Who is responsible for ESI & PF contribution of Contractual Labour
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Who is responsible for ESI & PF contribution of Contractual Labour

Knwoledge HRD Started The Discussion:

Dear all,

I am working in a pvt. ltd. company as a HR head in Punjab State .

There are three contractors are engaged in our manufacturing unit . And under three contractors there are approx. 40 emplyees/labours/workers with each contractors are working .

So, my question is from all HR experts:

1. Since ,our Contractors is not registered under contract labour Act.
2. In that case,as per law,who is responsible for ESI PF & EPF contributions of contractual labours who is working under contractors .
3. If contractor is responsible, can employer have a right to deduct both the share of ESI and PF contribution from these contractual labour who is working under each contractors.
4. What is other responsibilities & liabilities should be resoled by contractors in respect contractual labour/employees
5. As a principal employer, do we require to cover all these contractual employees under ESI & PF.In that case what will be the structure of ESI & PF deductions. What law says.

Thanks & warm regards

Sanjeev Sharma

tsivasankaran - Member Since: Dec 2007
1. Since ,our Contractors is not registered under contract labour Act.

The contractors have more than 20 workers working with them in your establishment Hence you need to issue Form 5 and ensure that the contractors obtain Licence Otherwise these contract workmen will be deemed to be your workmen
2. In that case,as per law,who is responsible for ESI PF & EPF contributions of contractual labours who is working under contractors .

Irrespective of whethr you register or not, Principal employer is accountable for ensuring that these employees are covered under PF ESI and are given Leave facilities

3. If contractor is responsible, can employer have a right to deduct both the share of ESI and PF contribution from these contractual labour who is working under each contractors.

[COLOR="DarkGreen"]Employee's contribution alone can be deducted from the employees Employer's contribution need to be paid by the employer

While fixing the contarctor's remuneration you must fix it in such a way that all these expenses are covered generally Contractor's remuneration is fixed as Employee's wages +30% towards statutory benefits including Bonus and leave + Profit margin as agreed You must release the Contractor's monthly bill only after he shows payment towards statutory liabilities If the contractor does not have PF and ESI code, employer can obtain sub codes( In some states they make it difficult to issue sub codes)Deduct employees contribution and maintain records[/COLOR]

4. What is other responsibilities & liabilities should be resoled by contractors in respect contractual labour/employees

A PF mointhly payment and returns
B ESI Monthly payments and six monthly returns
C. Leave and Holiday wages
D Gratuity
E Bonus under Payment of Bonus Act


5. As a principal employer, do we require to cover all these contractual employees under ESI & PF.In that case what will be the structure of ESI & PF deductions. What law says.

As a principal employer you are responsible and also liable for coverage,payment and maintaining records for all these employees, The structure is the same as that of regular employees and there is no differentiation



Sivasankaran

S.Chandrasekar - Member Since: Dec 2007
Hi Sanjeev,

Of late, many principal employers just like that appoint contractors of their choice by mere quotation value and get a licence. Principal employers are not bothered about the labor compliances of the Contractor to be engaged. Who cares? Answers to all the questions you have asked actually figure in the Special conditions of Contract. I am giving an excerpt from it:

Chapter 1 and Section 1 (4) (b) of the Contract Labour (R&A) Act - 1970 provides that the Act shall be applicable to every contractor who engages or engaged twenty or more personson any day of the proceeding twelve months.
It is therefore advised that in case you desire to engage twenty or more workmen, this should be brought to the notice of your Engineer-In-charge of Work Center who would in turn, issue necessary certificate in form V to the effect that the applicant has been employed by you as a contractor in relation to his establishment and that he undertakes to be bound by all the provisions of the Act and the rules made there under.

b) The Contractor shall discharge obligations as provided under various applicable statutory enactments including the Employees Provident Fund & Miscellaneous provisions Act, 1952. The Employees State Insurance (ESI) Act 1948. The Inter-State Migrant Workmen (Regulation of Employment & Conditions of Service) Act, 1979, the Minimum Wages Act, 1936, the Workmen’s Compensation Act, 1923 Building Construction Works and other relevant Acts, Rules and Regulations enforced from time to time. The Successful Bidder must have valid PF Code No. and Labour Licence as applicable, issued by the Competent Authority. The Successful Bidder has to comply with Insurance Provisions for the personnel deployed at the time of commencement of work.

c) The Contractor shall be responsible for required contributions towards PF, Pension, ESI or any other statutory payments to be made in respect of the contract and the personnel employed for rendering service to Principal Employer and shall deposit these amounts on or before the prescribed dates. Every contract shall submit the proof of depositing the employees’ and employer’s contributions. The contractor shall also be responsible to pay any administrative/inspection charge thereof, wherever applicable, in respect of the personnel employed by him for the work of Principal Employer.

So when the contractors fail to adhere, Principal employers go feverish and suddenly wakeup. They are concerned about the project run and not statutory compliances. Awareness about this Act is get to gain speed.

Regards
Chandru

Cordialmanpower - Member Since: Apr 2012
Dear Citehr team

We have newly found partnership firm engaging in Contract labour. Sir i would like to

know What is initial expenses for 1)P.F code 2) E.S.I code (Maharashtra ,Pune) 3) PAN

based Service tax Regn. number.

Please explain in details if possible.

Thanking you.

Cordialmanpower - Member Since: Apr 2012
Dear Citehr team

Would you send me excel sheet with calculation of following ? so i can calculate accurate wages of contract labour who is working of hourly basis. Please highlight which

contribution is payable by employer or employee. Please send me final invoice to be raised to principal employer with all calculation including 7 % Service fee/charge and Service tax.

1) PF ( Employer contribution , Employee Contribution)

2) E.S.I ( Employer contribution , Employee Contribution)

3) Labour Welfare fund

4 )Net pay to employee.etc

Please help

Thank you very much

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