Hi All, I am associated with a firm that is working on government projects. We have to hire contractors for the work to be done at various sites, and the contractors, for their convenience, engage daily wage workers at the concerned sites without deducting PF and ESIC from the daily wage employees.
Questions Regarding Compliance with Labor Laws
So, my questions are:
1. Are the daily wage workers also covered under the CLRA Act?
2. Should the contractor deduct PF and ESIC from the daily wage workers or not?
3. Are we liable to overlook the compliance fulfillment of subcontractors?
From India, Delhi
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1Questions Regarding Compliance with Labor Laws
So, my questions are:
1. Are the daily wage workers also covered under the CLRA Act?
2. Should the contractor deduct PF and ESIC from the daily wage workers or not?
3. Are we liable to overlook the compliance fulfillment of subcontractors?
From India, Delhi
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I also deal with such cases, but our sub-contractor doesn't hire workers on daily wages. In our industry, we prefer to hire permanent employees under the sub-contractor's scope. If the nature of work is hazardous or risk-inherent, I would suggest engaging sub-contractors who can deploy permanent employees and comply with all statutory benefits. It may be due to cost reduction or making margins that the contractor is engaging daily wage workers. But as a prime contractor, you should avoid such situations.
Compliance with Labor Laws
Please note my reply:
1. If you have considered those numbers in your/contractor’s Labor Licence, then such workers must be covered under CLRA and need to be included in the Half Yearly Labor Return/Annual Return under Shram Suvidha.
2. In my opinion, though primarily deducting PF-ESI depends on whether the sub-contractor is covered under PF-ESI or not. If covered, then those deductions are a must. But if not covered, you must take an indemnity bond from the sub-contractor, duly stating that if in the future (even after contract closure) any liability arises due to PF-ESI or such compliance, then the sub-contractor will be solely responsible for the same. As stated above, if the work involves risk-inherent activities, ask the sub-contractor to take an EC Policy for the required number of personnel deployed at the site. By doing so, if any worker meets with an accident leading to death or disability, they will receive compensation from the Insurance Company/Compensation Board. Otherwise, it will lead to huge costs for you and the sub-contractor.
3. You can’t escape by overlooking compliance fulfillment. Being the prime contractor, you will be responsible for all activities of your sub-contractors. In government projects, they define hard terms in the agreement but don't focus so much. However, in case of any incident, all the pressure falls on us (Prime Contractor). So, we need to be more focused while engaging any sub-contractor.
Advice on Compliance Costs
Additionally, I would advise first checking whether the compliance cost (PF-ESI, Bonus, Leave, Gratuity, etc.) has been included in the Work Order value (Agreement issued to the sub-contractor). If so, then you are at a double loss. If such costs are not considered, take your management's call on whether to include such costs and enforce strict compliance. If they don’t want to increase costs and avoid compliance levels, it can be harmful in the long run.
I have provided a detailed reply to your short query based on my personal experiences. Seniors can throw more light on the matter.
From India, Delhi
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Compliance with Labor Laws
Please note my reply:
1. If you have considered those numbers in your/contractor’s Labor Licence, then such workers must be covered under CLRA and need to be included in the Half Yearly Labor Return/Annual Return under Shram Suvidha.
2. In my opinion, though primarily deducting PF-ESI depends on whether the sub-contractor is covered under PF-ESI or not. If covered, then those deductions are a must. But if not covered, you must take an indemnity bond from the sub-contractor, duly stating that if in the future (even after contract closure) any liability arises due to PF-ESI or such compliance, then the sub-contractor will be solely responsible for the same. As stated above, if the work involves risk-inherent activities, ask the sub-contractor to take an EC Policy for the required number of personnel deployed at the site. By doing so, if any worker meets with an accident leading to death or disability, they will receive compensation from the Insurance Company/Compensation Board. Otherwise, it will lead to huge costs for you and the sub-contractor.
3. You can’t escape by overlooking compliance fulfillment. Being the prime contractor, you will be responsible for all activities of your sub-contractors. In government projects, they define hard terms in the agreement but don't focus so much. However, in case of any incident, all the pressure falls on us (Prime Contractor). So, we need to be more focused while engaging any sub-contractor.
Advice on Compliance Costs
Additionally, I would advise first checking whether the compliance cost (PF-ESI, Bonus, Leave, Gratuity, etc.) has been included in the Work Order value (Agreement issued to the sub-contractor). If so, then you are at a double loss. If such costs are not considered, take your management's call on whether to include such costs and enforce strict compliance. If they don’t want to increase costs and avoid compliance levels, it can be harmful in the long run.
I have provided a detailed reply to your short query based on my personal experiences. Seniors can throw more light on the matter.
From India, Delhi
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Clarification On PF Deduction For Indian Employees (International Workers) Returning From Foreig.pdf
PF ESIC.xls