Employer Is Liable To Pay ESI Contribution For Contract Workers

1
STRICTLY STATUTES OCTOBER
2013
A Newsletter from ADP India
TABLE OF CONTENTS
EDITORS NOTE
Pages Compliance calendar for Sep 13 (Time line
for Oct 13) 02 ADP trains Entrepreneurs on
Statutory
03 Compliance EPFO Schemes excluded from
implementation of 04 direct benefit
transfer Employer is liable to pay ESI
contribution for contract workers
05 Partners are not to be included for coverage
05 No accident compensation for normal
06 death during employment
Hello Readers,
September 2013 saw that the courts across the
country come up with some significant and
interesting rulings.
The Bombay High Court has made the employer
liable to pay the ESI contribution to
employees, irrespective of their engagement
whether on contract basis or otherwise.
India has the largest workforce employed in
un-organized sector, mostly as daily wage workers
and not covered by PF and ESI. This important
ruling by Bombay High Court will ensure that
contract workers, whether they are daily wage
workers, coolies, loaders or un-loaders are now
protected. Small steps such as these are in the
right direction and will play a large role in
mobilising the workforce movement towards
organised sector.
In the PF space, EPFO, has published a circular
quoting a recent judgment, which states that
canteen allowance will be included in the PF
wage calculation and has instructed its field
staff to refer to this ruling for adjudicating
similar issues and for defending similar cases
at EPFAT and high courts
under PF Act
This issue covers these developments and
judgments in detail, along with other interesting
information in the statutory compliance space.
We hope you enjoy reading this issue and find it
useful.
Please do share your inputs / suggestions and
help us to enrich the newsletter content. You
may write to us at contactadp_at_adp.com
Regards, Editor
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STRICTLY STATUTES
A Newsletter from ADP India
Compliance Calendar for October 2013
Due Date
Scope
Due Under
Mode
Professional Tax Remittances
10th Oct 13
Andhra Pradesh Madhya Pradesh
State-wise regulations
By Challan
15th Oct 13
Gujarat
Gujarat PT regulations
By Challan
20th Oct 13
Karnataka
Karnataka PT regulations
By Challan
21st Oct 13
West Bengal
WB PT regulations
By Challan
30th Aug 13
Maharashtra, Assam Orissa
State Wise regulations
By Challan
30th Oct 13
Maharashtra, Assam Orissa
State-wise regulations
By Challan
Labour Welfare Fund Remittances
20th Oct 13
Kerala
Kerala State Labour Welfare Fund
By Challan
PF
15th Oct 13
Central - Remittance of Contribution
EPF MP Act 1952
By Challan
25th Oct 13
Central - International worker with wages
EPF MP Act 1952
Statement in 7 I W
and nationality
ESI
21st Oct 13
Main Code Sub Codes - Remittance of
ESIC Act 1948
By Challan
Contribution
Employment Exchange (Compulsory Notification of
Vacancies) Act, 1959
15th Oct 13
Form ER I Strength Returns
ESIC Act 1948
By Challan
Factories Act
31st Oct 13
Renewal of Factory License
As submission
During month
Safety Committee Meeting
As meeting
During month
Canteen Committee Meeting
As meeting
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Page 03
STRICTLY STATUTES
A Newsletter from ADP India
ADP partnered with MSME DI, Chennai, a
Government of India initiative and trained 100
plus entrepreneurs on Statutory Compliance,
which is mandatory for every organisation.
Over hundred entrepreneurs from across
industries ranging from Manufacturing, IT, ITeS,
Educational Institutes to Staffing Companies and
Service Organisations attended this two day
training program held recently at Chennai.
Flash News
ADP partnered with
the Micro, Small and
Officials from ADP India trained the participants
on various State and Central Labour
Legislations that are mandatory for every
organization to follow. Participants were
exposed to the complex maze of various local,
regional and central acts and rules that are
related to employer and employee compliance,
which every employer is expected to comply with.
Medium Enterprises
Development Institute
and trains Entrepreneurs
The participants benefitted from this two day
session, where ADP officials shared their
expertise in an interactive format and
trained them on running a 100 compliant
organisation.
on Statutory Compliance
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STRICTLY STATUTES
A Newsletter from ADP India
Circulars Canteen allowance is now part of basic
wages for PF deduction
Canteen allowance, paid by the employer to his
employees is considered to be part of basic
wages, and is required to be taken into account
while computing the provident fund (PF)
contribution, the Delhi High Court has stated in
a recent ruling.
The EPFO has published this order in
its Web site, as a reference to its field
staff, for adjudicating similar issues and for
defending similar cases at EPFAT and high courts.
The court delivered its recent judgement on a
petition filed by Whirlpool Of India Ltd., on
July 22 against an order of Regional Provident
Fund Commissioner asking the company to pay
PF contribution on canteen allowance provided to
its workers.
The court observed that the employer is
splitting wages to reduce their PF and other
tax liabilities, which is an anti-worker
movement and against the social security
scheme. The canteen allowance is part of basic
wages itself and will be considered for PF
computation.
However, it is to be noted that the Food and
Consistence Allowances, which is provided by
the employer will continue to be treated
separately and will not be included for PF
calculation.
EPFO Schemes excluded from the list of schemes
identified for the implementation of direct
benefit transfer
With reference to the Ministry of Labour
letter No. Z.25025/7/2012.SS.II, dated 27
May 2013, it should be understood that the
schemes of EPFO have been excluded from the list
of schemes of the ministry identified for the
implementation of direct benefit transfer to the
beneficiaries.
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STRICTLY STATUTES
A Newsletter from ADP India
SIGNIFICANT RECENT JUDGMENTS EMPLOYER IS LIABLE
TO PAY ESI CONTRIBUTION FOR CONTRACT WORKERS
When the activity of loading and unloading is a
regular activity in the regular course of
business, under the supervision and control
of the employer, the employees like
coolies / hamalies employed through contractors
or directly by the employer, to carry out the
job, will be employees under section 2 (9) of
the Employees State Insurance Act, 1948.
The employer is liable to pay the ESI
contribution, irrespective of their engagement
on contract basis or otherwise, if they have
to perform work of regular nature under the
supervision and control of the employer.
In a case (Appeal under ESI No. 2/2007,
D/-2-5-2013) between Regional Director, ESI
Corporation, Goa vs. Farmacia Ananta, Goa, the
Bombay High Court has ruled that when the
employer is unable to give details of labour
charges and cost of material, the ESI
Authority could fairly determine contribution at
the rate of 25 of total amount as notified
vide memorandum dated 16.11.1981 by the ESI
Corporation.
In
a
recent
judgment
(C.
Misc.
W.P.
No.
PARTNERS ARE NOT TO BE INCLUDED IN A FIRM FOR
COVERAGE UNDER PROVIDENT FUND ACT
2922/2000,D/-19-10-2012), Allahabad High Court
has pronounced that partners are not to be
included in a firm for coverage under
Employees Provident Funds Miscellaneous
Provisions Act, 1952 Section 1(3)(b).
According to this ruling that was passed in the
case of M/s. Sachan Nursing Home Anr. Vs.
Reg.
P.F.
Commissioner, Bhavishya
Nidhi
Bhavan,
Varanasai Anr., the partners of an
establishment will not be included in a firm for
coverage under the EPF MP Act, since the
partners have different status than the employees
as held by the Supreme Court.
The High Court quashed the decision
of EPF Authorities and the ruling
further states that the partners of a firm
cannot be treated as employees as per Employees
Provident Funds Miscellaneous Provisions Act,
1952 Section 2 (f), to be covered under
the EPF MP Act and hence the coverage of
Nursing Home stating that it was
employees in addition to 3 doctors who were
partners as such.
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A Newsletter from ADP India
NORMAL DEATH EVEN DURING THE COURSE OF EMPLOYMENT
WILL NOT ATTRACT ACCIDENT COMPENSATION
termed as accidental death. If the claimant
fails to establish that the injury suffered by
him is due to accident arising out of and in
the course of his employment, the employer is not
liable to pay compensation under the Workmens /
Employees Compensation Act - 1923.
The Gauhati High Court, in a case (M.F.A. (WC)
No. 16/2002. D/-18-12-2012) between Santi Rani
Debnath and Another vs. Anil Chandra Saha and
Others, has ruled that the normal death
even during the course of employment will not
attract accident compensation. In its ruling the
court has stated that normal death by bodily
ailment even in course of employment cannot
attract the liability of employer under the act.
An injury under section 3(1) of the
Employees Compensation Act is a wide term
than bodily injury or actual physical hurt and
it may include a disease also, when a disease
is contracted as a result of passage of virus
i.e. consequential result of the injury.
Only an unlooked mishap or an untoward
event, which is not expected or designed is to be
covered under accident as per judicial
pronouncement. Death caused due to illness, not
consequential or connected with discharge of
duty, cannot be
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A Newsletter from ADP India
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