Supreme Court stays applicability of ESI to construction site workers / labour

Supreme Court stays applicability of ESI to construction site workers/labour

In a recent order, the Supreme Court has stayed the applicability of ESI to construction site workers/labour which was made applicable from 01.08.2015

ABCAUS Case Law Citation:
2423 (2018) 07 abcaus.in SC

The Employees State Insurance Corporation had issued a Circular bearing No. P.12/11/11/60/20110-REV.II dated 31/07/2015 extending the benefit of ESI Scheme to the construction site workers, deployed in the implemented area with effect from 1st August, 2015.

The Bombay High Court had held that any person employed by or through an immediate employer or under the supervision of principal employer or his agent who is ordinarily part of the work of the establishment falls within the ambit of the Insurance Act for all purposes.  It was held that the applicability of the Insurance Act, cannot be stated to be in conflict with existing field and the other special laws.

However, the Supreme Court in 2018 issued an interim order staying the the order of the Bombay High Court and also the Circular dated 31st July, 2015 of the Employees State Insurance Corporation until further orders

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Subsequent to the order of the Hon’ble Supreme Court, the Employee State Insurance Corporation (ESIC) in 2018 issued a clarification that no ESI contribution can be collected from the construction site worker and from their employers during the period of stay and also no benefits could be extended to such workers during the corresponding benefit period.

Thereafter, in January 2023, a Writ Petition was filed before the Hon’ble Supreme Court of India challenging the notices being issued by various Regional Officers of the ESIC. The Hon’ble Supreme Court ordered as under:

“We clarify that the adjudication proceedings which are pending before the Employees’ State Insurance Corporation authorities will be restricted to those employees who are covered under the Circular No. P-12(11) -11/27/99-Ins.IV dated 14.06.1999, i.e., workers who are employed on regular employment and not those employed periodically or on temporary basis.”

The ESIC had issued an Instruction dated 14.06.1999 wherein it was observed that in construction industry the work is carried out through the construction workers at the construction sites where the projects are situated. The workers engaged in it are mobile and migratory in nature. The criteria and duration of employment also vary from work to work. It was stated that the existing scheme under the ESI Act was neither applicable nor suitable for workers engaged in construction sites. Therefore, for coverage of ESI on construction workers a detailed guidelines were issued which in principle covers workers who are on regular employment.

In view of the above, the ESIC in its Instruction dated 03.04.2023 has advised field units to strictly comply with the orders passed by the Hon’ble Supreme Court in 2023 while following the instruction dated 14.06.1999 and 26.09.2018 till the final outcome of the case pending in Hon’ble Supreme Court.

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