, the company should pay the 6.5% ESI from 2008 on the total unloading charges or they should pay only for current year. (There is no ESI inspection from date of enrollment.)
From India, Lucknow
Dear Mr. Mehta,
The contractor is appointed by the third party i.e. supplier and The contractor is not willing to maintain any attendance and payment of wages register. As he is having less than 10 workers and all his worker is daily wages worker not the permanent worker.
Our company is only responsible for unloading of material in our premises.
And also if required, My Management is not having any problem to pay ESI on contract part, to avoid any penalty.
Dear Madhu.T.K,
Thank you for your valuable suggestion.
From India, Lucknow
The contractor is appointed by the third party i.e. supplier and The contractor is not willing to maintain any attendance and payment of wages register. As he is having less than 10 workers and all his worker is daily wages worker not the permanent worker.
Our company is only responsible for unloading of material in our premises.
And also if required, My Management is not having any problem to pay ESI on contract part, to avoid any penalty.
Dear Madhu.T.K,
Thank you for your valuable suggestion.
From India, Lucknow
Dear Members,
Thank you all for sharing views on important issue concerning loading and unloading work and its coverage and compliance under ESI Act. No doubt the company may be interested to get the work done and also make compliance by deposit of contribution @ Rs. 6.5% on total amounts of loading/unloading charges,but Mr.T.K.Madhu, Super Moderator has also raised a very important point whether keeping in view wage ceiling whether such employees will be coverable since getting wages more than Rs.1000/- per day.
In this connection it is submitted that the persons doing loading/unloading work generally work in groups and are very low paid employees. Even presuming that such employees are paid very high, even then efforts should be made to cover or uncover such employees under social security schemes on the basis of proper maintenance of records. Sometimes, very serious accidents occurs even when doing such work of loading/unloading etc.
Even if you will not deduct ESI contribution ( on the basis of such employees getting wages exceeding to wage limit), it will be for you or your company to prove at the time of verification of records that such employees had actually been paid wages exceeding to wage limit and was/were not coverable under Act. My suggestion regarding maintenance of Attendance and Wages Register of such employees was with the idea that without maintenance of proper attendance and wages records of such loading/unloading casual workers, a covered factory/establishment may not be in a position to explain the correct position to the inspecting authority at the time of inspection of records. Secondly, if there is any accident, while doing such work of loading/unloading, the interest of the employer as well as of the injured person may be protected and the worker or his dependant may get their due benefits in case of any serious accident.
The factory/establishment may already be maintaining some records of its employment and payment of wages. In my opinion, it will be equally important if either principal employer or the contractor may maintains such records,(though for very few such casual workers and for some days only) and keep such records in its office itself ( and not with contractor) in order to show that the compliance of social security enactments was made properly. As and when contract work is over, the contractor is not found anywhere and there is no alternative except to pay the amount of contribution on total amounts of such loading and unloading charges.
From India, Noida
Thank you all for sharing views on important issue concerning loading and unloading work and its coverage and compliance under ESI Act. No doubt the company may be interested to get the work done and also make compliance by deposit of contribution @ Rs. 6.5% on total amounts of loading/unloading charges,but Mr.T.K.Madhu, Super Moderator has also raised a very important point whether keeping in view wage ceiling whether such employees will be coverable since getting wages more than Rs.1000/- per day.
In this connection it is submitted that the persons doing loading/unloading work generally work in groups and are very low paid employees. Even presuming that such employees are paid very high, even then efforts should be made to cover or uncover such employees under social security schemes on the basis of proper maintenance of records. Sometimes, very serious accidents occurs even when doing such work of loading/unloading etc.
Even if you will not deduct ESI contribution ( on the basis of such employees getting wages exceeding to wage limit), it will be for you or your company to prove at the time of verification of records that such employees had actually been paid wages exceeding to wage limit and was/were not coverable under Act. My suggestion regarding maintenance of Attendance and Wages Register of such employees was with the idea that without maintenance of proper attendance and wages records of such loading/unloading casual workers, a covered factory/establishment may not be in a position to explain the correct position to the inspecting authority at the time of inspection of records. Secondly, if there is any accident, while doing such work of loading/unloading, the interest of the employer as well as of the injured person may be protected and the worker or his dependant may get their due benefits in case of any serious accident.
The factory/establishment may already be maintaining some records of its employment and payment of wages. In my opinion, it will be equally important if either principal employer or the contractor may maintains such records,(though for very few such casual workers and for some days only) and keep such records in its office itself ( and not with contractor) in order to show that the compliance of social security enactments was made properly. As and when contract work is over, the contractor is not found anywhere and there is no alternative except to pay the amount of contribution on total amounts of such loading and unloading charges.
From India, Noida
I would also like to point out that persons engaged need not necessarily be persons employed. There is a difference between persons engaged and persons employed. The Punjab and Haryana High Court has observed in Employees State Insurance Corporation v. Malhotra and Co., Chandigarh, (1981 Lab I.C. 475), that “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”.
Further in Regional Director, E.S.I. Corporation v. P. R. Narahari Rao, (1986 Lab I.C. 1981) the Kerala High Court has clarified that where an employer has no control over the persons engaged, like reporting to duty on a specified time, obtaining permission for taking leave etc and when the persons engaged are free to take up other activities when they are not engaged by the employer ( that is to say, after the work of unloading they can go and take another work and they are not expected to spent the whole day in the employer’s premises once engaged for the day), they will not come under the definition of employees.
Notification of ESI Corporation about notional wage is also attached for your reference
Madhu.T.K
From India, Kannur
Further in Regional Director, E.S.I. Corporation v. P. R. Narahari Rao, (1986 Lab I.C. 1981) the Kerala High Court has clarified that where an employer has no control over the persons engaged, like reporting to duty on a specified time, obtaining permission for taking leave etc and when the persons engaged are free to take up other activities when they are not engaged by the employer ( that is to say, after the work of unloading they can go and take another work and they are not expected to spent the whole day in the employer’s premises once engaged for the day), they will not come under the definition of employees.
Notification of ESI Corporation about notional wage is also attached for your reference
Madhu.T.K
From India, Kannur
Dear All,
Once again Mr. Mehta and Mr. Madhu thank you for feedback.
I always think our statutory compliances are quite clear there is no grey part. but after valuable input from members I’m more confused.
Finally my management accepts the social reasonability towards these workers. We are planning to maintain a register from our end and also dividing the wages charge into two part actual wages paid and contactor service charges. So, that worker can be covered into ESI.
However the Contactor is not willing to give any proper bill and all the payment will be in cash.
Please advice any other legal aspect should be taken care in this case.
Thanks and Regards
From India, Lucknow
Once again Mr. Mehta and Mr. Madhu thank you for feedback.
I always think our statutory compliances are quite clear there is no grey part. but after valuable input from members I’m more confused.
Finally my management accepts the social reasonability towards these workers. We are planning to maintain a register from our end and also dividing the wages charge into two part actual wages paid and contactor service charges. So, that worker can be covered into ESI.
However the Contactor is not willing to give any proper bill and all the payment will be in cash.
Please advice any other legal aspect should be taken care in this case.
Thanks and Regards
From India, Lucknow
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ESI on service charges.pdf