Supreme Court Upholds ESI Act Applicability on Casual Workers in Turf Club Case

The Supreme Court of India, in Royal Western India Turf Club Ltd. vs. Employees’ State Insurance Corporation, addressed a crucial question regarding the applicability of the Employees’ State Insurance (ESI) Act, 1948, on casual workers. The case revolved around whether temporary employees engaged on race days were covered under the definition of ‘employee’ under Section 2(9) of the ESI Act.

Background of the Case

The primary issue was whether the ESI Act applied to casual workers hired by the Royal Western India Turf Club Ltd., and from which period the club would be liable to make contributions. The club contested the demand for ESI contributions, arguing that temporary staff working on race days should not be considered employees under the Act.

Petitioner’s (Turf Club) Arguments:

• The club argued that casual workers engaged on race days for ticket issuance should not be classified as employees under Section 2(9) of the ESI Act.
• It relied on previous consent terms agreed upon with the ESI Corporation, wherein casual laborers were exempted from ESI coverage.
• The club contended that calculating contributions for workers employed only on race days was impractical.

Respondent’s (ESI Corporation) Arguments:

• The ESI Corporation asserted that the Turf Club was notified under the ESI Act as early as 1978.
• It argued that the consent terms cited by the Turf Club were related to an earlier period and had no bearing on the case.
• Casual workers engaged for race-day operations were still involved in the club’s core activities and should be covered under ESI.

Supreme Court’s Judgment:

• The Court upheld that casual workers fall under the definition of ‘employee’ in Section 2(9) of the ESI Act.
• It noted that the ESI Act was a welfare legislation meant to ensure social security benefits for all employees, including temporary workers.
• The ruling stated, “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 Court ruled that the Turf Club was liable to pay ESI contributions from 1978 onward and must comply with all applicable regulations.
• The Club was directed to clear outstanding contributions within three months along with applicable interest.

Key Takeaways

• The ESI Act covers casual workers if they are engaged in the core activities of an establishment.
• Employers cannot escape liability by claiming temporary employment arrangements.
• Welfare laws like the ESI Act must be interpreted in a way that benefits workers rather than depriving them of social security.

The judgment was delivered by Justice V. Gopala Gowda and Justice Arun Mishra on February 29, 2016.

This ruling strengthens labor protections for casual workers, ensuring they are not denied the benefits of social security schemes under the ESI Act.

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Download Judgment: Royal Western India vs E.S.I. Corporation & Supreme Court of India Judgment Dated 29-02-2016-1741852869862.pdf