Problems on Employee’s State Insurance Act 1948

 Whether the following are employees as per ESI Act 1948?

o Partner of a firm NOT
o Managing Director YES
o Contract Employee
o Professional Consultants
o Commission Agents

 Whether the following can attract applicability of the ESI Act 1948?
o A club having its own kitchen facility yes
o A company providing air cooling facilities to the tenants of a building more than 10
employee yes
o Employees of Bata retail stores----Yes
o Pathology lab of a Hospital---- No
o Employees of a Municipal Corporation----- No

 Should the benefits be made available to an employee under the ESI Act even if the
contributions are not paid?
 Yes

 Should an employee continue to be covered under ESI Act even if he crosses the wage
ceiling as prescribed under the Act?

 Can non-availability of funds be an excuse for nonpayment of ESI contributions? NO


 Whether a part-time employee working for more than one employer is to be covered
under the ESI Act? Yes, can be covered under any one employee with keeping record of
the employee, code of employee

 Can ESI benefits be made available to an employee, covered under the ESI Act, after his
superannuation?
The Employees State Insurance Corporation (ESIC) has decided to provide super
speciality treatment to retired employees, if they are subscribing to the medical scheme
at the time of their retirement. ... A retired IP who opted out any time after retirement
shall not be eligible to rejoin on any subsequent date.

 Co-operative societies rendering domestic services to its members like operating lifts,
cleaning, etc will be covered or not?
NO

 Whether a Halwai shop, manufacturing sweets would attract provisions of ESI Act? Yes if
20+ employees without use of electricity power
 Assigned work to outside parties for supply of material involving work from more than
20 workers. Will it attract ESI Act? NO

 When father allows his son to use his premises for different type of business, will their
establishments be clubbed for ESI Act purpose.? NO

 Prop Tiger dry cleaners will be covered by ESI Act or not?

 Selling services of financial products will be covered or not by ESI Act?

 Security guards working to safeguard the property located elsewhere can be treated as
employees or not? YES

 Can meals allowance paid to employees will, come under the definition of wages for ESI
Act? Yes

 Employees State Insurance Corporation (in short ESI

Corporation') issued a notice dated 3-9-1992 to Bharat Heavy
Electricals Limited (in short 'BHEL') pointing out that they had
not till then paid the employer's as well as the employees'
contribution as per the provisions of the Employees State
Insurance Corporation Act (in short 'the Act') and that the
Corporation is proposing to determine the contribution payable
under Sec.45-A of the Act. The notice also afforded an
opportunity to BHEL to explain their stand. The notice also
 made clear that in the event of any explanation not forthcoming
from BHEL, then the Corporation will proceed with the case on
merits and an order would be passed under Sec.45-A of the Act.
The period of claim was shown to be 19-7-1981 till 30-9-1991. 2.1
BHEL, on receipt of the said notice, instead of filing their
explanation had filed a petition. Decide the case

 In exercise of the powers conferred by sub-section (5) of Section 1 of

the Employees' State Insurance Act, 1948 (Central Act XXXIV of
1948), the Governor of Tamil Nadu, in consultation with the
Employees' State Insurance Corporation and with the approval of the
Central Government, after complying with the statutory requirement
of giving six months notice of the intention of the Tamil Nadu
Government vide Labour and Employment Department Notification
No.II (2)LE/265/2008, published at page 206 of Part-II Section 2 of
the Tamil Nadu Government Gazette, dated the 4th June 2008,
hereby extends the provisions of the said Act, to the educational
Institutions (excluding Government and Government aided
institutions) run by individuals, trustees, societies or other
organizations, wherein twenty or more persons are employed or were
employed on any day of preceding twelve months, with effect from
the date of publication of this Notification.

The ESI Corporation by its letter dated 15-10-1982 demanded M/s. Lamina Suspension
Products Private Limited to pay contribution of Rs. 20,891.39 for the period May 1981 to
July 1982 towards the production allowance. In pursuance of the demand, the respondent-
company deposited an amount of Rs. 13,098.90 on 28-12-1982 and intimated the ESI
Corporation by their letter dated 3-1-1983. The respondent-company made representation
by their letter dated 2-4-1984, disputing the payment of contribution on the ground that
production incentive is not wages as defined under Section 2(22) of the ESI Act. In spite
of the reply, the ESI Corporation by their letter dated 13-6-1984 demanded for payment,
failing which the same will be recovered by revenue recovery action. Thereafter, the
respondent-company sent a reply to the Deputy Regional Director, ESI Corporation dated
17-7-1984 and also questioned the demand letter dated 13-6-1984 by filing an application
under Section 75 of the ESI Act before the ESI Court, Bangalore, praying to quash the
said letter dated 13-6-1984 and for refund or for adjustment of the contribution already
paid in respect of the Production Incentive Scheme. The ESI Corporation, filed its
objection statement contending that the amount paid under the Production Incentive
Scheme comes within the meaning of wages as defined under Section 2(22) of the ESI
Act. Whereas, the agreement between the company and its employees are contrary to the
provisions of the statute and the same is void. In fact, the ESI Inspector inspected the
records on 19-8-1982 and found that the applicant has paid an amount of Rs. 2,98,448.50
as production allowance to its employees for the period from 1-5-1981 to 31-7-1982. The
applicant was asked to pay the contribution and to submit contribution cards as per the
ESI Act and regulations. Though the applicant sought time, finally paid the contribution
on 25-10-1982 that the production incentive have to be treated as wages under Section
2(22) of the ESI Act.
Therefore, the question of refund or adjustment of any amount does not arise and denied
all other averments which are inconsistent with their objection statement and prayed to
dismiss the application. On the basis of the application and the objection statement filed,
the ESI Court framed the following issues:

"(1) Whether the applicant proves that it is not liable to pay contribution over production
incentive as demanded, if so, whether the applicant is entitled for the refund?