Strictly speaking, for the purposes of the PF Act, the term "establishment" is relevant. In your case, the establishment is your Export House. Consequently, it does not matter if your Contractor does not employ on his rolls 20 persons. So long as the total number of employees (including contract labour) working in your establishment cross the 20 persons threshold, YOU (and not the Contractor) are obligated to comply with the PF Act requirements (since You are the Employer even for Contract Workers). Therefore, it is in your interest to specifically provide or agree upon in the Contract with the Contractor at the time of contract negotiations that the Contractor has to pay the PF for his workers as well.
Some courts have held that if the Contractor has his own code, then he, not the Principal Employer" is the Establishment (and the Employer). Although this is convenient for Principal Employers (and seems to find courts' acceptance), the PF Act per se does not recognise this aspect. The PF Act places the burden on the Principal Employer provided the Contract workers work in the premises of the Principal Employer.
From India, Vellore
7Some courts have held that if the Contractor has his own code, then he, not the Principal Employer" is the Establishment (and the Employer). Although this is convenient for Principal Employers (and seems to find courts' acceptance), the PF Act per se does not recognise this aspect. The PF Act places the burden on the Principal Employer provided the Contract workers work in the premises of the Principal Employer.
From India, Vellore
Dear HR Colleagues, Can a company hire all its employees on contract basis to avoid PF and ESI contribution Regards Prasun
From India, Delhi
From India, Delhi
Dear Anamika, Firstly, Please note that Contract Employees also come under the purview of all Labour Laws i.e EPF, ESI etc
Please do not think that Contract Labour (Regulation & Abolition)Act is enacted to circumvent applicability of other Labour Laws.
From India, New Delhi
Please do not think that Contract Labour (Regulation & Abolition)Act is enacted to circumvent applicability of other Labour Laws.
From India, New Delhi
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