I work in a PSU and engage a lot of contract workers through contractors. In our agreement with contractors, it is stipulated that contractor needs to register all his employees under PF and ESIC but many a times we noticed that contractor refuse to enroll all employees stating that it is optional for the employees earning more than Rs.6501. Please clarify is it correct on the part of contractor or as principal employer we can force contractors to enroll all employees in EPF?
If you appoint contractor for labour supply but it is duty of principal employer or his agent (GM or HR) to insure that labour contract to will submit form - 5 ( Joining of new member) and put the EPF amout on thems account. You can demand contract all legal compliances e.g. wages register, monthly epf challans, epf form 5, w.c. policy, ESIC challan.
You being Principal Employer, liable for compliance of labour laws and social securities in respect of contractors employees working in your premises. Therefore it is necessary for you to see that your contractors take care of said compliances in proper way.
You should ask for xerox of following documents in respect of contract employees engaged in your premises by your contractors every month:
i. Muster roll and wage register with remark: PF not deducted in respect of excluded employees within the meaning under EPF&MP Act;
ii. PFchallan and ECR with highlighting the names of employees engaged in your premises.
iii.ESI challan and contribution list with highlighting the names of employees engaged in your premises.
iv. PT Challan.
iv. MLW challan whenever applicable.
You should additionally take appropriate undertaking cum indemnity from contractors to abide by all the provisions of applicable labour law and indemnify you.
It is suggested to hire a Consultant / Adviser and also carry out third party audit of the complainces by such Consultant / Adviser.
I believe you are from Mumbai. You can contact me and have commercial contract with me for suggested services.
For all employees with a basic + da of over 6500 per month, PF is optional at the decision of the employee. So he is right in not option got PF for such employees.
However, there are several riders on the option.
- the worker must not be an existing member of PF (if they had PF at previous employment, then they can not opt out now unless they have closed that account and got their money back)
- they must have a starting salary of more than 6500 (it does not apply where the salary increased to 6500)
- they need to fill the relevant form at time of joining asking for exemption. Once they are under PF, they can not opt out.
From my knowledge and experience, contractors are going to give minimum wages only And I find it difficult to believe the workers have starting salary above 6500
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