ESI Act shall be applicable to establishments irrespective of the number of employees

The Employees State Insurance Corporation (ESIC) vide notification dated 15.02.2023 has published the Judgement of the Supreme Court in the matter of ESIC vs. M/s. Radhika Theatre. The apex court Judgement dated 20.1.2023 has ordered that on and after 20.10.1989, irrespective of the number of employees working in a factory or establishment, it shall be governed by the ESI ACT. The ESIC officers are directed to enforce the order.

The Apex Court, in its judgment, held that Section 1(6) of the Employees’ State Insurance Act, 1948 is retrospective in nature and applies to establishments that were already in existence prior to the insertion of the said provision. The Court further held that the provision applies even if the number of employees of the establishment falls below the specified limit at any time. The court held that the provision was introduced to provide greater security of employment to employees and to promote the cause of social justice and the provision should be interpreted in a way that is consistent with the purpose of the Act.

The Court clarified that Subsection (6) of Section 1 must be applied to all establishments, regardless of when they were established or the number of people employed. This means that the ESI Act is applicable to all establishments, even those established prior to 31 March 1989/20 October 1989.



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