ESIC & PF deduction as per labour law
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ESIC & PF deduction as per labour law

Rachana Gadage Started The Discussion:

Hi all,
My company is hiring security guards from a contractor, we are not aware about their deduction of ESIC & PF. We are paying per guard Rs.3500/- plus service tax, as per their income contractor have to give benefit of ESIC & PF.
If they are deducting ESIC & PF then are we liable to pay ESIC & PF to goverment ?

Amitmhrm - Member Since: Feb 2007
Dear Rachana,

ESI is contributed from both the sides Employee as well as Employer.
It is been calculated on the basis of Gross salary per month and the maximum ceiling is 10000 Rs./Month.
The contribution from both the sides is as below-

Employee Side- 1.75% of gross/month
So if gross of an employee is 8000/month then
ESI contribution would be 8000*1.75% = 140 Rupees

Employer side- 4.75% of gross/month
ESI contribution would be 8000* 4.75% = 380 Rupees.

Whereas, PF is also been paid from both the sides.. Both the employer as well as employee is required to pay the 12% of basic salary..
Out of this 12% of employer's contribution 8.33% goes to Pension fund whereas rest 3.67% goes to the PF Fund itself..

Regards,

Amit Seth.

Rachana Gadage - Member Since: Oct 2007
Hi Amit,
Thanks for reply
But my question is security guards which I am hiring if their employer is not deducting ESIC & PF then in any case am I liable for ESIC & PF ?

Because I think ( actually I am not sure about it) even any repairing charges or any labour charges company have to deduct ESIC.

Regards
Rachana

Amitmhrm - Member Since: Feb 2007
Dear Rachana,

Your company is not directly required to pay these contribution with the government bodies..

You are required to check whether the outsourced company is providing these benefits to their employees or not.. as these are your outsourced employees..
So, you are required to ask to the Outsourcing company to provide the returns and all details related with the same....

Regards,

Amit Seth.

Raj Meritech - Member Since: Sep 2007
Dear Rachana,
You can demand ESIC & PF Challans per month, ESI & PF Nos. of your employees, ESI & PF return or you can demand ESIC and PF details per month of your employees from your contractor so that you can check wether your contractor is depositing ESI & PF or not.

Regards,

Raj

Rachana Gadage - Member Since: Oct 2007
Hi all, My another query is as per labour law in this situation anywhere am I defaulter? It means can goverment body take action against me if security guards are not getting benefit of ESIC & PF ?

amitshah - Member Since: Sep 2007
Dear Amit,
Your reply on Rachana's query is right, but now the salary for ESI is raised upto Rs. 10,000.00. If the employees who r having the gross salary of Rs. 10,000.00 , then he is eligible for the deduction and benefit of ESI.

Dear Rachana,
You have to ensure from contractors side that they are deducting the ESI and PF from contract employees salary and paying the same to government. For that you can ask monthly challans from the contractors. If you are not ensuring the same, during the inspection it's sole responsibility of Employers.

Thanks,
Amit Shah

Amitmhrm - Member Since: Feb 2007
Dear Amit Shah,

Thanks.. BTW i have already specified that ceiling for ESI is upto rupees 10,000/- as a gross salary..

Moreover, dear Rachana.. yes Government body may ask you to produce the documents before them..

regards,

Amit Seth.

Raj Meritech - Member Since: Sep 2007
Dear Rachana,
As a principle employer you are liable to deposit ESI & PF. If ESI & PF authorities find anything wrong in that position Principle Employer is liable for these payments and they will tell the principle employer to deposit the amount but principle employer can deduct the same amount from the contractor bill.

Thanks

Raj

arv_r123 - Member Since: Oct 2006
Hi all,

All of us understand that compliance of ESIC & PF is must and therefore all the contract workers and direct employees must be covered under the act (according to the law). But my question is that in our company we are appointing various service contractors for providing service on site, so in few cases the contractor visits only 4-5 times in a month(2 to 3 Peoples), are we required to deduct PF & ESIC contributions?

regards

Arvinder Rawat



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