Urgent Clarification Regarding Contractor - CiteHR
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Dear Govind
Ultimately reponsibility of compliance lies with Principle employer not with contractor if you donot have proofs of challan of compliances you are in trouble firstly get in touch with contractor & inform him regarding penalties & jail for non payment of pf & esi & also discuss the same with legal consultant and take his further advice and action.
sai nandan
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Dear it is very much clear from the P.F. & E.S.I.Act that for conract labour the Principle Employer is fully responsible for the contribution if not paid by the contractor. If ur contractor is having his own PF & ESI code you just ensure that and take the photocopy of the Certificates from the contractor. To ensure the deposition of payment of contribution,you can deposit the same through challans on his code No's and just put a stamp on the challans " EMPLOYEES ENGAGED AT-------------------(your co.name)" So that the contractor can not use ur challan at any other co. It is also mentioned here that you may deduct the deposited amount from his bill i.e. you just pay the amount after deduction the ESI & PF contribution. So, this way you can save ur co. and your co. will be safe. V.K.Gupta
I have seen lot of transaction between you and other professionals.

I like to provide you the legal stand. First for all the violations of statute by any contractor or agents, the principal employeer is mainly responsible. Though you have given the money to the contractor, if the conotractor has no paid, you must have ensured whether he has paid or not. If he has shown fake chellans, it is the employers responsibility to check the proof correctly and not the contractor. May be you can take criminal action against the contractor for cheating under sec 420 on contractor, however you must have ensured all payments and you cant escape that the contractor has not paid and so what employer can do. If the Authorities accept your plea, every company can appoint a contractor who inturn show fake chellan and the employer can escape from action. So, you have to face the action. You need not fear, the authorieties may seek amount that has not paid with penalry and damages and interest for the non remittal amount. No other action they will take.hope you are clear.
Dear Govind,
I am completely agree with shahid and Dinesh
If u fail to take ESI and EPF code from your contractor and fail to deposite required amounts for ESI & EPF then both department recover those amount from Principle Employer on the basis of wages paid to contractot @ 6.5 % for ESI with Interest rate near about 13% and for EPF 25.61 % with Interest rate of nearly 13 %.
Regards Rizwan
I read the whole discussion, and every thing posted was very correct legally and socially.
The main question of Govind is who is responsible, The whole onus of responsibility is on the Principal Employer for any non compliance of statutory requirements.
Sanjeev Kumar
Pricipal employer will be responsible For wages & their social security contributions if contractor fails to clear their dues or social security contribution.
Ajay Kumar Mishra

At the outset it is your responsibility as PRINCIPAL EMPLOYER to ensure that the conbtractor appoited by you is abiding all the legal reqmts. Govt will catch you first when they see the records. Hence it is very much essential that before teh contacrt is awarded you must ensure that the contractpor is willing to abide with all statutory reqmts.
Thogh the law permits that you can deduct these dues form the bills of contractor afterwards.
Plesae refer to contract labour(abolition and regularation act)
Milind Naik
To answer your query the organization on who's payroll the employee in working will be responsible.
what you can do to get out of this mass is seek clarification from the contractor regarding the same. You can also make an amendment in the SLA for the same to again safeguard your Firm interest.
Hi, I agree with Mukesh thakkar, we also follow the same procedure. Our contractor submit copy of PF&ESI challan along with bill.
Dear Govind,
I has gone through the above question and replies given by our friends.you better to collect the following documents with your contractor right now.
1) Contract registred licnece ( Department of Labour)
2) Agreement made by company & contrator
3) Half yearly returns.
4) PFcode no allotment copy.
5) ESIC code no allotment copy.
6) Service Tax registration copy.
7) PT registration copy.
8) Any policy's like ( Travel, Local conveyance etc).
9) Monthly salary register.
10) OT register.
Principal employer is resposiable for if contrator is not paid amount to depts. Right now conduct audit to your contractor ask him to produce all above documents and verify each and every thing if you found any fraud ask him to pay immediatly to dept.
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