Whether apprentices engaged in a factory are liable to be covered under E.S.I.?

The apprentices who are mere trainees for a particular period for a distinct purpose are not employees under section 2 (9) of the E.S.I. Act. And the employer is not bound to employ them after training period.

Employees' State insurance Corporation and other vs. Tata Engineering & Locomotive Co. Ltd. and another, 1975(58) FJR 206 (SC); AIR 1976 SC 66; 1976 Lab.IC 1; 31 FLR 387; 1976 (I) LLJ 71; 1975(2) LLN 498.


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.


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.
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).


Whether casual workers are 'employees' within the meaning of Employees' State Insurance Act?

The Supreme Court has enlarged the meaning of an employee under section 2(9) of the E.S.I. Act and has held that the employees engaged for the construction of additional building required for expansion of a factory will fall within the definition of an 'employee'. Hence, they are covered under the Act. The casual employees engaged by publishers for folding cover and inside pages of a weekly and monthly magazine have also been held as employees under the E.S.I. Act.

1 Regional Director Employees State Insurance Corp., Madras & others vs. South India flour Mills (P) Ltd., and others, 1986 LLR 65;1986 Lab. IC1193; AIR 1986 SC 1686; 1986 2 LLN 358; 1986 2 LLJ 304; 1986 (53) FLR 178.

2.Hindustan Times Ltd. vs. E.S.I. C. and another (36) DLT135.


Whether such employees will also get benefit who are, in fact, not working at the place of establishment or shop as covered under the E.S.l. Act?

The place where services are rendered on retail basis is also a shop. A firm, which has been carrying on business of playing music on marriages and other social functions, challenged the liability of the applicability of E.S.I. Act on the ground that the business they have been carrying on was not of a shop and that the business being of seasonal character, the E.S.l. Act would not be applicable to such business. The E.S.!. Court rejected the plea of the employer and also Rajasthan High Court dismissed the appeal, the Supreme Court in the appeal has held that since E.S.I. has been made applicable to the shops by virtue, of notification dated 20th October, 1985 issued under section 1(5) of the ESI act, therefore, the employees paid on daily rate or part-time employees basis for playing band etc. will be treated as 'employees' as defined by E.S.I. Act.

Hindu Jea Band vs. Regional Director, E.S.I.C.  1986 LLR 95; 1987 Lab. IC 894; (1987) 54 FLR 44; 1987 Cur. LR. 166.


Is a part-time employee covered under Employees' State Insurance Act?

A part-time employee would be coverable under E.S.I. if he has a contract of service with the employer. It is, however, very difficult to demarcate whether part-time workers, such as sweepers, clerks, accountants, engaged in a factory/establishment, which cannot afford to employ full time employee for these jobs, have a contract of service or contract for service, if the person has got some fixed hours of work and in case of absence he loses his wages. It would also be a case of contract of service if the part-time employee is governed by various labour laws, i.e. his attendance is marked, he is granted leave as per rule, he is paid overtime wages, or food allowance or any other allowance, or bonus or if any other privilege which is- admissible to the other employees is also extended to him. However, where an employee does not have any fixed hours of work, he has simply to finish the work contracted for at his convenience or the persons like street sweeper or street watchman cannot be termed as employed on can tract of service; When a part-time doctor was engaged by the factory for ambulance room, he has been held an employee of the factory. In another case, it has been held that the part-time employees are also included while extending the E.S.I. Act and the scheme on an establishment.1n a case, where gardeners and sweepers were employed by a company on part-time basis and were paid along with other 8 regular employees; it was held that the E.S.I. Act would be applicable. The Supreme Court has held that the part-time employees employed on daily rate basis for playing of band etc. will be deemed as employees to be covered under ESI.

1.T.I. Cycle of India, Madras us. Regional Director Employees State Insurance Corpn. 1977 Lab. IC 1335; (1977) 1 Mad. LJ 511 DB.

2.Modern Equipment Company, Ambala Cantonment vs. E.S.I.C. Chandigarh, 1984-II LLN 560.

3.Hindu Jea Band vs. Regional Director E.S.I., 1987 Lab. IC 894; 1987 (54) FLR; 144; 1987 Cur. LR 166.


There have been difference of opinions and finally the Supreme Court has set the controversy at rest in holding that a Managing Director of a company is chosen one of the directors on payment of remuneration for extra work to be done by him as such he has to discharge his functions as Managing Director under the supervision of the Board Of Directors. Thus, there is employer and employee relationship between two separate entities. On the one hand is the Managing Director of a company will be covered under the Act. 
Employee’s State Insurance Corpn. vs. Apex Engineering Pvt. Ltd., 1997 LLR 1097 (SC).


Whether the free lancer such as an electrician or a carpenter will be covered under E.S.I.?

No. In a case where an electrician who was carrying some repair work for a company and was paid against the bill, it has been held that he will not be treated as an employee under E.S.I.

Modern Equipment Company, Ambala Cantonment vs. E.S.I,C Chandigarh, I 984·II UN 560.


Will a partner be an employee under the £.5.1. Act?

The Supreme Court has held that the position of a partner qua the firm is not that of a master and a servant or employer and employee which concept involved an element of subordination and not that of equality. The partnership business belongs to the part­ners and each one of them is an owner thereof. In common parlance the status of a partner qua the firm is thus different from employees working under the firm. It may be that a partner is being paid some remuneration for any special attention which he devotes but that would not involve any change of status and being him within the definition of 'employees' under the Act.

Employees' State Insurance Corpn. V5. Apex Engineering Pvt. Ltd., 1997 LLR 1097 (SC).


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