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ESI & PF applicable on construction labour, contractor, Empl (Others)

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This query is : Resolved


Author : Deepak

Posted On 15 October 2010 at 17:24

Dear Experts,

We have manufacturing establishment in Delhi since 1980, and covered under ESI & PF act, and more than 20 workers are working with us.

Now, we bought a land in Noida and start the construction trough various contractors on the following conditions.

1. Including Labour + Material.
2. Only Labour Basis.
3. Only material Basis.

Some of the contractors having 5 labours, some have 10, 20, or more than 20 labours at site and they don’t have ESI & PF No.

my query is-:

1. Are the PF & ESI applicable on the above?
2. If yes. Who will be responsible to pay under both the act?
3. Is there any notification/circular under both the act to pay/coverage of these labours?
4. Are our Noida Building will be club with the Delhi unit for the purpose of coverage?
5. or this Noida unit will treat as a new/separate unit(there is no connection with Delhi unit)?
6. As we don’t have any PF or ESI nos. at our Noida unit (which is under construction) still we need to pay the ESI & PF to the construction labour?
7. Are we need to taken ESI & PF no during the construction period?
8.

Regards,
Deepak Bharadwaj





Expert : Basavaraj

Posted On 15 October 2010 at 17:29

pls check in your state rules, so can get some points



Expert : Akashdeep Sharma

Posted On 16 October 2010 at 16:54

Point-wise reply to your queries:

1. Are the PF & ESI applicable on the above?

Yes, as an Employer, you would be responsible for ensuring PF ad ESI compliance for employees engaged (Whether engaged directly or indirectly thru. vendor) in your establishment including the one, which is being constructed for extension of business.

2. If yes. Who will be responsible to pay under both the act?

Generally, employers fasten the responsibility upon the Contractor to adhere to all statutory obligations ( Inc. ESI and PF) but be informed that over-all responsibility to ensure compliance always remains with the Principal Employer ( Who’s work is being carried out) and in the event of default or delay on the part of contractor, the Principal Employer is required to make compliance.


3. Is there any notification/circular under both the act to pay/coverage of these labours?

Yes, a notification dated 14.06.1999 issued by ESIC (Copy attached), whereby clarifications on ESI coverage on construction agencies that workers engaged by the construction agencies and working on the site of the project would not be considered for the purpose of coverage.

This notification may not be squarely applicable in your case and also only pertains to ESI but still you can take benefit from this.

4. Are our Noida Building will be club with the Delhi unit for the purpose of coverage?

There are many factors to be considered for clubbing two units for the purpose of coverage. Primarily it’s the common ownership and functional integrity and other factors like common resources/ management, transfers between uints, finance etc.


5. or this Noida unit will treat as a new/separate unit(there is no connection with Delhi unit)?

It would depend upon the factors as stated above.

6. As we don’t have any PF or ESI nos. at our Noida unit (which is under construction) still we need to pay the ESI & PF to the construction labour?

For ESI, you may be able to secure benefits from this ESI notification.
For PF, either engage vendor with their own PF code or make compliance in your existing code.

7. Are we need to taken ESI & PF no during the construction period?

Apparently there is no such need. You can always make compliance in your existing coverage codes.


These are my personal views based upon the limited information that you have shared. Please re-verify it before taking any final decision and secure a detailed legal view.



Revert, for any support.

Akashdeep Sharma
Labour Law Consultant




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