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Respected Seniors & fellow colleagues,

My organization is facing a Provident Fund issue due to our labor contractor. The matter goes like this that we had hired a labor contractor in the year 2012 for engaging approximate 10 workers under his contract. Somewhere in between 2012 to 2014, the contractor started making non-compliance with PF remittance of the workers. This came to our notice in February - 2014 hence then onwards we stopped paying total amount of his bill. We, instead, only paid basic wages or somewhat more than that against the bills he produced. And simultaneously asked him to generate and make payment for pending PF challans. He started making payment for back dated pending challans for sometime and then again stopped doing so. He started asking for outstanding amount, but we refused it and instructed him to pay challans. Last year in 2016, we decided to get challans and ECRs generated from him and make payment from our account. We could pay the challans for around 9-10 months as he stopped providing us challans. Now we, as an principal employer, are stuck in outstanding PF challans almost for 1.5 years from the period of March-2014 to Oct-2015.

In January 2017 he didn't even pay the salary to workers from the amount which we paid to him and this made us to decide to change the labor contract. Somehow we arranged extra amount and made paid salaries. We haven't issued the previous one a work order cancellation letter yet due to pending PF issue. Therefore from Feb-2017 we shifted all the workers under contract of a new a labor contractor who has a record of regular compliance with PF and all other statutory compliance.

The previous labor contractor has received damages/penalty payment notice from PF office and again he's pressurizing us to make his payment. But as per my communication with PF officials, my company has been advised not to pay a single penny unless that contractor provides us challans, we pay those challans, then we pay the damages and penalties (as ultimately it will come on us) and then PF office will issue us a NO DUE CERTIFICATE. We are willing, prepared and ready to pay the PF remittance dues as priority for us is safety of worker's invested/deducted money in the PF and the same we have communicated to the EPFO.

Is there any action to be taken from my end in this case? I am expecting notice/summons from EPFO in this case as we being principal employer and we don't think he will be able to pay the damages.

From India, Ahmadabad
Seasoned Ir Professional
Hr Executive
Srinath Sai Ram
Hr Manager


Since the matter is with EPFO, you can only wait for the directions of the PF authorities to come. In the meanwhile, you can also join the 7A enquiry proceedings and say that the retained amount can be paid to PF. The PF Organisation will try to make you liable to the dues saying that it is the responsibility of the Principal Employer to pay the PF dues in respect of employees employed through contractor. But since the Contractor has separate PF registration and an enquiry has been initiated against that employer by the EPFO, they cannot make you solely responsible for the payment. Therefore, it is advisable to keep the amount and pay it only when the EPFO demands.

From India, Kannur
Srinath Sai Ram

is the Labour Contractor Independently Covered under the EPF Act, with EPF Code #
If so, you can Implead the Contractor, if at all Principal Employer receives any claim.Let PF Department Initiate appropriate action to recover the amount due. You as Principal Employer, should not have Persisted with the same contractor inspite of knowing Non Compliance

From India, New Delhi
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