In the first decade, after gaining independence, as India was looking forward to industrialization, the Government came up with social welfare legislations aimed at the weaker section in the industry i.e. workers. Acts like Industrial Disputes Act, 1947 (ID Act), Employee’s State Insurance Act, 1948 (ESI Act), Dock Worker’s (Regulation of Employment) Act, 1948 (DW Act), Employees Provident Fund & Miscellaneous Provisions Act, 1952 (EPF Act) etc were promulgated. While ID Act & DW Act deals with the conditions of service, ESI Act & EPF Act provides for social security to the workers.
From April, 1948 till 1st August, 2015 the Construction Site Workers & the Construction Agencies enjoyed immunity from the provisions of Employees Insurance Act, 1948 & the Scheme framed thereunder. The reason being the Act in the first place applies to ‘factories’ (other than seasonal factories). The ‘Construction Site’ is not a factory. Secondly, an establishment can be brought under the purview of ESI Act by appropriate Government only after giving a notice, expressing its intention to extend the provisions of the Act to such establishments and by inviting objections from the interested parties. Again the ‘Construction Site’ does not fall within the definition of ‘shops & establishment’ as given in Shops & Establishments Acts as promulgated by different States. However, the business/corporate office of the Builder (not construction site) was always covered under the Act, if meeting the criteria of minimum number of workers. It is thus, clear that the Legislator while promulgating the Act, intended to apply it to factories/establishments only.
In order to extend social welfare benefits to the ‘Construction Site Workers’ Building and Other Construction Workers’ (Regulation of Employment and Conditions of Service) Act, 1996 (BOCW Act, 1996) was promulgated. This shows that the Legislators always considered ‘Construction Site Workers’ as a class separate from the workers working in other industries.
The Employees State Insurance Corporation (ESIC) was in agreement with the above preposition and issued a clarification vide its Instructions No. 4/99 dated 14th June 1999 clarifying that the existing scheme under the ESI Act is neither applicable nor suitable for workers engaged at construction sites. The reason given was 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. Due to the nature of employment and the nature of work place involving the construction workers enforcement of ESI Act, in respect of such workers and organizing Medical & other facilities for them which are normally available under the ESI Scheme will be difficult. This clarification came in as an aftermath to BOCW Act, 1996whereby certain facilities were given to the Building & Other Construction Workers (BOCW).
By a recent circular dated 31.07.2015, ESI has extended the ESI Scheme to the construction site workers w.e.f 01.08.2015. Instructions were issued to the Regional Directors to collect data with respect to the employees of Construction Agencies in order to extend coverage of all the workers by 31.12.2015. Before issuing this circular, ESI came up with a circular dated 03.01.2011 whereby it decided to revisit Instruction No. 4/99. The reason given was that due to implementation of IT Roll out “Anytime, Anywhere”, ESI services can be made available to these mobile & migratory workers with no geographical barriers. Further medical facility is no longer restricted to ESI dispensaries but medical facilities can also be availed at empanelled dispensaries and diagnostic centers. By this circular ESI asked the Regional Directors to conduct survey of Public Limited Companies in the 1st phase and asked to submit a report by 31.01.2011. It is not known as to whether any survey report was submitted by the Regional Directors to ESI.
No.This circular is not welcomed by the Construction site workers. BOCWs are covered under BOCW Act, 1996, for some of the facilities wherein they were required to make contribution as well. Now, BOCWs are liable to make contribution under ESI Act. Although their salaries are impacted by double contribution but they cannot derive same benefits under both the Acts. The provisions of Workmen’s Compensation Act, 1923 are made applicable to construction site workers under BOCW Act. However, ESI, Act bars receiving compensation under Workmen’s Compensation Act or any other Act. The Contribution & Benefit Period under ESI Regulations, 1950 are different. The benefits are passed on to the Insured Person for the first time after nine months of joining the fund. Similarly, for availing sickness benefit, the Insured Person has to pay contribution for minimum period of 78 days in the Contribution Period. Since, the work at construction site is project based and the workers are migratory, benefit of the scheme will not reach them. Thus, the present Circular though aimed at providing benefits to the Construction Site Workers, is of little use to them. Further, two welfare legislations (ESI, Act 1948 & BOCW Act, 1996) providing the same benefits cannot run parallel. Implementing one will oust the jurisdiction of the other. BOCW, Act1996 being the later Act will prevail over ESI, Act, 1948.
This circular came in the wake of 46th Indian Labor Conference inaugurated by Hon’ble Prime Minister, Mr. Narendra Modi on 20th July 2015 when he also launched ESIC 2.0. This circular was rolled out in such a haste that the Central Government & ESIC by passed the mandatory provisions with respect to coverage of an establishment. Even objections were not invited from the interested parties giving them 30 days time to do so.
Various flaws and discrepancies in the Circular dated 31.07.2015 has led to challenging the same by Builders. The Madras High Court has passed an order directing the parties to maintain status-quo in the matter. Associations are formed in other States as well to challenge the circular and similar petitions are under way in other High Courts.
ESI is caught in its own web of Instruction No. 4/99. In the said Instructions, it has recognized the peculiar nature of work at construction site i.e. seasonal and contract based. Whether after fifteen years, the nature of work at ‘construction sites’ has changed and is longer seasonal and contract based? Another issue that arises is whether the ‘construction sites’ are now ‘establishments’? These are few issues that ESI will have to answer before various courts.
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