Dear All, Greetings!
We have engaged one contractor for providing 20 nos vehicles on monthly basis – the contractor provides us the services of vehicle to us on a fixed base price for running of 2400 KM & 240 hrs in month basis. Any extra Km and Hr run in a month will be charged as per the formula in the contract. I just want to ask whether CLRA will be applicable on them or not and alos whether PF and ESI compliance have to be ensured . Request you to please advise.


Alok A. Toppo

From India, Rishikesh
Doctor Siva Global Hr
Personnel Officer

Dear Colleague,
If you engage any agency or service provider to service you exclusively then YES. Whether you pay them kilo meter based or otherwise does not matter to the Labour Laws compliance.

The Service Provider will be treated as CONTRACTOR in the eyes of law and all compliance has to be done by the Service Provider management and you become the Principal Employer in such arrangement. As the agency is having 25 plus employees or more probably, then they become " Establishment" in the purview of law and they have to be compliant and you have to ensure it to avoid statutory non-compliance risks.

Some companies allow the Managers to engage their own Vehicles and they have to enter into contract with different service providers. Here the company pay Petrol/ Driver Salary and Vehicle hire charges to their Managers upon producing the valid Vehicle lease agreement. This will to some extent avoid Labour Laws compliance by the Company.

But in the given situation of your arrangement the compliance has to be done by the Service Provider and the Principal Employer has to ensure and monitor. You need to demand their PF Code/ ESI Code/ Contract Labour License and so on and ensure monthly remittance by asking for proof of copies of compliance documents on line.

From India, Chennai

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