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Dr. Raghuvir Aggarwal

Respected Seniors, The limit for mandatory deduction of EPF has been raised from 6500 to 15000 effective from 1st Sep., 14. We are Construction company & are registered under EPF. We are facing following problems:
1. The petty contractors working with us are not registered in EPF. They do not want to submit us their Pay Rolls. Even they do not want to contribute under EPF. How to fulfill our obligation under EPF
2. The masons who were earlier out of EPF range, now fall in EPF but they do not want to be enrolled under the scheme. They do not allow us to deduct employee's share of EPF from their wages. They even do not provide us details of their Bank Accounts. How to over-come the situation.
Please advise.

From India, New Delhi
Partner - Risk Management
+3 Others

Dr. Raghuvir Aggarwal

We are civil construction company registered under EPF.We do certain calculations to arrive at workable rates at the time of tendering . Previously most of the skilled labor was out of EPF coverage as such component of EPF on labor and staff getting more than 6500, was not taken into account while arrive at the workable rates at the time of signing agreements.
Now with increase in EPF slab from 6500 to 15000, the EPF lialibilty has escalated heavily. Rates are not workable now. The Principal employer has refused to compensate us on increased EPF liability. Please advise solution. Can we get the exemption from increased liability on contracts in force before raising of ceiling??

From India, New Delhi

The answer to both of your queries is the same :

PF is mandatory and needs to be paid for every employee who does not fall under the exempt category. Exempt category at the moment is those getting more than ₹15000 (basic + da) as on 1-9-2014 and not having an existing / active PF account.

Ofcourse, pf applies to companies with more than 19 employees. But since you are working in a factory where more than 20 employees are working, you can not claim the exemption.

Since your sub contractors are not registered, you are liable to pay under your code for them also. And your client is liable to pay under their code if you do not pay. The law allows them to recover the amount from you thereafter.

Your contractors and their masons not want PF is immaterial in law. You are liable and you need to negotiate with them. It's a business and an Industrial Relations problem actually. Similarly you need to negotiate with the clients and get them to revise the rates. They know your cost and impact of PF and what they are doing in exploitation of contractors. But there is no law against it. Next time ensure that you have an escalation clause.

From India, Mumbai
Premkumar Nair

Dear Dr. Aggarwal,

It is human nature that everyone think of short term benefits and resent EPF deductions as the accumulations shall be available after long years. However, I suggest that you have a workshop or something of that sort to educate the ignorant employees of your company, your contractors or subcontractors about the benefits of EPF and EPS including the group insurance amount. I am sure majority of them would agree except a few who may have real financial problems. In any case, you have to comply with the deductions in respect of such minority also - there is no escape route for you; rather you will be punished heavily on their behalf at your own cost for non-compliance.

Secondly, as regards the provisions under the existing contract for reimbursement of incremental increase in EPF contributions, check up the contract clauses. Since the law is very clear that employers have to comply with increased liability irrespective of the contract provisions or source of funding. Since it is a matter of past 2-3 months, bear the cost and then negotiate with the Principal Employers to bear cost of incremental increase fully or partially for an amendment in the ongoing contract to meet the liability of future months.


From India, Mumbai
HR Mohankumar

no option to leave your contractors as such.
you can allot the pf numbers for the contract staff and deduct (employee and employer contri) the pf from the monthly bill.
else look for somebody who is paying pf contri on regular basis.
assume me as pf official
if you pay 3 lakh for your contractor per month say for 30 staff the avg salary will be 10000
basic pay will be treated 1.5 lakh
you are entitled to pay the penalty of 1.5 lakh * 27% approx + interest + damages even after 5 years
so pls take a serious note on this immediately.
for any help reach me at

From India, Chennai

Dear Dr Aggarwal
We are professional service providers for many big group Companies in South India. Pl contact us for any support for the PF coverage of the contract labour in your Company.
N Nataraajhan, Sakthi Management Services (Mob : + 91 94835 17402 ; e-mail : )

From India, Bangalore

Dear all
The most problems in the construction workers whether contractor or patty contractors are not steblize or there is no any continuity in the job with in month or 15 days also all contractors are changed or left there worker for each job. so how we deposit pf CONTRIBUTION and who will claim for that. I NEED YOUR ADVICE /OPINION PL.

From India, Delhi

To some extent, now the problem will be solved with the introduction of UAN
Since the UAN remains the same irrespective of who the worker works with or for how many days, they can accumulate and withdraw when they are no longer working. With linking of that with Aadhaar, it should be easier.
But the problem still is at human resource, IR level. To make them understand that it benefits them.

From India, Mumbai
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