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Labour Legislations

Notes Contract Labour and Applicability of other Labour Laws

The following are the other labour laws which are applicable to contract labour, the relevant
provisions of which are briefly described below:

The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952

As per Section 2(f) of the Act, any person employed by or through a contractor, in or in connection
with the work of the establishment, is also an employee unless otherwise covered under the Act

and will thus be eligible to get the benefits of the schemes framed under the Act. Thus, the
employees engaged through the contractor will be liable to be covered under the Employees’
Provident Fund and Miscellaneous Provisions Act – DCM Ltd. vs. Regional Provident Fund
Commissioner, 1998 LLR 532 (Raj HC).
The Employees’ State Insurance Act, 1948

In factories and such other establishments to which the Employees’ State Insurance Act applies,

contract labour will be eligible for the benefits as conferred under the Act to the employees,

so long as they meet the requirements of the expression “employee” as defined in section 2(9)
thereof which reads as under:
“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 of establishment or which is preliminary
to the work carried on in or is 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, and 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, of
which the purchase of raw materials for, or the distribution or sale of the products of, the
factory or….

Did u know? In view of the above, the employees engaged by the contractor in
an establishment as covered under the Employees’ State Insurance Act, reliable to be
covered – Employees’ State Insurance Corp. vs. Vijaymohini Mills, 1990 LLR 304: 1990 (1) LLN
902 (Ker HC). In another case also, it has been held that the principal employer will be
liable to pay ESI contributions of the employee employed through the contractor – Standard
Fabricators (India) (P) Ltd. vs. Regional Director, Employees’ State Insurance Corpn., Bombay,
1994 LLR 869 (Bom HC). In one case, the Kerala High Court has held that the workers
employed by contractor for the work of the principal employer connected with the business
of the factory are liable to be included for the purpose of contribution under the Act, even
if such workers were casual – Siddeshwar and Co. vs. Employees’ State Insurance Corpn., 1997
(3) LLN 589 (Karn HC). Also the employees engaged through the contractor to do ancillary
job for the principal employer will be covered under ESI Act – Regional Director, ESI Corpn.

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