1. Are seconded employees from the holding company considered contract workmen under CLRA?

2. Employer does not book any expense on behalf of Project Company. Employer makes separate balance sheet and Project Company has separate balance sheet or Project Company P&L becomes part of consolidated balance sheet of SPGVL.

3. Can Host Entity pay the salary and remit statutory contributions using the PF registration of Employer?

4. In Secondment from a parent company, is there a requirement of additional consideration payable to Employer for seconding the services to the Host Entity (Subsidiary)?

5. Can the Host Entity transfer funds (without invoicing process) with regards to statutory contributions like PF, ESIC, PT, LWF etc to employer for remitting the contributions in their code?

6. During the secondment period, if any employee leaves, how will the full & final settlement be closed? In our arrangement salaries are from Host Entity (Project Company) and Host entity is transferring funds for statutory remittances as well to Original Employer. Will Original Employer bear the cost of other components like leave encashment, gratuity or any other deductions from Original Employer finance?

7. Since salaries are paid by Project Company (Host entity) basis the internal understanding (no invoice will be raised between the two entities). In the event of any inspection, will employer be able to establish the payment of wages to their employees?

8. While the employee is on secondment, salary slip will be issued by SPV (Host Entity). We mention PF number on all employees’ salary slips. In this scenario, PF number mentioned on each pay slip will be of Original employer. Is this fine?

9. Can any employee go to labour court asking that Original employer has not paid the salaries as per the appointment terms for the period he has been on secondment with Project Company (Host entity)?

10. If any PF Enforcement Officer visits to Project Company (host entity) location for inspection. Due to jurisdiction constraint, will our respose to EPFO EO that the employees working at Project Company (host entity) are not Project Company employees but they are getting paid salaries from Project Company and their PF is remitted in Original employer in Delhi?

From India, Delhi
Management Consultancy

Use factoHR and automate your HR processes

Mobile-first hire to retire HR and Payroll software that automates all HR operations and works as a catalysts for your organisational growth.


My views are as follows:

1. No, CLRA Act is not attracted. There is no contractor involved, it is only a temporary transfer of service between two sister units.

2. This is an accounting practice, If the Project Company is separately registered, it has to have its P&L accounts settled every year. Whether it is to be a part of the SPGVL (??) is a managerial decision.

3. Yes, since the salary is paid by host, it can as well remit the statutory contributions but keep its record at both the ends.

4. Not necessary. We have done so without any additional remuneration, but if it is done it would be definitely an incentive.

5. It can be so transferred without any invoice etc. However, this aspect could be covered in the correspondence between both the organisations.

6. If the employee leaves service, the full & final settlement is to be made by the original company as he is still on its rolls and he will have a claim of being back in employment there. The transfer of money between the host company and original company is a mutual affair depending on the finances of both the entities, however a fair method is that the host company pays the proportionate expenses for the Secondment period to the original company

7. Yes, the original company shall keep a copy of the wage bill, payment details, statutory contributions made and this would suffice if called to produce the evidence.

8. Yes, this would suffice.

9. If he goes to the Court, it would be sufficient to prove that the employee is seeking double employment, which is illegal as per the Factories Act 1948.

10. Yes, this is a valid explanation. The EO EPFO can only seek compliance either by the Project Company or by the Original Employer. The remittance details can be verified from anywhere. So it is not an issue at all.

I hope the above clarifies

From India, Mumbai

If you are knowledgeable about any fact, resource or experience related to this topic - please add your views.

About Us Advertise Contact Us Testimonials
Privacy Policy Disclaimer Terms Of Service

All rights reserved @ 2022 CiteHR®

All Material Copyright And Trademarks Posted Held By Respective Owners.
Panel Selection For Threads Are Automated - Members Notified Via CiteMailer Server