Labour Law & Hr Consultant
Industrial Relations And Labour Laws
+1 Other

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Dear Seniors,
We have deposited PF amount of our contract labours as per the wage ceiling limit mentioned in the act ie Rs15,000/-. As the MW is high, our client(a PSU) is pressurizing us to pay wages as per the MW applicable to their establishment and not giving hr clearance.
Further, we have posted a site-In-charge to carry out the contract jobs. As he is our regular employee, his basic is 50% of the gross salary and accordingly we have deducted and deposited his PF contribution.For this also client objecting and forcing us to deposit his PF as per the gross salary. Client is also forcing us to mentioned his name in the wage register.When he is the authorized signatory how he will certify his wages in the wage register. And as per the contract labour act he is not an workmen as he is working in managerial post.
For the both the cases client's HR is not ready to give anything in writing and hold our RA bill.
In the work order it is clearly mentioned that we need to comply as per the PF ACT, Contract Labour Act, MW Act, etc. Now when we are complying as per the statue why client is objecting is not understood.
For same client located in other district, have no issue regarding this and they are clearing our RA bills.
Therefore, I request seniors to guide me on the above issues.

Attached Files
File Type: pdf ABSTRACT OF THE CONTRACT LABOUR ACT.pdf (64.8 KB, 444 views)

So long as you are paying PF on a salary of Rs 15000, the clients cannot object because the Provident Fund authorities have no right to demand a contribution on any salary above Rs 15000. therefore, if the minimum wages applicable is more than Rs 15000, you can pay it but the contribution to PF can be restricted to Rs 15000.
Regarding inclusion of your supervisor in the muster rolls, the clients can insist that all persons whether a worker coming under CLRA Act, ID Act or any other Act shall sign the muster rolls if they are counted for the payments that the clients make to you. I believe that you will be charging the remuneration given to your supervisor along with workers wages. If so, why don't you write his name also in the register? You can do that.
Regarding the contribution of PF on his salary, the same things is applicable. The client is right in one direction that PF should be on gross salary (you can exclude only HRA, if nay given) but if that salary is more than 15000, then they cannot say that for the entire amount you should pay contribution. The attached judgement is from the Apex Court of India. It is very clearly stated that the PF Organisation has no right to demand a contribution on a salary of more than Rs 6500. ( it was Rs 6500 at the time the verdict came but you may read it as Rs 15000 since the salary limit has become Rs 15000 in 2014)

Attached Files
File Type: pdf Employer-PF-restrict to wages of Rs 6500.pdf (3.30 MB, 83 views)

Dear Mr.Madhu.T.K,
Thank you very much for your quick response.
Sir, The said contract is drawing development contract and not a manpower supply contract.The Site In- charge is a existing employee and as per the our company rule we used to pay his PF contribution on 50% of his gross salary.
As the the said employee is not a workman therefore we have striked out his name from wage register but we can submit separate salary slip and bank transfer payment sheet to our client.
looking forward to your view.
Thanks and Regards

Dear Jitendra,
I think that the answer given by our learned friend Madhu needs no further elucidation. Perhaps, the particular HR of your client might be a highly opinionated person or have some personal grudge against you. Better, your boss can take up this matter with the CEO of your client.

Dear Jitendra,
I do not see any lapse in the matter since you are paying PF as stipulated in act i.e. Rs. 15000/-. Why your client is objecting to that is not understood. In my suggestion one responsible person of your establishment should meet Chief HR to resolve the issue.
Inspite your meeting no result is yeild. Your establishment should write a letter to client that your tender price quoted considering 15000/- as per prevaling norms under EPF & MP ACT, and is not violating. Your deductions & contribution as per the said norms but insisting us to pay at higher rate shall be done on confirmation from your site to reimburse as extra on your RA bill.
Insist them to issue letter mentioning their view o n EPF. You can take a legal action against their unlawful demand.

Dear Sir,
After lots of discussion also client has been forcing us to deposit PF more than the ceiling limit.But client was not ready to give anything in writing.
But to get their written confirmation I have deposited PF as per the statue (on wage ceiling limit of 15,000/-) and emailed ECR copies to client's HR department and request them to issue HR clearance to us to raise our RA bills.
Now HRD has given the following return email.
Dear Sir,
After verification of the documents submitted by you towards issue of HRD Clearance for May 2018 and June 2018, it is observed that you have deducted and deposited EPF contributions on EPF wages of Rs.15000.00, in respect of your employees engaged at ++++ Plant who are drawing monthly EPF wages beyond Rs.15000.00, thereby depriving them from higher benefits under the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 and schemes framed there under.
In this regard, your kind attention is drawn towards the definition of employer and employee specified under Section-2(e) & (f) of the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 and Section-26(6) of the Employees’ Provident Fund Scheme, 1952.
++++ Plant as the employer is extending the provision of EPF deduction and deposit on higher wages to all its employees including the contract labourers. This provision has also been factorized in the workable rate of all contracts including the one being executed by you. In view of this, you are advised to deposit the differential EPF contributions in respect of the concerned workers and submit the documents substantiating such deposit to us, in order to enable us to issue HRD clearance(s) for release of your RA bills. "
Sir, the above return email also they suggested to deposit PF on higher wages. The sec mentioned in the email is about the definition of employer and employee and nothing else.
As per the SCC of the contract we need to comply the PF Act, MW Act, CLRA Act etc. and when we are complying as per the statue they are creating objection.They treat as if PSUs rules are larger than the statutory Acts.
Now I am confused whether to fight with them or deposit the PF as per their direction. Already two months delayed and no single bill has been raised.
Under this circumstances I request you once again to guide me in this regard and oblige.

Dear Jitendra,
I think that the PSU follows the policy of equality in respect of monetary compensation both direct and indirect to all those who work for them irrespective of their status and nature of employment and also draw your attention to the reply specifically mentioning the fact of inclusion of EPF contributions on higher wages also in the charges payable to the contractor. If it is correct, well, they have the right to insist on the payments as per the terms of the contract.
If you are rotating some of the CL among different clients depending on the work exigencies, you ought not have agreed to such a specific clause in the contract on the ground of practical difficulty it can cause. Once accepted a more beneficial clause and fixing your charges on that basis, I think that it is not right on your part to take shelter under a legal provision granting a lesser benefit.

You may take a stand that the workers deployed at the plant are yours only and once the contract with the plant is over we will have to deploy them in some other plant. If we pay PF contribution on higher wages and (obviously this higher contribution by you can be recovered from the PSU plant) at a later stage if the contract is terminated and these same workers are asked to work with another principal employer and if that other company is not be interested in bearing the cost over 15000, and accordingly we decide to reduce the contribution or restrict the contribution to 12 % of 15000, then it might lead to an industrial dispute. It is true that there is a Supreme Court verdict which says that the employer (you as an employer) can restrict the PF contribution to 12% of Rs 15000, the workers will not accept it but they will demand it either as PF contribution or to be included in their monthly salary. This will even result in strikes and loss of manhours.
I don't know why this HRD is saying that contribution on higher wages is factored in the contract value. This is again a hit on your head because even if you pay on higher wages you will not be able to recover it because as per their mail the contract value is computed after considering the PF at higher wages. Therefore, please verify the contract and see if the cost is arrived at after taking into consideration the PF contribution on the total value of wages. If it is not there, then take it to the higher authorities. Also see who has signed the contract on behalf of the PSU,naturally it should be CEO/MD and not the HR person. Then take the matter to him and bypass the HR.

Dear Sir,
Thank you very much for your detailed response. But Sir, policy of equality in respect of monetary compensation neither mentioned in the WO and SCC and GCC of Client.
Further, making statutory compliance is vested on us, PF and ESIC are deposited in our code and we are the employer and our client is a Principal employer. Being the employer we are paying wages and PF contribution as per the act.
Sir,please suggest can we take legal action against them.

Dear Jitendra,
What all explained by our learned friend Mr. Madhu, in my understanding, mainly focus on the factum of your contractual obligation versus your legal obligation as a contractor in a matter of statutory compliance that mandates vicarious liability on the other party to the contract as a principal employer. Therefore, if the contract has such a specific clause, you have no other go but to abide by it. On the other hand, if it is a matter of mutual understanding during the course of negotiations for rates, you can legally fight it out.

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