Pl. provide me the information whether there is any supreme court judgement ( pl. provide me the case law details) for deciding the wage component in PF enquiry to be considered as 25% of the bill amount paid to the contractor.
From India, Mumbai
How can u calculated the pf? Pl. provide the calculation of pf in excel formet. how can u calculate the total information of pf act please give me overall information.
From India, Hyderabad
Sir, Thanx for the prompt response.
In PF 7A enquiry, the APFC has asked us (we are the principal employer) to withhold 6.4% of the bill amount paid to the contractor till further orders. He has verbally quoted that there is a supreme court judgement that in case of absence of any wage record 25% of the total bill paid to the contractor shall be treated as labour component. Therefore i am interested in knowing whether there is any supreme court judgement. Pl. provide me the details if any such judgement is really there.
Rajendra Bhavsar

From India, Mumbai
on PF i donot know but on ESi this judgement is there .
being a principle employer you are responsible for the same.
but what type of contract it was .whether this work was done inside on contract basis or outside the premises.
j s malik

From India, Delhi
To Mr. J S Malik, Dear Sir, What difference makes to ESI contribution when the contract labour has worked inside or outside the premises of the Principal Employer? Regards Deepankar Shree Gyan

This is the fair percentage the RPFC takes in 7A proceedings in absence of any document submitted by the company to that effect.
If any one want to challenge it, then supporting documents have to be submitted.

From India, Bhubaneswar
I agree that in absence of details of material cost and labour cost in a particular bill (of a contractor), it will be construed as 25% as labour charge and the balance is material cost. This is pertaining to ESI alone.

Whereas there is no such system availble in PF.

You must understand one big difference between these two acts.
1) ESI is an insurance agency (remember Employees State INSURANCE Corporation) where they do not have to see from whom they are collecting the money. It is collected from you and spent to those who are in need. Therefore it is payable.

2) To avail the PF benefits one has to have the names of the beneficieres. The contractors employ their casual labours. They work for two days with him and vanish. He hires other labour again; he works for 10-15 days and goes elsewhere (Remember you need to submit Form-2 to enrol them as members; by the time you organize this, they are not there!).

If you deduct PF contribution from the contractor's bill, the amount collected or paid as PF contribution, has to necessarily to be paid back at a later date to the beneficiary for whom they collected. In our case, it is not possible to keep record of such employees.

Hence PF office does not and will not demand PF contribution from such bills.

Hope we are clear now!

V. Balaji

From India, Madras
Mr. Balaji,
Friend i m not aggreable 2 ur view, as PF is applicable 2 contract labour irrespective of their nature of job, even if contractor labour works 4 two days PF has 2 be deducted & payable.
mahesh pandey

From India, Calcutta
Dear Rajendra

Principal Employer, when employing contract labours (through contractors), is required to ensure that the contract labours deployed for his work are paid minimum wages, and statutory deductions are made and deposited with the respective authorities so that these contract labours get their due benefits under these two social security acts. Hence, identification of contract labour is all the more necessary for ensuring benefits to them. Principal employer is thus required to keep track of all the benefits arising, to those contract employees, out of the job entrusted to the contractors employing those contrac labours. So, in absence of any such details available to the statutory bodies for identification of labour element, they take a thumb rule of 25% on the invoice value as labour charges which have been corroborated through different case laws. However, for labour intensive jobs, this rate may vary in higher proportion.

For any further query, you may get in touch with me on .



From India, Calcutta
I have got the judgement of Bombay High Court in ESIC case wherein the court has held that the assuming the wages part as 25% of the total bill by the ESI authorities was right. I am attaching herewith the judgement for the ready reference of all the memebers.
From India, Mumbai

Attached Files (Download Requires Membership)
File Type: pdf Bomaby High Court Judgement.pdf (124.4 KB, 593 views)

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