Pf / Esic For Third Party Canteen Staffs - DOCX Download - CiteHR
Madhu.T.K
Industrial Relations And Labour Laws
Natraj@sakthimanagement.com
Head - Outsourcing
Sibabrata.majumdar
Management Consultants Legal & Hr
AK CHANDOK
Epf & Esi Matters
Rajesh Vaidya- Earth & Stars
Director- Earth & Stars
Lokender.k
Sr. Manager - Hr & Admin
Loginmiraclelogistics
Asso.prof.(commerce & Management) Pg
Anandakg
Service
Jganesh.r
Propreitor

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We have recently started a canteen in a big nursing home on contract basis. the nursing home is PF complaint organization and they said since we operate under them, we naturally fall under PF/ESIC laws even though the labour strength is only 6. We are ok with this but our labours are not accepting for the deduction. we are yet to complete the PF registration. My question is should our principal employer (the nursing home) contribute PF to of our employees. Also do our principal employer have any responsibility or authority towards what we pay for our labours in terms of PF /ESIC. Kindly advice.
If you have only 6 persons employed, they can be enrolled under the Principal employer. In such cases, both the shares of ESI and PF will be deposited by the principal employer and the amount so deposited will be recovered from you by deducting the amount payable to you.
Workers cannot say that they do not want ESI or PF and you should educate them of the benefits of these schemes.
Madhu.T.K

Hello Jganesh,
PF/ESIC payment is to be finally ensured by the principle employer and they have the right in enforcing that the vendor pays it to their employees. It is always advisable that while determining the commercial rates, ESI/PF and even minimum Bonus are factored in the salary cost. From your employees point of view, if you have conveyed an 'X' amount as in hand salary, them they would see any deduction from that amount as breach of trust.
Nursing home cannot contribute directly to your employees social security benefits- You have to possibly renegotiate the rates, get the additional quantum towards PF/ESIC.
Alternatively you have make adjustments from your margins till such such time the contract is renegotiated and revised.
regards,
Rajesh

Mr.Ganesh
Please refer verdict of Honorable High court of Kerala on the case law.
Cominco Binani Zinc Ltd. vs Pappachan on 28 December, 1988 to have better insight in to THE CONTRACT LABOUR (REGULATION AND ABOLITION) ACT, 1970
http://www.indiankanoon.org/doc/1387153/

As per provisions under the Act, all contractual employees working for a covered estt. are also to be covered under the Act and Principal Employer is responsible for ensuring the compliance in r/o of all such employees. It depends upon the agreement as to who will deposit the PF contributions but if the contractor is not covered independently, the responsibility lies on the Principal Employer
AK CHANDOK
RPFC ( Retd.)
www.akchandok.com

Principal employer has to ensure implementation of applicable laws on employees engaged through contractor. If Principal employer is covered under PF & ESI, employees of contractor shall also to be covered under PF & ESI irrespective of strength of employees under contract.

As your establishment is not registered under PF & ESI, in such case Principal Employer shall allot PF & ESI numbers on their code to employees in contract and shall ensure payment of both contributions (Employees' and Employer's) to respective authorities. They will deduct both shared from your bill amount and pay.

You need to educate and convince your employees regarding benefits of PF & ESI. The word "deduction" is negative in itself. The perception of deduction to be removed from mind of employees, it should be seen as "contribution". They should also be appraised about the fact that employer is also contributing equal amount which is being deposited in their account and will be for their own benefit only.

Principal employer has a right to know what amount you are paying to your employees so that they can ensure there is no violation of Minimum Wages Act, 1948. As long as you are paying wages more than Minimum Wages prescribed by State Govt, Principal Employer should not have any concern on it.

Hope I have covered your queries.

Thanks & Regards,

Lokender Kumar

Manager - HR

Minda Industries Ltd, Gurgaon


HI
Contractor's employees are also included in the definition of PF Act.Hence though contrator is having 6 nos of employees(min 20 employes is required for PF Registration) they will be eligble for PF Contribution. As a principal employer he has to deduct the PF Contribution against his own code no. because the responsibility lies on PE.

Dear Friend,
As the Principal employer is registered under PF & ESI, the employees engaged in the canteen by the contractor, who work in side the establishment of Principal employer, will be covered under the PF & ESI code of the Principal employer because they are liable to make payment in the event contractor fails to deposit statutory payment.
Since you organisation is not covered under the aforesaid Acts, in such situations, both the shares of PF and ESI will be deposited by the Principal employer under their code. The contributions so deposited by the Principal on account of employees working in the canteen engaged by contractor at the premises of Principal employer will be recovered from the bill / Invoice to be submitted the contractor for rendering such service.
You will have lot of resistance, without saying, from employees for deduction PF & ESI contribution but you should convince them short and long term benefit in terms of social security.

Dear Ganesh,
Pl.clarify these -
1) Are you a contractor providing only the labours and inputs for running the canteen is being met by the Hospital
2) Or the Canteen is being run by you under your own name, meeting all the cost by yourselves. Which means you have only hired the premises by paying them a monthly rent. And you are collecting the money of food bills which goes into your own Profit/Loss.
3) What is the arrangements between you & the Hospital in running the canteen. Is there any mention about the labours and how they will be treated.
You should consider these comments Depending on the status of the arrangement with the hospital.

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In continuation of the discussion, I consider that it may be relevant to take note of the judgment passed by the bench of SC in the Air India case (related to running of a canteen by a contractor), gist of which is attached. Though may not directly answer to the query but may throw some light on the discussion of the subject matter.


Attached Files
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File Type: docx Aspect Of Employer-Employees relationship-contract canteen.docx (19.2 KB, 1560 views)


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