ESIContract labourSupreme Court of India

ESIC v R.K. Swamy

AIR 1994 Supreme Court 175419941 min read
The case in brief30-second read
Facts
Employees of an advertising agency worked on the premises of the principal employer. Principal employer exercised supervision and control over their work. Denied ESI coverage on the ground that they were employees of the contractor (advertising agency), not the principal employer.
Issue
Whether persons employed through a contractor but working under the principal employer's supervision are "employees" under Section 2(9) of the ESI Act.
Held
The test is functional control and supervision, not the contractual arrangement.
Principle
Persons working through a contractor but under the principal employer's supervision and control are employees under Section 2(9) of the ESI Act.
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Facts

  • Employees of an advertising agency worked on the premises of the principal employer
  • Principal employer exercised supervision and control over their work
  • Denied ESI coverage on the ground that they were employees of the contractor (advertising agency), not the principal employer
  • ESIC brought proceedings to declare them covered

Issue

  1. Whether persons employed through a contractor but working under the principal employer's supervision are "employees" under Section 2(9) of the ESI Act.

Held

  • The test is functional control and supervision, not the contractual arrangement
  • Where the principal employer:
  • Exercises supervision over the work
  • Controls the manner of work
  • Workers operate on principal employer premises

Ratio decidendi

A person working through a contractor on the principal employer's premises under their supervision and control is an employee under Section 2(9) of the ESI Act. The test is functional control, not the paper contract.

Exam use

How to use it in an answer

  • Authority for ESI coverage of contract workers
  • Use in questions on scope/coverage of the ESI Act
  • Key line: "In ESIC v. R.K. Swamy (1994), the Supreme Court held that the test for employee status under the ESI Act is functional control and supervision, not the contractual label."

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Citation

ESIC v. R.K. Swamy AIR 1994 Supreme Court 1754

Reported: AIR 1994 SC 1754; verified from chapter content. This is an educational summary, not the judgment itself. Cite the reported version in professional or academic work.