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Dear All,
One of my friend company,they have 4 contractor and each contractor having 3 employee under them.
They don't have ESIC,PF number and no license.
Total 12 employee working under 4 contractor.
If we go through ESIC and PF then how can we deduct the PF and how it to be submitted to PF & ESIC authorities.
THis is on the needly basis,senior pls give your valuable inputs.
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Kindly check Each contractor has got how many Employees in there Roll's where they would be providing similar service to different organization then Automatically they wud be having above 20 Employee's .
Dear Ravi, They dont have any other contract and having only 3 employees on the roll for each. Then what should be sir...................?
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You are required to deduct the pf and esic from the payment to contractors and pay the same to the department on your own pf code. / esic code. There is a procedure for it under pf and esic rules. You can do it without making them your emploupyees. You need to fill the correct form, naturally
It is the Principal Employer's liability to ensure all Social Security benefits are available to the employees even engaged thro Contractors despite of individual contractor's numerical strength. It has to be either by the Contractor if he is independently covered otherwise thro the Principal Employer.
Eeach contractor must get hinself registered with the concerned authorities. In your case they should get themselves Code No.s under ESI & PF Acts, if they are eligible for coverage under the two statutes.

In any case if each contractor has only thre eemployees on their rolls, then they are not liable for coverage under both Acts....ESI & PF.

Therefore there is no question of any deduction under ESI & PF.

However whenver you engage employees through a contractor you MUST ensure that the following stipulations are incorporated in your contract with them:

That every month they will give to you copies of the following alongwith the originals which shall be returned after verification by you:

1. Attendance sheet for the month which shall include employee working for you.

2. Payroll, again with names and wage details of employees working for you.

3. ESI & PF Challans. In your case obtain a decaration by the contractors on their Letter Heads stating that they have ONLY three employees on rolls of thier firm and that therefore they are NOT liable for coverage under the two statutes.

These basic documents should be submitted by the contractors alongwith their bills, each month.

Pay them their due money after due verification of the relevant facts.

In case you have any further clarifications please feel free to contact me on 09717726667 or on my emial

Vasant Nair

Dear Vasanth,
Do you suggest if the contractor is not covered under the relevant acts they need not be covered under PF and ESI?
If so what happens if the employee is injured or meets with a fatal accident while working in the company?
In this context, I agree with Saswata Banerjee's view that PF and ESI has to be deducted from the contractor's bill and remitted to the respective authorities by way of a separate challan and explained to the respective inspectors when being audited.
This suggestion is given considering the practical problems that might arise while we deal with certain eventualities.
Dear Kannan
U R 100% right. Please go thro s2 (f) of the EPF Act 1952. It shows that the employees engaged thro contractors are also your ees for all practical purposed as far as statutory benefits and protections are concerned.
The Esic provides for insurance protection against the huge liability in case of accident under workmen's compensation Act. besides non payment of contribution on both accounts of ESIC & EPF the liability may go the extend of 400-500% of the statutory liability besides disalowance from I Tax.
I totally disagree with the views expressed by Mr Vasant Nair.These are contrary to Legal Position.
My Dear Friend,

Each contractor should get himself an ESI Code and PF Code No. This requirement is a MUST when you think of engaging a Contractor.

If one is NOT eligible for coverage then the concerned party will not be given a Code No. by the concerned authorities.

If the Contractor does NOT have an ESI & PF Code No. where is he going to deposit the money deducted from his employees' wages against ESI & PF?

AS the Principal, please appreciate the practicality of the issue.

The employees under a Contractor are his employees. Therefore the Contractor will be responsible for preparing their Payroll and compliance of all applicable labour laws.

If you as the Principal Employer you decide to do all this, then you might as well take such employees on your own Company's Payroll instead of engaging them through a Contractor.

Under the present circumstances the employees engaged through each respective contractor are NOT eligible for coverage under the ESI & PF since the concerned Contractor is NOT eligible for coverage under the said Statutes.

In case of an employment injury or death, the concerned worker will be entiled to benefits under the Workmen's Compensation Act.

As a measure of abundant caution you may ask the Contrator to get a Personal Accident & Mediclaim Policy for his employees to take care of any such unfortunate mishaps.

Your suggestion, I am sure, is well intended, but not quite the right one.

Best Wishes,

Vasant Nair

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