MISCELLANEOUS



CONTINUOUS APPLICABILITY OF THE ACT

Will E.S.l Act continue to apply to a factory or an establishment where the number of employees is less than the limit specified by the Act?

By an Amendment of Act 29 of the ESI in 1989, it is provided that a factory or an establishment shall continue to be governed by this Act notwithstanding that the number of persons employed therein at any time falls below the limit specified by or under this Act or the manufacturing process therein ceases to be carried on with the aid of power.

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BENEFITS AWAY FROM THE PLACE OF WORK

Can an employee insured under E.S.1. Avail benefits of E.S.I. at a different place where he is temporarily staying?

If an insured person who is temporarily away on leave for a period of up to three months from his place of employment to another area where medical care under the scheme is available, he can get medical treatment if he takes a certificate of temporary resi¬dence from his employer.


CLAIM FOR BENEFIT NOT MAINTAINABLE

Can an employee covered under the E.S.I. Act claim disablement benefit from the Employees' Insurance Court without first approaching the E. S.1. Corporation?

The language of section 77(1) (I-a) of Employees' State Insurance Act is unambiguous and clear and leaves no scope for any exception. An employee claims benefits in accordance with the vari¬ous regulations as contained in Chapter 3. Thereafter under Regula¬tion 51, if the authority certifies the eligibility of the claim and, then the benefit shall be paid in accordance with Regulation 50. Regulations 53 to 64 deal with certification and claim from sickness and temporary disablement. After the scrutiny of the claim by the corporation. If the claim is denied by the corporation, then only the cause of action arises to an insured person under section 77 of the Act to commence the proceedings before the Employees' Insurance Court. In one case, court has held that in fact the application was premature and the E.!. Court acted illegally, in not directing the appellant insured person to approach the E.S.l. Corporation. It was also observed that the Corporation was also responsible for not invit¬ing the attention of the court to decide the matter in respect of cause of action and maintainability of the application.
Radheyshyam vs. Employees State Insurance Corporation, Ujjain, 1989 (58) FLR 133 (M.P.HC Indore Bench),


CASUAL EMPLOYEES OF A CONTRACTOR

Are the casual employees employed through the contractor covered under the £.5.1. Act?

For E.S.I. purposes an employee 'need not be directly employed by the employer in connection with some work which is incidental or preliminary to the work of the factory or establishment or connected with its works, so workers even engaged by a contractor will be' 'employees' of the factory or establishment and will be covered by the Act. In one case, the factory was engaged in the purchase of raw coir mats and mattings. The process of shearing, trimming, pressing and packing them was also
Employees State Insurance Corporation vs. Suresh Trading Company, 1983 (Ker.HC) LLR 168.


ABOUT THE EMPLOYEES ENGAGED BY A CONTRACTOR

Under what circumstances the E.S.I. will be applicable to the employees engaged by a contractor?

The employees engaged by a contractor are surely to be covered under E.S.I Act and the Scheme. A Division Bench of the Bombay High Court dealing with such a proposition has held that the employees of the contractors engaged for repairs, site clearing, construction of buildings etc. are engaged in an activity which is essentially required for the running of the factory and is ancillary or incidental to and has relevance to or link with the object of the factory, 1 However, the Supreme Court has held that the order to determine the -relationship of employer and employee between the principal employer and the employees engaged by the contractor (immediate employer) the supervision by the principal employer or his agent is essential.
1. Kirloskar Pneumatic Company Ltd. vs. Employees State Insurance Corporation, 1987-1 LLN 906.

2. C.E.S.C. Limited etc. vs. Subash Chandra Bose 1992 Lab. IC 332; AIR1992 SC 573; 1992 (I) LLJ 475; 1992 LLR81 (Supreme Court).


CONTRIBUTION FOR PAST PERIOD

Is it justified for authorities to recover E.S.I, contribution when the employees have not availed the benefit for that particular period?

It is immaterial whether the employees have availed the benefits or not so far as the payment or deposit of E.S.I. contribution is concerned since the liability to pay contribution is not made to depend on the benefit to be received by the members in respect of whom the contribution is sought for.
1. South India Viscose Co-operative Stores Ltd. vs. Regional Director, Employees State Insurance Corporation, 1986 (68) ;FJR 329 (Mad .HC)

2. ESl Corporation vs. Hotel Kalpaka International 1993(1) KLT 281 1993 LLR 177 (Supreme Court).


DAMAGES ON LATE SUBMISSION

Whether E.S.I. authorities are within their right to levy damages for late submission of contribution cards?

A plain reading of Regulation 31-A of the E.S.I. (General Regulations), which came into force w.e.f. November 23, 1977, shows that only in these cases the late submission of contribution cards amounts to late submission of payments where an employer is paying contribution by affixation 'of contribution stamps ,on the contributions cards. The legislature on its wisdom, has merely pro¬vided that in those cases where the contributions are being paid by affixation of adhesive stamps, the delay in the contribution cards will tantamount to delay in payment of contributions. This provision has been enacted to clarify the position of those employers who are paying contributions by way of purchasing adhesive stamps and then fixing them on the contribution cards. It was held that the provision to Regulation 31-A does not at all cover the case in which an employer is making payment of contributions by depositing the amount in case in the bank. The decision of the Punjab and Haryana High Court reported in 1981 Lab. IC 658 was distinguished on the ground that there the contributions were paid by way of affixation of contribution stamps and not in cash.
E.S.I. Case No. 77 of 1979 decided by E.S.I. Court, Delhi on the 24th September, 1981. Elephant Wire Gauge Factory vs. E.S.I. decided on 30.9.1983 by E.S.L Court, Delhi.


DEFINITION OF FACTORY UNDER E.S.I.


Whether ESI Act will be applicable when there are more than one establishments of same concern but located at different premises?

The Act applies to factories which have been defined under section 2(12) of the Act. The definition does not indicate that the factory will have to be located within a single municipal premise or building. In a case where the firm was carrying on manufacturing process in the shape of printing and actually the printing work with machine was being carried on in 2 premises and the composing at another premise which was being done mechanically. In none of the premises taken separately number of employees engaged exceeded 20 but the aggregate number of employees engaged in the aforesaid three premises admittedly exceeded 20. In the prevail¬ing circumstances, it was held that it would not be possible for the employer to find out one common place to run its different units for some reasons that may not be convenient or economical. It was held that the point of greatest importance was unity of purpose of the different units notwithstanding location far apart. Considering the facts of the case and the law, it has to be concluded that all the three units will be treated all 'factory' and liable to be covered under E.S.I.
Employees Stale Insurance Corporation vs. Bengal Priming Works, 1983, (2) LLN 187.


EMPLOYEES' CLAIM AGAINST INSURED ESTABLISHMENT

Can an employee insured under the E.S.I. Act claim compensation under Workmen:, Compensation Act?

No. Where a workman is covered under E.S.I. Scheme, no compensation could be claimed from his employer under the Workmen's Compensation Act in respect of employment injury sustained by him.
Abad Fisheries vs. Commissioner for Workmen's Compensation, Ernakulam and others. 1985 (50) FLR 512.


EMPLOYEES OF MANUFACTURING CONCERN

Whether E.S.I. Act and the Scheme thereto will be applicable to a concern rendering services through other concerns to its employees?

The E.S.I. Act, 1948 is a complete code and will be applic¬able to all the employees of a concern employed in different units. Where the main business of concern was to attend to the defects, including servicing and repairing of air-conditioner machines, not only at the office premises but to take such work in complete sense at the place of the customers, on their request or demand and the employer was engaging more than the required number of employees as defined under the Act, it has been held that the petitioner would not only be governed under the provisions of E.S.I. Act but the provisions of the Factories Act would also be applicable to him.
T.V. Punj vs. Regional Director, Employees State Insurance Corporation and others, 1982 Lab. ICNOC 102 (Cal).


E.S.I. DISPUTES AND CIVIL COURTS

Can a civil court entertain a petition pertaining to a dispute or difference between an employer/employee and the E.S.I. authorities?

No. Section 75 of the Employees' State Insurance Act provides a forum for adjudication of the dispute as to whether any person is an employer and is liable to pay employee's contribution, whereas the clauses (h) to (d) of the said section have reference to the definition of employees and principal employer. By reasons of these definitions to find out an employee, it must be found out whether a person was employed for wages or in connection with the work of a factory or establishment to which the Act applies and to find out the principal employer, it would be necessary to find out the owner of occupier of the factory as far as clause (1) of sub-section 17 of section 2 is concerned. It has been held that it is only in relation to a factory or an establishment to which the Act applies that the question or dispute can be adjudicated as provided for in clauses (a) to (d) of section 75(1) of the Act. The dispute would squarely fall under clauses (c), (d) and (g) of section 75(1) of the Act. It is covered then by virtue of sub-section (3) of section 75, the jurisdic¬tion of the civil court to decide or deal with such disputes would be barred.! The Punjab and Haryana High Court has also held that the disputes between employers and employees have to decide by the Employees' Insurance Court and Civil Courts will have no jurisdic¬tion to decide such disputes.2 The question as to whether the Act applied is not upon a factory will be decided by the E.I Court and not the Civil Courts held by the Karnataka High Court in one case.3
1. Employees' State Insurance Corpn. Bombay. Appellant vs. RP. Gundu and Anr., 1983 Lab IC 16M, 1983 Maharashtra LawJournal761 (Born.).

2. Employees' State Insurance Corpn. vs.]alandhar Gymkhana Club, 1992 LLR 733; 1993 (1) CLR220 (Punjab and Haryana High Court).

3. Employees' State Insurance Corporation vs. Nirmata Chemical Industries, 1993 LlR.941 (Karnataka High Court).


IDENTITY CARDS TO EMPLOYEES

What are the obligations of an employer 10 provide identity cards to employees who are covered under E.S.I. ?

When the identity cards are received by the employer, he should hand them over to the employees on taking their signatures or thumb impressions on the identity cards in the space provided for the purpose. The temporary Identification Certificate, if issued to the employees, should be received back and sent to the local office concerned after obtaining the signatures or thumb impressions of the employees on the back of the certificate. In areas where the panel system of medical treatments is in force, a Medical Acceptance Card will be sent to the employer by the E.S.I. Corporation along with the identity cards. The employer will hand over the medical acceptance cards to the employees who will take them to the panel doctors from whom they wish to receive treatment.


JURISDICTION OF E.S.I. COURT

Which will be the forum when there is a dispute or difference of opinion between an employer and the authority under E.S.I. Act? Whether civil courts can decide such matters ?

The Employees' State Insurance Act IS a self-contained and complete code providing a forum i.e. E.S.1. Court under E.S.1. Act to adjudicate upon the questions or disputes as to whether any person is an employee or liable to pay contribution or to resolve the disputes or differences between an employer and the E.S.1. It is also within its 'exclusive jurisdiction in deciding such a dispute. The Employees' Slate lnsurance Court by reason of the provisions of section, 75 of the E.S.l. Act excludes the jurisdiction conferred on civil court by virtue of provisions of section 9 of the Civil Procedure Code. It is also open to the E.S.I. court to grant all injunction or interim stay.
1. Employees' State Insurance Corporation, Bombay vs. R.I'. Gundu Rao and another, 1983 Lab. IC 1631 Born. 1983 Mah. LJ 761 (Born.).

2. Aggarwal Hardware Industries vs. E.S.I. Corpo. 1976 Lab, lC 1:354; 19772 LLN 412; 1977(t) LLJ 197.


JURISDICTION OF CIVIL COURTS

Can civil courts determine as to whether E.5.I. Act is applicable to an establishment or not?

No. Section 75(3) of the E.S.1. Act imposes express and complete bar of jurisdiction of a civil court in such matters. The E.S.I. Act creates a special right or a liability and further lays down that question about the said right and liability shall be determined by the Employees' Insurance Court constituted under sec Lion 74 of the Act. The Employees' Insurance Court has exclusive jurisdiction to determine the dispute as to whether a particular establishment comes within the purview of the E.S.I. Act or not. The Punjab and Haryana High Court has also held that the disputes between employers and employees have to decide by the Employers Insur¬ance Court and Civil Courts will have no jurisdiction to decide such disputes.
1. Ram Prasad vs. E.S.I.C., 1988•11 CLR446; 1988(57) FLR 139 (Delhi HC).

2. Employers' State Insurance Corporation vs.Jalandhar Gymkhana Club 1992 LLR 733; 1993 (10) CLR220 (Punjab and Haryana High Court).


LIABIUTY OF A PARTNER FOR PROSECUTION 


Will a partner be liable for prosecution under E.5./. Act, if he fails to submit the contribution cards within the specified period?

The liability of the owner of the factory is absolute for the compliance and implementation of the provisions of the E.S.I. Act. As a partner of the firm owning the factory, he could not. escape the liability of the prosecution under section 85(g) of the Act [or non¬ submission of contribution cards within the specified period.
Sankar Bhattacharjee vs. Bholanath Ghosh, 1987-1 Cur. LR 413 (Cal.HC).


OBLIGATIONS TO HEAR THE EMPLOYER

Is it obligatory on the part 0I E.5.I.G. to hear the employee, while insisting for payment of contribution, which is disputed by the employer ?

The E.S.I.C. is under an obligation to hear an employer before determining the contribution payable by him if there is any dispute regarding such liability. The determination or a point touching the liability of the employer. Under the Act, should be in confor¬mity with the principles of natural justice. It has also been held that it is incumbent on the E.S.I.Corporation not only to consider explanation of the employer but also to pass reasoned order
1. Hegde and Golay Limited vs. E.5.l.C. and another, 1982 1 LLJ 49 (Karnataka HC).

2. Rameshwar Jute Mills Ltd. us. Union of India & others. 1986 Lab. IC 1225; AIR •1986 Pat. 228; 1986(2) LLN 610; 1986 (FJR) 387.


PROSECUTION OF DIRECTORS

Whether the Directors of a company can be prosecuted for violation of the provisions of £.5.1. Act?

The question of liability of a director or company under sections 2(17), 85(a) and (b) of the Employees' State Insurance Act and 26(1) of the Employees' State Insurance General Regula¬tions 1950 was considered by the Calcutta High Court in the case of Bidyut Kumar Seti and another vs. Sat yes Chandra Bogehi and another,, the High Court held that the Employees' State Insurance Act does not define the word owner but under section 2(15) of the said Act, an 'occupier' of a factory is to have; the meaning assigned to it under the Factories Act, 1948. Section2(n) of the Factories Act defines 'occupier' of a factory as a person who has the ultimate control over the affairs of a factory and where such affairs are entrusted to a managing agent then he shall be deemed to be occupier to the Factory. Relying on these provisions, the Calcutta High Court held that a director of a company is an occupier as mentioned in section 2(17) of the Employees' State Insurance Act as he has the ultimate control over the affairs of the factory. The Calcutta High Court further held that a distinction has to be drawn between the Employees' State Insurance Act and other Acts such as the Employees' Provident Fund Act, the Prevention of Food Adultera¬tion Act etc. Under the Employees' Provident Fund Act only those directors and persons who are concerned in day-to-day running of the business of the companies are primarily held responsible for makirlg contributions.
E.S.I.C. Chandigarh vs. Gurdial Singh, 1974(45) FJR ~08.


TERMINATION OF AN EMPLOYEE DURING WE PERIOD OF SICKNESS

Can an employer terminate the services of an employee during his period of sickness, if he is covered under E.S.I. ?

Section 73 of the Employees' State Insurance Act, 1948 prohibits an employer to dismiss, discharge or reduce or otherwise punish the employee during the period an employee is in receipt of sickness benefits or maternity benefits. However, the cases of abandonment of service on the part of an employee are not covered. I t has been held that the refusal of the employer to take back an employee after remaining absent. With leave and thus giving effect to Standing Order 8(2) did not contravene the provisions of section 73 of the Act. In another case, it has been held that if the termination of services of an employee follows automatically either from the contract or from standing order, section 73 of the E.S.I. Act does not apply in such case even if the employee remained sick during the last days of his service and was in receipt of sickness or disablement benefit.
1. Premier Tyres Ltd. vs.A.Abraham, 1976 Lab. IC684; 19761 Lab. LJ 161; 1976 I Lib. LN 518.

2. Buckingham & Karnataka Company Ltd., vs. Venkatiah, 196~(7) FLR 343; AIR 1964 (SC) 1272; 1963 2 LLJ 638; 25 ~]R 25.

3. Moti Singh vs. The Factory Manager Cimmco Ltd.., Bharatpur and another. 1989(58) FLR 900 (Rajasthan High Court).

4 Management of Guest keen Williams Ltd. VS. Presiding Ofiicer,2nd Additional Lahore Court 19921 CLR 433 (Karnataka High Court D.B).


TIME LIMIT FOR RECOVERY OF CONTRIBUTION

whether any limitation period is prescribed for claiming the contribution by the E.S.J. from an employer?

No. It has been held that unless the statute itself limits the period for recovery by processes envisaged by the statute itself there would be no scope for applying the provisions of the Limita¬tion Act. In other words. The law of limitation on being confined to actions in courts, will have no application where a statute creates a right and does not envisage to court for enforcing the right. That would be the position in a case arising under the Employees' State Insurance Act. The obligation to pay contribution imposed on the principal employers and the right of the corporation to recover such contributions are creations of the statute and do not exist indepen¬dent of the statute. The mode of recovery is prescribed in the statute itself. It is either by resort to section 4-8, or by resort to section 75 read with section 78(4). Therefore, the right to recover such contribution would not in any way be affected by any law of limita¬tion other than what is provided in the Act itself, if there be any. The Limitation Act will have no scope for operation in respect of any claims arising under section 45-A of the Act.
Employees' State Insurance Corporation vs, Ramadas Reddiar, 1980(56) FJR 490 (Madras HC).


SUSPENSION ALLOWANCE-WILL ATTRACT CON¬TRIBUTIONS

Whether E51's contributions will be payable on suspension allowance?

Yes. All eligible employees are entitled to get the statutory coverage of the Act, the benefits being insured employees and any person employed for wages is to be treated as an employee for the purpose of the Act. Under these circumstances an employee who is admittedly covered by the Act and who is entitled to get the benefits under the Act as insured employee will not cease to be an employee covered by the Act if he is placed under interim suspension pending domestic enquiry on any alleged misconduct by his employer
Regional Director, Employees' State Insurance Corpn.vs. Popular Automobiles etc., 1997 LLR 1147 (SC).


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APPLICABILITY OF THE ACT & SCHEME:

 Is extended in area-wise to factories using power and employing 10 or more persons and to non-power using manufacturing units and establish-ments employing 20 or more person upto Rs.15,000/- per month w.e.f. 01.04.10. It has also been extend-ed upon shops, hotels, restaurants, roads motor transport undertakings, equip-ment maintenance staff in the hospitals.

COVERAGE OF EMPLOYEES:

 Drawing wages Upto Rs.15,000/- per month Engaged either directly or thru’ contractor

RATE OF CONTRIBUTION OF THE WAGES:

 Employers’ 4.75%

 Employees’ 1.75%

MANNER AND TIME LIMIT FOR MAKING PAYMENT OF CONTRIBUTION:

 The total amount of contribution (employee’s share and employer’s share) is to be deposited with the authorized bank through a challan in the prescribed form in quadruplicate on ore before 21st of month following the calendar month in which the wages fall due.

BENEFITS TO THE EMPLOYEES UNDER THE ACT:

 Medical Benefit
 Sickness Benefit(SB)
 Maternity Benefit(MB)
 Disablement Benefit
 Dependants’ Benefit(DB)
 Funeral Expenses

 In addition, the scheme also provides some other need based benefits to insured workers.

WAGES FOR ESI CONTRIBUTIONS:

 Registers/files to be maintained by the employers

CONTRIBUTION PERIOD:

 If the person joined insurance employment for the first time, say on 5th January, his first contribution period will be from 5th January to 31st March and his corresponding first benefit will be from 5th October to 31st December.

TO BE DEEMED AS WAGES:

• Basic pay
• Dearness allowance
• House rent allowance
• City compensatory allowance
• Overtime wages (but not to be taken into account for determining the coverage of an employee)
• Payment for day of rest
• Production incentive
• Bonus other than statutory bonus
• Night shift allowance
• Heat, Gas & Dust allowance
• Payment for unsubstituted holidays
• Meal/food allowance
• Suspension allowance
• Lay off compensation
• Children education allowance (not being reimbursement for actual tuition fee)

NOT TO BE DEEMED AS WAGES:

• Contribution paid by kthe employer to any pension/provident fund or under ESI Act.
• Sum paid to defray special expenses entailed by the nature of employment – Daily allowance paid for the period spent on tour.
• Gratuity payable on discharge.
• Pay in lieu of notice of retrenchment compensation
• Benefits paid under the ESI Scheme.
• Encashment of leave
• Payment of Inam which does not form part of the terms of employment.
• Washing allowance for livery
• Conveyance Amount towards reimbursement for duty related journey

PENALTIES :

 Different punishment have been prescribed for different types of offences in terms of Section 85: (I) (six months imprisonment and fine Rs.5000), (ii) (one year imprisonment and fine), and 85-A: (five years imprisonment and not less to 2 years) and 85-C (2) of the ESI Act, which are self explanatory. Besides these provisions, action also can be taken under section 406 of the IPC in cases where an employer deducts contributions from the wages of his employees but does not pay the same to the corporation which amounts to criminal breach of trust.

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