In today’s competitive world employers engaging services of contractors is very common. However, ESIC acts as recovery agents in sending the employers notice u/s 45A of the ESI Act to recover the ESI contributions. ESIC targets outsourcing of service and attempts to recover the ESI Contributions from the principal employer without impleading contractors as a party. Many a times, ESIC contributions are paid by the principal employer, but the record may not be available with them. Further, during the hearing ESIC will not accept request to issue notice to the contractors.
The Hon’ble Apex court has held that it is imperative on the part of ESIC to implead the contractors. The Hon’ble Supreme Court in Bharat Heavy Electricals Ltd. vs Employees’ State Insurance Corporation (2008) 3 SCC 247 has held that ESIC has the requisite jurisdiction to implead the third parties or summon them before it to produce all relevant documents. Section 45A of the Act enables the appropriate authority to recover such dues both from the principal as well as from the immediate employer. The Proviso in section 45 provides for a mandate of giving reasonable opportunity of hearing to both the principal and immediate employer. The Act also empowers the principal employer u/s 41 to recover dues from the contractors / immediate employers. Further, the Hon’ble Supreme Court has held in Fertilizers and Chemicals Travancore Ltd. vs Regional Director, ESIC & Ors. (2009) 9 SCC 485 that “The ESI Corporation is only the agency to implement and carry out the object of the Act and it has nothing to lose if the decision of the Employees Insurance Court is given in favour of the employer. It is only the workmen who have to lose if a decision is given in favour of the employer. Hence, the workmen (or at least some of them in a representative capacity, or their trade union) have to be necessarily made a party/parties because the Act is a labour legislation made for the benefit of the workmen.”
Employers can request the ESIC to issue notice to the contractors / immediate employer of the workmen with the help of above referred judgements to avoid trouble of paying to ESIC and subsequently recovering it from the contractors.