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Dear All,

Hope all are safe and staying at Home.

Seek your valuable opinion on the following issue.

We have entered Security Service Agreement with a contractor wef. 01.04.19 to 31.03.20.

At the time of negotiating the amount the contractor has given a split details for the wages including his service charges.

But in the agreement we have entered as Rs.11,500/- (an example) to be paid to security contractor for one person / 8 hrs of work.

But wef. 01.07.19 ESI contribution has revised from 6.50% to 4.00 % (1.75% + 4.75%) to (0.75% + 3.25%) 1.5% reduction in Employer contribution.

But the contractor has billed to at the rate of Rs.11,500/-. He has not reduced the amount in his bill.

Can we now ask the contractor to refund the excess amount collected from us. (If any increase in statutory limit he will come and ask us for to increase his service charges. ).


Ganapathy V

From India
Dear Mr Ganapathy,
Principal Employer is liable to Pay ESI & EPF Contributions at the prevailing rates.(As and when Rate of Contributions goes up/gets reduced)
As Principal Employer you have not followed due procedure while processing Security Contractor Bill.You are entitled to deduct excess Contribution from the Contractor future Bills.
Please look for an alternate Contractor instead of persisting with such Contractors.
Please put proper systems in place to Monitor contractors in line with statutory requirement.Please evaluate your vendors periodically.Retain those who comply with Labour Laws

From India, New Delhi
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