Industrial Relations And Labour Laws
Statutory Complaince/labour & Employment
Taxation And Related Legal Matters
With regard to paras (c) and (d), I would like to add some insights with regard to ESI.
Generally there is a standard thumb rule in respect of the contractors--to maximize profit--by minimizing whatever possible under the contract. Al-tough i may sound a bit pessimistic this is the real fact.
Generally most of the HR personnel just check whether the monthly statutory payments have been made and whether the remittance challan is produced. The area where the HR man fails here is --whether the quantum of amount remitted is in tandem to the labour bill raised by the contractor. Eg: the bill submitted for a particular week would be let us say for 2 lakhs and also submits a challan for Rs. 1250/- towards ESI contribution remittance. Now let us assume he operates at a margin of 15% (MARGIN ABOVE THIS LEVEL MAKES THE COMPANY IMPRUDENT). Then his payout should be (bill amt minus profit) i.e. Rs. 1,70,000/-. Now 6.5% (ESI Contribution Rate) should be Rs. 11,050/- whereas the contractor submits a challan for Rs 1250/- only therby evading Rs.9800. This comes to light after say 2 years when an inspector from esi comes and verifies the records. By the contractor would have fled.
So for ESI if it is a pure labour/manpower contract, deduct or instruct the contractor to remit remit contribution on around 2/3rds of the bill amount.This is the Thumb rule followed by the ESI authorities and this could save the company from future shocks.
Also read the Sections 40 to 44 of the ESI Act with reference to your question.
1st March 2010 From India, Madras
From the post it is not clear what activity is being carried out in the department. If any manufacturing process is being carried out then you should have obtained registration under the Factories Act as well because your number of workers including workers engaged through contractors exceeded 10. I do not know why there is no such registration.
If your department is covered by ESI and EPF (not the government Provident Fund but the Employees Provident Fund governed by the Employees Provident Fund and Misc. Provisions Act, 1952) then all contractors should have ESI and EPF registration. On the other hand, if your department is not covered by ESI and EPF then there is no need for the Contractors to have ESI and EPF just to employ workers in your department.
If so covered, it becomes the responsibility of the Principal Employer to ensure that the Contractors have remitted all ESI and EPF contributions in respect of all employees engaged by them in your department. It is also the responsibility of the Principal employer to ensure that the contractors have paid at least minimum rates of salary fixed by the government as per Minimum Wages Act and paid the salary in time as per the provisions of Payment of Wages Act.
1st March 2010 From India, Kannur
Suppose a contractor has employed more than 20 employees and he has not obtained code and even the principle employer like above they have goverment PF rules and not PF & Misc Act or ESI as the case may be. so as per you no need to comply.
But by virtue of applicability of PF Act and ESI Act, as it is applicable on any estabishment in which 20 or more than 20 persons have employed.
In veiw of this who shall be responsible for non complaince, because as per both Act as far as my knowledge and understading at first instance Principle employer is liable for any default in non complaince or breach of rule, athough he has right to recover the same from the contractors.
As you have mentioned in next para that Principle employer shall ensure the complaince of contractors
So please will you clarify.
3rd March 2010
4th March 2010 From India, Kannur
Further, If employer uses his own license to deposit PF, can contractor worker claim to treat him as employee of Principal employer before court of law?
16th January 2011 From India, Delhi
16th January 2011 From India, Kannur
Pls see the ESI Circular reference in the following link more at https://www.citehr.com/285737-legal-...#ixzz1BHj8UDqB
The liability can be accordingly fixed.
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17th January 2011 From India, Bangalore
We are mechanical construction organisation and take projects at various location thruout the Country. I would like to know in case of absence of labour license under contract labour act,1970, can our labour sub-contractor apply for EPF and ESI registration. He is having CST registration and has been issued work order. Pl. guide.
artson engineering limited
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14th February 2013 From India, Mumbai