Labour Laws Q/A


Q. Will different branches be taken into consideration in calculating the number of employees for coverage under the ESI Act?1

Ans. The ESI Act will apply on all branches of an establishment when total number exceeds 20.2 Different sales and service outlets will be clubbed for applicability of ESI Act even when none employs 10 or more employees.3 ESI Act will be applicable upon the employees working in sales depots and offices of Bata India since its factory is covered under the Act. Two units will be clubbed together for coverage under the Act when there are common partners and interdependence of one unit upon the other.4

However, when the appellant-corporation demands contribution from respondent-firm, clubbing it with another firm having common partners as one establishment, the Employees’ Insurance Court held that the demand was not sustainable. Hence, the present appeal by the Corporation was dismissed. In appeal, the High Court observed that the Employees’ Insurance Court had recorded a finding that both the firms in question were separate and in none of them more than 10 employees were found working, and as such no contribution could be recovered.5 For instance, two petrol pumps owned by the same owner, though located at different locations but having functional integrality, will be treated as single entity to be clubbed together for coverage under ESI Act. Hence, the findings of the Employees’ Insurance Court excluding one petrol pump to be covered for want of 20 employees is liable to be set aside.6 However, when father allows his son to use the premises for different types of business, their establishments cannot be clubbed for coverage under ESI Act.7 But the employees of two establishments can be clubbed for coverage under ESI when there is functional integrality.8

1. Duvent Fans (P) Ltd. v. Regional Director, E.S.I. Corporation, Bangalore, 2001 LLR 783 (Kant HC).

2. Southern Agencies v. Andhra Pradesh E.S.I Corporation, 2001 LLR 191 (SC).

3. Bata India Ltd., Calcutta v. E.S.I. Corporation, 2003 LLR 1018: 2003 (3) LLN 1069: 2003 (III) LLJ 716 (Cal HC).

4. Jamuna Stores v. Regional Director, E.S.I. Corporation, 2004 LLR 1163 (AP HC).

5. Employees’ State Insurance Corporation, Kanpur v. Tops Foods Products, 2008 (I) LLJ 337 (Uttr HC).

6. Assistant Regional Director, Employees’ State Insurance Corporation v. Kolhapur Motor Malik Sangh Ltd., 2007 LLR 1242 (Bom HC).

7. E.S.I.C. v. Ved Parkash Gupta, 2008 LLR 881 (Del HC).

8. Sumangali v. Regional Director, E.S.I. Corporation, 2008 LLR 941 (SC): AIR 2009 SC (Supp) 1298.


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