Casual workers are covered under the definition of ‘employee’ as defined in ESI Act #indianlaws

Supreme Court has held that Section 2(22) of the ESI Act covers the “casual employees” employed for a few days on a work of perennial nature and wages as defined in section 2(22) and wage period as defined in section 2(23) does not exclude the wages payable to casual workers. They cannot be deprived of the beneficial provisions of the Act. The employees’ work for the day of racing which is perennial activity of Appellant Club and in view of the provisions of the Act, Rules, Regulations and notification, such employees are covered and consequently are entitled for benefit of the Act.  

The questions raised for adjudication before the Court was whether casual workers are covered under definition of employee as defined in Section 2(9) of the Employees State Insurance Act, 1948 (‘ESI Act’)?

So far as the moot question in the present petition is concerned was to determine as to whether the ESI Act Act was applicable on Appellant as was held by a 3-Judge Bench decision of this Court holding that Turf Club would fall within the meaning of the word ‘shop’ as mentioned in the notification issued under the ESI Act and therefore, the provisions of ESI Act would extend to the Appellant also.

It was submitted on behalf of the Appellant club that temporary staff engaged on race-days for issue of tickets, would not be covered by the definition of the “employee” under Section 2(9) of the ESI Act.

Section 2(9) of the ESI Act defines the term ‘employee’ where a wide definition has been given to the term. A person who is employed for wages in the factory or establishment on any work of, or incidental or preliminary to or connected with the work is covered. The definition brings various types of employees within its ken. The Act is welfare legislation and is required to be interpreted so as to ensure extension of benefits to the employees and not to deprive them of the same which are available under the Act.

Section 39 deals with the contribution payable under the Act with respect to the employee in respect of each “wage period” shall ordinarily fall due on the last day of the wage period, and where an employee is employed for “part” of the wage period or is employed under two or more employers during the same wage period, the contributions shall fall due on such days as may be specified in the Regulations.

The definition of the term “employee” in section 2(9) is also wide enough to cover casual employees who are employed for part of wage period. It is also provided in section 39(5) that in case contribution is not paid, it shall carry 12% interest per annum or such higher rate as may be specified in the Regulations till the date of actual payment and the amount is recoverable as arrears of land revenue.

Then, Section 42 deals with the general provisions as to payment of contributions, which provides that no employee’s contribution shall be payable by or on behalf of an employee whose average daily wages are below such wages as may be prescribed by the Central Government. Contribution of the employer as well as the employee shall be payable by the principal employer for the wage period in respect of the whole or part of which wages are payable to the employee and not otherwise. The provision does not prescribe that employee has to work for a particular period for availing benefit of the said provision.

Section 2(22) clarifies that it would cover the “casual employees” employed for a few days on a work of perennial nature and wages as defined in section 2(22) and wage period as defined in section 2(23) does not exclude the wages payable to casual workers. They cannot be deprived of the beneficial provisions of the Act.

The employees’ work for the day of racing which is perennial activity of Appellant Club and in view of the provisions of the Act, Rules, Regulations and notification dated 18.9.1978, such employees are covered and consequently are entitled for benefit of the Act. The Court further clarified that notification issued has statutory force and no agreement can supersede it.

[Royal Western India Turf Club Ltd. vs. E.S.I. Corporation & Ors.]

(SC, 29.02.2016) – Civil Appeal No. 49 of 2006