First of all, when an establishment of contractor not having registration under EPF & MP Act is engaged for providing services on contract, the employees of the contractor will have to be added with the manpower strength of the principal employer and compliance of the provisions of the Act in respect of such employees falls on the PE. The methodology for such remittance is detailed in the Act. It has its own implications.
Instead, I would suggest that you may award contracts for services to the establishment which has establishment Code Numbers under the EPF & MP Act, ESI Act, etc. for the following reasons:-
1. You will get better services because such companies are generally established ones having large manpower support, business with various other companies and better management practices;
2. They will comply with the provisions of these Acts as Employers and hence you don't have to take the pain of compliance on behalf of your contractors.
However, you may insist for production of proof of remittance of contributions under the relevant Acts in respect of their employees deployed in your establishment as a precondition for passing of bills by inserting suitable clauses in the contract agreement. This will ensure that there is no default by such establishments calling for action against your company by the authorities under these Acts.
11th June 2013 From India, Mumbai