What is the legal position regarding the applicability of the Employees’ State Insurance Act, 1948 if the services provided by the employees of the establishment are outside the establishment? E.g. a business of playing music (band) at marriages and birthdays which take place outside the establishment or the catering services where food is cooked and served in the client’s premises. These establishments are mostly seasonal basis as marriages are a seasonal affair and do not take place on daily basis. Under such circumstances, does the ESI Act become applicable to the establishment of such nature where the employees are providing services outside the establishment?
In the case of Hindu Jea Band, the applicant establishment through their labour law advocate challenged the coverage before the Learned EI Court, Rajasthan on the plea that the employees are providing services outside the establishment which is of seasonal in nature. However, the plea of the applicant establishment was rejected by the Learned EI Court and thereafter the Hon’ble Rajasthan High Court dismissed the appeal filed by the appellant establishment.
Finding no other alternatives, the applicant establishment moved before the Hon’ble Supreme Court. The Supreme Court of India held that employees whether paid on daily basis or part time employees, will be treated as ‘employees’ under the Act. Hence, the establishment has been rightly covered under the Employees’ State Insurance Act, 1948. Thus it can be concluded that even if the employees provide services outside the establishment, still they will be treated as employees and will come under the coverage of the ESI Act.