Employees State Insurance Act, 1948
2. DEFINITIONS. –
In this Act, unless there is anything repugnant in the subject or context, – (1) “appropriate Government” means, in respect of establishment under the control of the Central Government or 1a railway administration or a major port or a mine oilfield, the Central Government, and in all other cases, the State Government;
2[***]
(3) “confinement” means labour resulting in the issue of a living child, or labour after twenty six weeks of pregnancy resulting in the issue of a child whether alive or dead;
(4) “contribution” means the sum of money payable to the Corporation by the principal employer in respect of an employee and includes any amount payable by or on behalf of the employee in accordance with the provisions of this Act;
3[***]
4(6) “Corporation” means the Employees State Insurance Corporation set up under this Act;
(6A) “dependant” means any of the following relatives of a deceased insured person, namely :- (i) a widow, a minor legitimate or adopted son, an unmarried legitimate or adopted 5daughter;
6(ia) a widowed mother;
(ii) if wholly dependent on the earnings of the insured person at the time of his death, a legitimate or adopted son or daughter who has attained the age of eighteen years and is infirm;
(iii) if wholly or in part dependent on the earnings of the insured person at the time of his death, –
(a) a parent other than a widowed mother,
(b) a minor illegitimate son, an unmarried illegitimate daughter or a daughter legitimate or adopted or illegitimate if married and a minor or if widowed and a minor,
(c) a minor brother or an unmarried sister or a widowed sister if a minor,
(d) a widowed daughter-in-law,
(e) a minor child of a pre-deceased son,
(f) a minor child of a pre-deceased daughter where no parent of the child is alive, or
(g) a paternal grand-parent if no parent of the insured person is alive;
(7) “duly appointed” means appointed in accordance with the provisions of this Act or with the rules or regulations made thereunder;
7(8) “employment injury” means a personal injury to an employee caused by accident or an occupational disease arising out of and in the course of his employment, being an insurable employment, whether the accident occurs or the occupational disease is contracted within or outside the territorial limits of India;
(9) “employee” means any person employed for wages in or in connection with the work of a factory or establishment to which this Act applies and –
(i) who is directly employed by the principal employer on any work of, or incidental or preliminary to or connected with the work of, the factory or establishment, whether such work is done by the employee in the factory or establishment or elsewhere; or
(ii) who is employed by or through an immediate employer on the premises of the factory or establishment or under the supervision of the principal employer or his agent on work which is ordinarily part of the work of the factory or establishment or which is preliminary to the work carried on in or incidental to the purpose of the factory or establishment; or
(iii) whose services are temporarily lent or let on hire to the principal employer by the person with whom the person whose services are so lent or let on hire has entered into a contract of service; 8and includes any person employed for wages on any work connected with the administration of the factory or establishment or any part, department or branch thereof or with the purchase of raw materials for, or the distribution or sale of the products of, the factory or establishment 9or any person engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 (52 of 1961), or under the standing orders of the establishment; but does not include –
(a) any member of 10the Indian naval, military or air forces; or
11(b) any person so employed whose wages (excluding remuneration for overtime work) exceed 12such wages as may be prescribed by the Central Government :
Provided that an employee whose wages (excluding) remuneration for overtime work) exceed 12such wages as may be prescribed by the Central Government at any time after (and not before) the beginning of the contribution period, shall continue to be an employee until the end of that period;
(10) “exempted employee” means an employee who is not liable under this Act to pay the employees’ contribution.
13(11) “family” means all or any of the following relatives of an insured person, namely :- (i) a spouse;
(ii) a minor legitimate or adopted child dependent upon the insured person;
(iii) a child who is wholly dependent on the earnings of the insured person and who is (a) receiving education, till he or she attains the age of twenty-one years, (b) an unmarried daughter;
(iv) a child who is infirm by reason of any physical or mental abnormality or injury and is wholly dependent on the earnings of the insured person, so long as the infirmity continues;
(v) dependent parents;
(12) “factory” means any premises including the precincts thereof – (a) whereon ten or more persons are employed or were employed for wages on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of power or is ordinarily so carried on, or
(b) whereon twenty or more persons are employed or were employed for wages on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on without the aid of power or is ordinarily so carried on, but does not include a mine subject to the operation of the Mines Act, 1952 (35 of 1952) or a railway running shed;
(13) “immediate employer” in relation to employees employed by or through him, means a person who has undertaken the execution, on the premises of factory or an establishment to which this Act applies or under the supervision of the principal employer or his agent, of the whole or any part of any work which is ordinarily part of the work of the factory or establishment of the principal employer or is preliminary to the work carried on in, or incidental to the purpose of, any such factory or establishment, and includes a person by whom the services of an employee who has entered into a contract of service with him are temporarily lent or let on hire to the principal employer 14and includes a contractor;
15(13A) “insurable employment” means an employment in a factory or establishment to which this Act applies;
(14) “insured person” means a person who is or was an employee in respect of whom contributions are or were payable under this Act and who is, by reason thereof, entitled to any of the benefits provided by this Act;
15(14A) “managing agent” means any person appointed or acting as the representative of another person for the purpose of carrying on such other person’s trade or business, but does not include an individual manager subordinate to an employer;
16(14AA) “manufacturing process” shall have the meaning assigned to it in the Factories Act, 1948 (63 of 1948);
(14B) “mis-carriage” means expulsion of the contents of a pregnant uterus at any period prior to or during the twenty-sixth week of pregnancy but does not include any mis-carriage, the causing of which is punishable under the Indian Penal Code (45 of 1860);
(15) “occupier” of the factory shall have the meaning assigned to it in the Factories Act, 171948 (63 of 1948);
15(15A) “permanent partial disablement” means such disablement of a permanent nature, as reduces the earning capacity of an employee in every employment which he was capable of undertaking at the time of the accident resulting in the disablement : Provided that every injury specified in Part II of the Second Schedule shall be deemed to result in permanent partial disablement.
(15B) “permanent total disablement” means such disablement of a permanent nature as incapacitates an employee for all work which he was capable of performing at the time of the accident resulting in such disablement :
Provided that permanent total disablement shall be deemed to result from every injury specified in Part I of the Second Schedule or from any combination of injuries specified in Part II thereof where the aggregate percentage of the loss of earning capacity, as specified in the said Part II against those injuries, amounts to one hundred per cent or more.
18(15C) “power” shall have the meaning assigned to it in the Factories Act, 1948 (63 of 1948);
(16) “prescribed” means prescribed by rules made under this Act;
(17) “principal employer” means – (i) in a factory, the owner or occupier of the factory and includes the managing agent of such owner or occupier, the legal representative of a deceased owner or occupier, and where a person has been named as the manager of the factory under 19[the Factories Act, 1948 (63 of 1948)], the person so named;
(ii) in any establishment under the control of any department of any Government in India, the authority appointed by such Government in this behalf or where no authority is so appointed, the head of the department;
(iii) in any other establishment, any person responsible for the supervision and control of the establishment;
(18) “regulation” means a regulation made by the Corporation;
(19) “Schedule” means a Schedule to this Act;
20(19A) “seasonal factory” means a factory which is exclusively engaged in one or more of the following manufacturing processes, namely, cotton ginning, cotton or jute pressing, decortications of ground-nuts, the manufacture of coffee, indigo, lac, rubber, sugar (including gur) or tea or any manufacturing process which is incidental to or connected with any of the aforesaid processes and includes a factory which is engaged for a period not exceeding seven months in a year –
(a) in any process of blending, packing or repacking of tea or coffee; or
(b) in such other manufacturing process as the Central Government may, by notification in the Official Gazette, specify;
(20) “sickness” means a condition which requires medical treatment and attendance and necessitates abstention from work on medical grounds;
(21) “temporary disablement” means a condition resulting from an employment injury which requires medical treatment and renders an employee, as a result of such injury, temporarily incapable of 21[doing the work which he was doing prior to or at the time of the injury];
(22) “wages” means all remuneration paid or payable in cash to an employee, if the terms of the contract of employment, express or implied, were fulfilled and includes 22[any payment to an employee in respect of any period of authorised leave, lock-out, strike which is not illegal or lay-off and] other additional remuneration, if any, 23[paid at intervals not exceeding two months], but does not include—
(b) any travelling allowance or the value of any traveling concession;
(c) any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or
(d) any gratuity payable on discharge.
24(23) “wage period” in relation to an employee means the period in respect of which wages are ordinarily payable to him whether in terms of the contract of employment, express or implied or otherwise;
25(24) all other words and expressions used but not defined in this Act and defined in the Industrial Disputes Act, 1947 (14 of 1947), shall have the meanings respectively assigned to them in that Act.
COMMENTS
(i) Canteen workers are “employees”; Employees’ State Insurance Corporation v. Shri Ram Chemical Industries, (1978) 2 LLN 227 (Raj).
(ii) Employees who are working in a showroom or sales office of a concern are “employees”; Bhopal Motors (Pvt.) Ltd. v. Employees’ State Insurance Corporation, (1982) 2 LLN 827 (MP).
(iii) Workers rendering services outside the place of establishment or shop are “employees”; Hindu Jea Band v. Regional Director, Employees’ State Insurance Corporation, 1986 LLR 95.
(iv) Part-time employees employed on daily rate basis are “employees”; Hindu Jea Band v. Regional Director, Employees’ State Insurance Corporation, 1986 LLR 95.
(v) Casual workers are “employees”; Regional Director, Employees’ State Insurance Corporation v. South India Flour Mill (Pvt.) Ltd., AIR 1986 SC 1686.
(vi) Members of a co-operative society are “employees”; Kunnathund Chalakudy Sankethika Co-op. Society Ltd. v. Employees’ State Insurance Corporation, (1989) 2 LLJ 27 (Ker).
(vii) “Casual employee” employed by intermediate employer is an “employee”; Employees’ State Insurance Corporation v. Suresh Trading Company, (1989) 59 FLR 137 (Ker).
(viii) “Employee” includes any person employed for wages on any work connected with the administration of any establishment or branch thereof; Employees’ State Insurance Corporation v. Management of Rajashri Pictures (Pvt.) Ltd., (1990) 61 FLR 251 (Gau).
(ix) Employees engaged by the contractor in connection with the work of a factory or an establishment are liable to be covered under this Act; Employees’ State Insurance Corporation v. Vijayamohini Mills, (1990) 76 FJR 246 (Ker).
(x) An apprentice who is mere trainee for a particular period for a distinct purpose is not “employee”; Employees’ State Insurance Corporation v. Tata Engineering & Locomotive Co. Ltd., AIR 1976 SC 66.
(xi) The free lancer such as an electrician or a carpenter is not “employee”; Modern Equipment Co. v. Employees’ State Insurance Corporation, (1984) 2 LLN 560.
(xii) A partner is not “employee”; Regional Director, Employees’ State Insurance Corporation v. Ramanuja Match Industries, AIR 1985 SC 278.
(xiii) Managing Director of an incorporated company entrusted by the Board of Directors with specified functions for the specified annual remuneration is an employee and not principal employer; Employees’ State Insurance Corporation v. Apex Engineering Pvt. Ltd., (1998) 1 SCC 86.
(xiv) There cannot be any distinction between the workers employed in the kitchen and those in the hotel; A.I.I.T.D.C. Employees Union v. Hotel Ashok, 1984 Lab IC (NOC) 107 (Karn).
(xv) Workers employed in a hospital attached to the factory are coverable under this Act; Regional Director, Employees’ State Insurance Corporation v. Manager, Associated Cement Co. Ltd., AIR 1979 NOC 145 (Karn).
(xvi) Tailoring of clothes is a “manufacturing process”; Vasanti Mahendra Kumar Shah v. All India Handloom Fabrics Mktg. Co-op. Society Ltd., 1985 Lab IC 1104 (Guj).
(xvii) A petrol pump-cum-service station is coverable under this Act; Baranger Service Station v. Employees’ State Insurance Corporation, 1988 Lab IC 302.
(xviii) This Act applies to a factory where any manufacturing process is carried on with the aid of electrical energy; Employees’ State Insurance Corporation v. Gopi Prints, 1990 LLR 51 (AP).
(xix) There is no distinction between a “hotel” and a “club” which renders catering services to its members, Cricket Club of India v. Employees’ State Insurance Corporation, 1992 Lab IC 2029 (Bom).
(xx) Separate buildings, when used for one continuous manufacturing process, will constitute a single factory under this Act; A-1 Plastic Firm v. Regional Director, Employees’ State Insurance Corporation, 1993 LLR 156 (Mad).
(xxi) More than one factory or establishment situated within the common boundary may be taken to constitute a single unit; Employees’ State Insurance Corporation v. Bengal Printing Works, 1984 Lab IC 1.
(xxii) In 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; C.E.S.C. Ltd. v. Subhash Chandra Bose, AIR 1992 SC 573.
(xxiii) Dry cleaning merely cleans the clothes either by washing or through the process of dry cleaning. There is no manufacturing activity involved therein. No new product comes into existence. By no stretch of imagination could the activity of dry cleaning be regarded as the manufacturing activity; Employees’ State Insurance Corporation v. Triplex Dry Cleaners, (1998) 1 SCC 196.
(xxiv) A person will be the immediate employer and not the principal employer even if the employees have been employed by him, if he supplied services to a factory or establishment, to which the Act applies; Employees’ State Insurance Corporation v. T. Shankar Singh T. Byali, (1998) 92 FJR 645 (Kar).
(xxv) A director of a company is an “occupier”; Employees’ State Insurance Corporation v. Gurdial Singh, (1974) 45 FJR 308.
(xxvi) A director who is in possession of the contribution cards and also responsible for sending the same, can be held “principal employer”; Employees’ State Insurance Corporation v. M.P. Roongta, (1998) 56 FLR 115 (Raj).
(xxvii) The term “wages” includes house rent allowance, heat, gas and dust allowance and incentive allowance; Harihar Polyfibres v. Regional Director, Employees’ State Insurance Corporation, AIR 1984 SC 1680.
(xxviii) Subsidy for life insurance premium is “wages”; Employees’ State Insurance Corporation v. J.S. & W. Mills Ltd., (1988) 57 FLR 32 (Raj).
(xxix) L.I.C. premium subsidy is to be included in “wages”; Employees’ State Insurance Corporation v. Shri Ram Chemical Industries, (1988) 56 FLR 343 (Raj).
(xxx) Incentive bonus (but not ex-gratia payment) is a part of “wages”; M.P. State Transport Corpn. v. Employees’ State Insurance Corporation, (1991) 62 FLR 369 (MP).
(xxxi) “Attendance bonus” payable to the employees under the terms of the settlement is “wages”; Williams (India) Pvt. Ltd. v. Employees’ State Insurance Corporation, 1994 LLR 1 (SC).
(xxxii) Bonus or ex-gratia payment is not “wages”; Regional Director, Employees’ State Insurance Corporation v. Bata Shoe (Pvt.) Ltd., AIR 1986 SC 237.
(xxxiii) Over-time wages is not “wages”; Hind Art Press v. Employees’ State Insurance Corporation, (1990) 2 LLJ 195 (Karn).
(xxxiv) Payments made in respect of “paid holidays” are not “wages”; Employees’ State Insurance Corporation v. Malabar Cashew Nut and Allied Products, (1993) 1 CLR 199 (Ker).
(xxxv) Both the remunerations received during the working hours and over time constitute a composite wages and thereby it is a wage within the meaning of section 2(22) of the Act; Balmer Lawrie & Co. Ltd. v. Employees’ State Insurance Corporation, (2003) 2 LLJ 105 (Cal).
(xxxvi) The equipment maintenance Deptt. of a hospital, which is part of a medical college, maintaining and repairing the equipments in the hospital, being a ‘factory’ within the meaning of section 2(12); C.M.C. v. Employees’ State Insurance Corporation, AIR 2001 SC 373.
(xxxvii) The payment was made quarterly and was not ‘wages’ under the Act as it didnot fall under the first part of section 2(22) or under third part thereof; Whirlpool of India Ltd. v. Employees’ State Insurance Corporation, AIR 2000 SC 1190.
(xxxviii) The Crucial expression in section 2(14) of the Act is “are or were payable”. It is the obligation of the employer to pay the contribution from the date the Act applies to the factory or the establishment; Bharagath Engineering v. R. Ranganayaki, (2003) 2 SCC 138.
—————
1. Subs. by the A.O. 1950, for “a federal railway”.
2. Clause (2) omitted by Act 29 of 1989, sec. 3(i) (w.e.f. 1-2-1991).
3. Clause (5) omitted by Act 29 of 1989, sec. 3(ii) (w.e.f. 1-2-1991).
4. Ins. by Act 44 of 1966, sec. 2 (w.e.f. 28-1-1968).
5. Subs. by Act 29 of 1989, sec. 3(iii), for “daughter or a widowed mother, and” (w.e.f. 20-10-1989).
6. Ins. by Act 29 of 1989, sec. 3(iii) (w.e.f. 20-10-1989).
7. Subs. by Act 44 of 1966, sec. 2, for the original clause (w.e.f. 28-1-1968).
8. Subs. by Act 44 of 1966, sec. 2, for “but does not include” (w.e.f. 28-1-1968).
9. Subs. by Act 29 of 1989, sec. 3(iv), for “but does not include” (w.e.f. 20-10-1989).
10. Subs. by the A.O. 1950, for “His Majesty’s”.
11. Subs. by Act 44 of 1966, sec. 2, for the original sub-clause (w.e.f. 28-1-1968).
12. Subs. by Act 29 of 1989, sec. 3(iv), for “one thousand and six hundred rupees a month” (w.e.f. 12-1991).
13. Subs. by Act 29 of 1989, sec. 3(v), for clauses (11) and (12) (w.e.f. 20-10-1989).
14. Added by Act 29 of 1989 sec. 3(vi) (w.e.f. 20-10-1989).
15. Ins. by Act 44 of 1966, sec. 2 (w.e.f. 28-1-1968).
16. Ins. by Act 29 of 1989, sec. 3(vii) (w.e.f. 20-10-1989).
17. Subs. by Act 53 of 1951, sec. 3, for “1934” (w.e.f. 6-10-1951).
18. Ins. by Act 29 of 1989, sec. 3(ix) (w.e.f. 20-10-1989).
19. Subs. by Act 53 of 1951, sec. 3, for “clause (e) of sub-section (1) of section 9 of the Factories Act, 1934” (w.e.f. 6-10-1951).
20. Ins. by Act 29 of 1989, sec. 3(ix) (w.e.f. 20-10-1989).
21. Subs. by Act 44 of 1966, sec. 2, for “work” (w.e.f. 28-1-1968).
22. Ins. by Act 44 of 1966, sec. 2 (w.e.f. 28-1-1968).
23. Subs. by Act 53 of 1951, sec. 3, for “paid at regular intervals after the last day of the wage period” (w.e.f. 6-10-1951).
24. Subs. by Act 45 of 1984, sec. 2, for clause (23) (w.e.f. 27-1-1985).
25. Subs. by Act 44 of 1966, sec. 2, for the original clause (w.e.f. 28-1-1968).
Employees’ State Insurance Act, 1948
