kanand72 Started The Discussion:


ESI & PF becomes applicable to all employees irrespective of their designations or whether they have been taken on a probationary basis/ on a contract basis (individual or either through a labour supplier) /on a daily basis/ on a weekly basis wherein their total emoluments is Rs.7500/-pm for esi and Rs.6500/- for pf they are ought to be covered under the act.

As per the latest court judgement, esi department is insisting the employer to deduct contribution on parties doing job work either inside the premises of the factory/establishment or outside at the party's premises. Before, the employer by providing supporting documents didnot deduct esi for the parties who had done work outside the premises since the party were different entities and dont do the work exclusively for them alone.This was proved by providing sales invoices,delivery challans proving that the materials were sent out and no workmen were engaged by the principal employer to do the work. However after this debatable judgement the employer was told to deduct esi for job work since the principal employer has the discretionary powers to reject the material wherein supervisory control is there over the party on this basis the employer is been asked to deduct from the labour bill @6.50% and pay this amount vide a separate challan. In case the Party has an separate esi code no. he may be asked to provide the copy of the paid challan along with the returns submitted at the time of payment of labour bills. By this way they have broaden the net for esi coverage.

Even Provident fund authorities have taken the same stand they are insisting the employer to deduct 25.61% as like deducting tds from the labour bill of the party and pay the amount in a separate challan every month. They have also been asking to furnish the particulars of the parties from whom tds is been recovered this they planning to make it mandatory as an annual return every year.
Hi, For ESI the total emoluments of Rs.7500 is correct. But for PF Rs.6500 is not the toal emoluments, it is only the Basic of your Salary. Regards, Manjunath
yes on ESi the views expressed are in vogue.several judgments are prevalent on this matter.When job work is done outside by another independent company and there is clear exclusivity the courts have considered them to be a separate entity.

On EPF there has not been such insistence as they have not taken sub contracts for coverage,but on case to case basis this has to be examined and a conclusive desicion arrived at.
ex: home workers in case of Agarbathi industry/beedi rolling/silk looms
to name a few are applicabity noted cases.
This subject is debated for the past 2 decades but no one seems to have the definition amended for the act to remove this ambiguity.
Further, I wish to bring to the notice of all the viewers the point raised by the Provident fund authorities:

It states "As per section 6 and section 8A read with para 30(2) & 30(3) and para 32 of EPF & MP Act,1952, the principal employer is only responsible for contractors' compliance,whether contractors/sub contractors have independent code no". Further inorder to stream line/reguralise the compliance in respect of contractors/sub contractors/outsourcing agencies/service providers, employees, a proforma has been deivsed as Annexure B. All the establishments (Exempted/unexempted) are directed to furnish this annexure immediately.


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