Kpv007
Hr/admin
Karthik Aptus
Hr Consultant
Srinath Sai Ram
Hr Manager
Amit Aishwary Choudhary
Managing People At Work.
+2 Others

Dear Colleagues and Seniors, I need your views on the following situation faced at present in Mumbai. We are employing 3 Contractors Under CLRA act 1970. These three contractors have not submitted their Monthly Remittances records to us under Payment of Wages Act, Minimum Wage act, Employees Provident Fund and Miscellaneous Provision act and ESIC act.
Presuming that they have not complied to this said act; 1) What are the consequences that a Principal Employer will face in such case? 2) What are the types of Penalties and the Exact amount that will be imposed on Principal Employer? Please help me in understanding this scenario. I will appreciate if anyone may quickly respond to this request as its an urgent matter.
Thank you in advance
KUNAL V.
Dear Mr Kunal,
You will be liable for penalties for non paid compliances & to Principle Employer.
Regards
Narendra/Mumbai
## Responsibility for payment of wages under section 21 (4) of CLRA,1970-
-In case the contractor fails to make payment of wages within the prescribed period or makes short payment, then the principal employer shall be liable to make payment of wages in full or the unpaid balance due, as the case may be, to the contract labour employed by the contractor and recover the amount so paid from the contractor either by deduction from any amount payable to the contractor under any contract or as a debt payable by the contractor.
## the principal employer shall be liable to make payment in case of EPF, ESIC, and recover the amount so paid from Contractor's Bill.
Regards,
Amit
KPV007, Your post is full of assumptions & presumptions.being Principal Employer you are not able to categorically state about Compliance/Non Compliance by your 3 Contractors.
Please follow due procedure of verification of records & discharge your liabilities/Obligation as Principal Employer & Revert with factual information.
You are Liable to pay and maintain records. if the contractor fails. You no need to worry regarding this matter if you have not paid the contractor for the service provided by him. Pay all the statutory deductions with penalty and deduct it in the contractors bill. If you have paid the contractor you under pressure, insist the contractor to do it ASAP so the penalty amount will be low.
The Madras High Court recently held that liability for depositing PF
Contribution in respect of employees of Independent Contractors, who were allotted and have been holding their own PF Code No. – Not of Principal Employer but of the contractor.

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Dear Mr. Kunal
In case the contractors fails to make payment of wages and minimum wages the liability will cast upon the Principal Employer.
It is well settled principle of law that if the contractors are having Independent Code both under ESI & PF then the Principal Employer will not be held responsible for non-compliance by the Contractors
In case of contractors who do not have independent code the liability will be on the Principal Employer for non-compliance by the contractors
P S Lakshmanan
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