Pf/esi Compliance Is Reauired Or Not - CiteHR
Industrial Relations And Labour Laws
Korgaonkar K A
Hr Officer

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Request an advise on the following;
We are procuring few air conditioners in relation to which 3-4 personnel will enter into the factory premises for 2-3 days for installation. Further furing the warranty period of next 1 year persons will come on time to time basis for breakdown maintenance alongwith 4 free services.
In such case is it mandatory for that firm to ensure PF &Esi compliance?

Installation is done by the vendors who have supplied the machine/AC. There is no payment made by you to those who do instalation. Similarly, during the warranty period you will not be making any payment to technicians who will do maintenance of the Machine or asset. Then why should you pay ESI and PF? On what basis you should contribute when there is no payment or wages paid in respect of the said work?

In addition to workers there may be a number of visitors who visit the factory daily for various reasons, say to meet the Purchase Manager, to meet HR Manager, MD etc. Do we cover all these visitors under ESI or take responsibility in case they have met with any accident while they are in the factory premises? No. Visitors will be given separate pass at the security gate which will contain certain conditions and safety precautions or in other words, they enter after accepting these conditions which make themselves responsible for any injury or mishap. The same thing applies to these technicians also. The payment made to the supplier or the purchase price of the machine is inclusive of installation and free maintenance for a certain period and therefore, the element of labour cannot be put on the employer. Certainly, if something happens to these technicians their employers should indemnify.

@Madhu T.K;
Thank you sir for your valuable guidance. In this regard I will be much grateful if you put some light on the issue of Annual Maintenance Contracts (AMC) and applicability of CL (R&A) Act, EPF Act, Min. Wages Act and ESI Act in an AMC. From my experience of last 2 years in an industry, i have realised AMC's issued are different in nature. For certain AMC's like AC plant maintenance the vendor needs to depute certain personnel (say 2) on regular basis during the entire working hours, in such case all the above acts are applicable. But in some other cases of AMC's like Split/Window AC maintenance or Computer maintenance the vendor's men enters factory on weekly, biweekly or monthly basis for preventive maintenance (e.g. twice in a week or 6 days in a month) and for breakdown maintenance. In such cases I have doubts on applicability of statutes????
Your advice will junior officers like us to update knowledge and perform better.

The matter of AMC and applicability of CLRA Act to AMC was discussed in length in the past also. You may get the details from this forum itself. In short AMCs will not come under the purview of CLRA Act since this pertains to a contract for service and not contract of service.

Dear DG,
I endorse the views by Madhu ji. My addition to annual maintanance or service contract, as under:
Work by contract labour is being supervised by PE. However, the work by technicians / experts from out side agencies of repairing or servicing the machinery or equipements, can not be supervised by PE. Such annual service contracts are to be considered as Contract for Service. Hence such technicians / experts are not to be considered for coverage.
But it is advisable to hire such kind of services also by covered agencies, as far as possible. This may help you in any mishap.

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