Discuss the Liability of Immediate Employer and Principal Employer Under ESI Act 1948.

Meaning of Immediate Employer: 

Immediate employer, in relation to employees employed by or through him, means a person who has undertaken the execution of the work of the principal employer on the premises of a factory or any establishment to which this Act applies. He may have undertaken the execution of the work independently or under the supervision of the principal employer or his agent.

Further, he may have undertaken the execution 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. The term immediate employer shall also include a person by whom the services of an employee who has entered into a contract of service with him are temporarily lent or lent on hire to the principal employer and includes a contractor.

Liability of Immediate Employer : 

Immediate employer is not required to pay his contribution and contribution in respect of his employees in the first instance. A principal employer, who had paid contribution in respect of an employee employed by or through an immediate employer, shall be entitled to recover the amount of the contribution so paid (i.e.,. the employee’s contribution as well as employer’s contribution, if any) from the immediate employer.

The immediate employer shall maintain a register of employees employed by or through him as provided in the regulations and submit the same to the principal employer before the settlement of any amount stated above.

Meaning of Principal Employer: 

  • 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 the Factories Act, 1948, the person so named;
  • 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;
  • In any other establishment, any person responsible for the supervision and control of the establishment;

Liability of Principal Employer : 

The principal employer shall pay in respect of every employee, whether directly employed by him or through an immediate employer, both the employer’s contribution and the employees contribution.

The employer has to deduct contribution from wages of employees and pay to ESIC his contribution as well as employees’ contribution. The employer is required to contribute at the rate of 4.75% of the wages paid/payable to each employee in respect of every wage period, rounded off to the next higher rupee.

The employees are also required to contribute at the rate of 1.75% of their wages, rounded off to the next higher rupee. The contributions payable in respect of each wage period shall ordinarily fall due an the last day of the wage period. Where an employee is employed for part of a wage period or is employed under two or more employers during the same wage period, the contribution shall fall due on the day as may be specified in. the regulation.

If any contribution payable under this Act is not paid by the principal employer on the date on which such contribution has become due, he shall be liable to pay simple interest at the rate of twelve per cent per annum or at such higher rate as may be specified in the regulations till the date of its actual payment.

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