Partner - Risk Management
Harsh Kumar Mehta
Consultant In Labour Laws/hr
Freelancer In Hr &indirect Taxes For
Hr Officer
+3 Others

1. I am working in a large manufacturing org. as HR Manager. ]one of our contractors has processed for PF claim settlement of his labours after long pursuation. however it came to our notice that few of them are facing some problem in PF claim settlement.. while checking with the authority we found that there may be some problem in deposition of pf contribution. but we have received pf challan and ECR sheet (contribution sheet) from the contractor for last one year.
2. In such confusion we are suspecting that the contractor might have submitted fake pf challans and ECR sheets. we are planning to investigate the matter with the branch of the bank whose stamp is marked on the copy of challans.
3. please guide me whether such fake documentation is possible or there might be some other issues for non deposition of pf cont. moreover if the contractor has done some duplicacy then the possible course of action from principal employers end.

From India, Delhi
1.Sir, in this great country every thing is possible including fake bank documents. In my opinion, your organisation should have immediately got the matter investigated and confirmed the position from EPFO and bank concerned.
2. In case, it is found that the contractor(s) have not actually deposited the contribution, principal employer will also be equally responsible (for such non-payment or for non-compliance only) and till the period actual contribution is deposited, interest and damages will also be due to the said department and in addition criminal liability may also be there.

From India, Noida
Yes there is every possibility of fake documents being submitted.However it can be cross verified actually by logging on line with the epf site and verify with the bank.The action from principal employer would be to take up the case jointly with vendor and ask him to remit the complete contribution against each employee on his roll and ensure that the vendor provides correct and legal proof against such remmittace.
From India, Vadodara
One standard practice we ask our clients to follow is that they should not rely on challans and documents, but instead asked the contractor to log into the account and let the HR department review or generate reports from their PF site for verification.

Two advantages that makes is that on one hand there is no question of fake challans, and on the other hand you can verify that the names of the persons working for you are included in their PF returns.

We have had cases where the challenge has the right amount and is actually valid, but the names of the people in the PF return and in whose name the PF is deposited is not the person who is working for our clients.

This is the best way for you to approach the matter. In case it turns out that the amount has not been paid, you are liable to pay the same and are entitled to recover it from the contractor. In reality, recovery from contractor is generally a waste of time. The exception would be large contractors who have the money and resources and therefore can be forced by the court to pay.

Hope this helps

From India, Mumbai
There are simple methods to be followed in respect of PF remittance by contractor.
1. Ask for PF challan & ECR file print every month.
2. Check the sum appearing as total of account 1 in challan & total sums of part A, B, C & D; should be the same.
3. Ask for print of 'Remittance Confirmation Slip' (RCS). Print can be obtained by using facility "Print pay challan' appearing on website. Check amounts with those appearing on challan and the date. RCS print is final proof that the amounts have been received by the authorities.
4, Randomly cross-check few entries in part A & wages register.

From India, Mumbai
Contribution payment made or not by contractor can be verify with the TRRN as mentioned on Challan and ECR.
If contractor did not paid than company will be liable to pay with required Interest and Damages for that under Section 8 and 8A of EPF & Misc. Provisions Act.
So alertness is very important.

From India, New Delhi
PF contribution made by the contractor should be cross checked from the bank concerned and EPFO on line.Before forwarding the bills of the contractor,a sample checking should be done as a routine matter whether the contribution has been deposited with EPFO. If not, the contractor should be made liable for interest and damages.
From India, Bokaro
@ Sachin: In case the contractor is a separate organisation registered under Companies Act having its own separate set up with own PF and ESI code no., even then, whether the Principal employer will be liable for non compliance by the contractor. I think there is a judgement in this regard (might be for Group 4 securities) which stated that for contractors having own PF code with separate set up, Principal employer will not be liable for any PF non compliance. Please confirm.

From India, Delhi
That particular case the court said that in case the service provider is a large, multi client multi location company, where the contract workers for a particular principal employer is only a small fraction of the total work force of the service provider, then the principal employer can not check accurately the PF payment for the contract workers working for him and therefore not liable for non payment, provided that the basic duediligence has been undertaken.
So this applies in very few cases.

From India, Mumbai
It is an interesting judgement by hon justice MEHTA. Independent PF code is given only to independent business and not to a contractor. This contention seems incorrect based on evidence I see. I think that will apply only in the specific scenario described in the judgement - where they are an actual service provider with liability to deliver a result only and zero control of the principal employer in deciding anything of the contract workers. For example they can't tell a specific guard to be posted at a place. Only they can tell supervisor who will instruct the guard. And that they have multiple clients who are all large.
I doubt if this applies to a smaller provider. And even if it did, how many businesses have the money and the time to fight a case till Supreme Court. It's then better the to comply.

From India, Mumbai
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