Respected All,

We are into manufacturing pharma machinery.. We have 2 license holder labour contractor..

Now, we would like to take all labour contractor's employees on company roll.

Hence, want to know about what are the formalities and legal as well other consequence in respect to advantage and disadvantage from company point of view?

Should we go ahead or not?

Kindly suggest or advise......

From India, Ahmedabad
Industrial Relations And Labour Laws

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Babu Alexander

You may ask the Contractor make an entry on ‘exit’ column in Provident fund & ESI Portal for all his workmen in his code number. When taken on Company’s roll same code number may be used, for continuity of benefits under the Act..
As an abundant caution you may ask the contractor to write to ESI & PF authorities regarding shifting of workmen in Company’s rolls.
Insist the Contractor to submit winding up off contract Form-VI-A ( along with FormVI-B issued by the Principle Employer) for having discontinued / Completion of Contract
Ask the Contractor to settle his workmen all dues, including Gratuity and Bonus if any payable, and get a ‘No dues’ certificate
After all the above process over, issue a fresh appointment order for appointment in Company’s’ roll

From India, Madras

If the contract has been a genuine one, you can hire the workers as fresh employees after taking employment application form, letting them undergo the joining formalities and the process of induction, at least in paper. The employee would, obviously, give the UAN and PF member id allotted to him by the contractor's establishment. There is no need of writing a letter to EPF or ESI by the contractor stating that the employees have become onroll employees of the principal employer. Let him take it as exit or cessation due to resignation by the employees individually. He can surrender he licence as suggested by Mr Alexander. It is important that there should be evidences to show that the contractor has discharged his obligations towards gratuity and or retrenchment compensation, in case the employees have not put their papers but the termination of employment has been the result of closing down of the establishment (of the contractor)

The risks: Normally, if we take the employees of the contractor no legal formalities are required so long as he contract has been genuine. But in most of the cases, the contract will be for name sake and this may result in disputes in future by workers claiming seniority citing their service with the company since they were under the contractors' rolls. In the absence of any settlement, preferably, a conciliation settlement with Labour Officer as one of the parties, you will have to take it up on your shoulder because of various reasons. First, the contractor will not be in the picture once the contract is terminated. Second, it will be easy for the workers to establish that the contract was sham and there were direct supervision by the principal employer (ie, you) on them. Third, they can very well establish that they had been working lie a regular employees and that was why they were taken on the rolls of the company.

From India, Kannur

Thank you for giving your valuable inputs..

But We are concerning with what can be legal and other liability will company have to face?

Is it advisable or not to move from contract to company roll?

From India, Ahmedabad

I repeat that so long as the contract is genuine, there is no legal issue. It is just like any person joining your establishment. You can allow them to use the same UAN, ESI number etc. It can be just like any new employee. But if the contract was sham, you should think twice before employing them. Tomorrow if something happens and you take a step to terminate the employees, they will demand gratuity from their date of joining as contract workers. My experiences show that if the contract made just for the sake of compliance is terminated not by the operation of law, then forget about the workers of the contractor.
From India, Kannur

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