Man-power supply agencies are coverable under the ESI Act as Shops, but only their offices, as the premises in which those offices are functioning are utilised to render service for a price.
The persons supplied by them to do the work of the other factories or establishments cannot be treated as employees of these Man-power supply agencies, just because they got an ESI Employer’s Code Number.
A lot of evasion, manipulation and abuse of the benefits of ESI and denial of benefits takes place in the coverage and non-coverage of the employees deputed by these agencies, which use their employer code number to cover the non-coverable employees also.
The responsibility for their coverge lies only with the ultimate employer who utilizes their services. The Principal Employer for the employees deputed by these agencies to work in other factories or establishments are only those employers who utilize the services of these employees and not the man-power supply agencies which depute them.
Relevant details in this regard are provided in the Powerpoint Presentation available in the following link:
Manpower supply agencies
We have seen the theory and practice in Administrative Procedure in the earlier Posts. We have seen the link between the internal administrative procedure of a department and its impact on public. The current Post deals with certain vital aspects of the administrative procedure evolved in the Revenue Wing of the ESI Corporation and the way it directly affects the insured persons, insurable persons, employers, Social Security Officers and the Revenue Branch Officers. All the instructions cited in the Post are available in public domain.)
The objective of the ESI Scheme is to provide a variety of benefits to the working population. The provisions for inspection mentioned in the statute are, therefore, intended only to further that objective. Concealed employment can be detected only through proper inspection including Ledger Verification in a thorough manner. A simple visit by the Inspector or his going around the factory cannot help detecting such cases. Inspections alone can ensure that all the coverable employees have been covered without being left out, and that contribution is paid on their behalf on all items of wages. If contribution is not paid on all items of wages, the benefits payable would only be a pittance and would not help sustenance of the family of the insured persons during the periods of sickness, maternity, etc., The provision for inspection in the ESI Act is, therefore, intended, mainly, to safeguard the benefit provisions.
The ESI scheme pre-supposed mutual trust on the part of the Employers and the Corporation. It was presumed that the compliance would be honest and correct. That was why the Act did not make inspection mandatory. But, when the scheme was enforced, it was found that the reality in the field was different. The working population was denied coverage or was given benefit very very less as the wages on which the contribution was paid was very less.
Periodical and proper inspections alone could safeguard the interests of the working population by ensuring proper coverage and compliance, the authorities understood. As the saying goes, the ESIC did not get what it expected. It got only what it inspected.
Former Director General, Mr. T.C. Puri who was in charge of the ESIC during the period from 1967 to 1972 had done personal research on insurance matters and issued orders for proper documentation of the behaviour of the employers so that the Inspection methods could be made more effective when dealing with recalcitrant employers. He ordered that such details available with the ESIC authorities must help them to ascertain which employer was ‘absolutely honest’ and ‘above board’ and which employer was ‘trying to cheat the ESI Corporation’. He said that such information must be readily available to the SSOs whenever they join a particular inspection division. Proper and necessary focus was there at that time on the inspection procedure. That set the trend of inspections for more than 24 years from 1968 to 1992.