I am seeking clarification for the beneath given issue.
I just joined in battery manufacturing plant wherein near about 15 to 16 contractors are working. They have their depended ESIC and PF numbers and Contractor license has already taken from the labour department to comply the qua compliance. Being a responsible principal employer we are taking all necessary record as per act just like wages distribution record , PF & ESIC Submission record. One audit was held by third agency one month ago, and some noncompliance were observed. But some point I think not related to us. Just like half yearly return wrong by contractor , adult register not maintained by some of them, advance register not maintained, bonus register, leave register, etc are not maintained. Now I want to clarify my confusion about the same . As per my view they are independent Contractor and principal employer can not interfere in this matter. Other matter related to wages and pf & esic principal employer is responsible .Please clear my doubt about this .
PROFESSIONALS AND BUSINESSES PARTICIPATING IN DISCUSSION
Seasoned Ir Professional
Madhu.T.KWhat do you mean by Independent contractor? Independent contractor means a person who undertakes to do a specified work for a certain period. He uses his own men, tools, materials and time for doing it. An AMC holder is an independent contractor. You may not know who all are engaged by him to do the maintenance. He does it periodically or when a need arises. He brings tools and equipment with him to do the work.
A contract of service, at the same time, is a contract to engage workers to will work for you, using your materials, using the tolls and equipment that you have installed or supplied, according to the specification given by you.
In the second above mentioned, you are the principal employer and you are responsible for compliances and answerable for the non compliances by the contractor.
It is also surprising that you have 15 such contractors working in your plant. Basically, you can only outsource such works which are not perennial in nature. That is different issue. Normally, and of course, practically, other than wages payment records, records of payment of ESI, PF and Bonus, the other files and records are not important and now a days the department is not very concerned about such documents.
From India, Kannur
email@example.comThe tests that are applied to find out whether a person is an employee, or an independent contractor may not automatically apply in finding out whether the contract labour agreement is a sham, nominal and is a mere camouflage. For example, if the contract is for supply of labour, necessarily, the labour supplied by the contractor will work under the directions, supervision and control of the principal employer but that would not make the worker a direct employee of the principal employer, if the salary is paid by a contractor, if the right to regulate the employment is with the contractor, and the ultimate supervision and control lies with the contractor. The principal employer only controls and directs the work to be done by a contract labour, when such labour is assigned/allotted/sent to him. But it is the contractor as employer, who chooses whether the worker is to be assigned/allotted to the principal employer or used otherwise. In short, worker being the employee of the contractor, the ultimate supervision and control lies with the contractor as he decides where the employee will work and how long he will work and subject to what conditions. Only when the contractor assigns/sends the worker to work under the principal employer, the worker works under the supervision and control of the principal employer but that is secondary control. The primary control is with the contractor. This is only my view sir
Madhu.T.KTrue. Then what is the issue? Your contract is genuine one and from all the angles you have complied with what is required to be followed by a principal employer. Then you can answer to the audit query that you have ensured that the contractors have paid salaries of their workmen in time and as per the Minimum Wages notifications of the government, you have verified the Returns of Contributions of ESI and EPF and found satisfactory and you have vouched the payment of bonus to their workers deployed in your plant. You can also say that you have given contract for supply labour and for you it is only number and not who are engaged. If one worker is absent on a day, the contractor is expected to send/ deploy some other in his place. You are not concerned about what kind of leave the contractor is giving to his workers. Since you (principal employer) is not the leave approval authority in respect of contract labour, the question of not gone through the leave book of the contractor does not arise.
From India, Kannur