Hello, I am the principal employer of the contractual construction company working under me for the renovation of the building work inside the factory located in Gujarat. My client never asked for such labor compliance. We are asking our contractor to secure ourselves from future complications. The duration of the project is about eight months with a workforce of 25-30 individuals.
Labor Compliance Concerns
The engaged contractor didn't comply with any labor laws during this period. To minimize the risk of future indemnity, what should I do to protect myself? Is there any affidavit or declaration from a contractor? As the project ended last month, kindly suggest a solution for this.
From India, Surat
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Labor Compliance Concerns
The engaged contractor didn't comply with any labor laws during this period. To minimize the risk of future indemnity, what should I do to protect myself? Is there any affidavit or declaration from a contractor? As the project ended last month, kindly suggest a solution for this.
From India, Surat
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Ensuring Compliance with Labor Laws for Contractors
You should have ensured that the contractor who engages workers in your plant has ESI and PF registrations and has obtained a license under the CLRA Act. Failure to do so will result in non-compliance on your part. Having completed the project, you are responsible for the payment of contributions. It is true that workers engaged in a construction site are not covered by ESI. However, when they are engaged in the construction or renovation of a building within the boundaries of a factory, they fall under the purview of the ESI Act. Similarly, the payments would attract PF as well. It is defensible that these contributions are made only in respect of those who come under the scope of the respective Acts by means of wages drawn per month. When the matter is raised by the ESIC or EPFO, you will have to establish that the workers were hired on a salary above the threshold limits of Rs 21,000 for ESI and Rs 15,000 for EPF. Then you may be asked to produce the Workmen Compensation Policy in respect of these workers. If not covered, they should be covered under the Employees' Compensation Act. Above all, when you engage a contractor to supply or engage 20 or more workers, you should have registration under the CLRA Act. Since you have given the work to one contractor and he is engaging more than 20 workers at a time, he should have a license as well. All these are non-compliances.
One-Time Settlement and Future Compliance
In respect of completed projects, the ESI will allow a one-time settlement by paying the required contribution of 4 percent of 60% of the cost of the project. There is no such settlement under EPF. However, in the absence of inspection and if the client is not concerned about legal compliances, you can also remain silent. Still, when you take on another project, please ensure that compliance will make you feel secure, even though it may cost you a bit.
From India, Kannur
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4526You should have ensured that the contractor who engages workers in your plant has ESI and PF registrations and has obtained a license under the CLRA Act. Failure to do so will result in non-compliance on your part. Having completed the project, you are responsible for the payment of contributions. It is true that workers engaged in a construction site are not covered by ESI. However, when they are engaged in the construction or renovation of a building within the boundaries of a factory, they fall under the purview of the ESI Act. Similarly, the payments would attract PF as well. It is defensible that these contributions are made only in respect of those who come under the scope of the respective Acts by means of wages drawn per month. When the matter is raised by the ESIC or EPFO, you will have to establish that the workers were hired on a salary above the threshold limits of Rs 21,000 for ESI and Rs 15,000 for EPF. Then you may be asked to produce the Workmen Compensation Policy in respect of these workers. If not covered, they should be covered under the Employees' Compensation Act. Above all, when you engage a contractor to supply or engage 20 or more workers, you should have registration under the CLRA Act. Since you have given the work to one contractor and he is engaging more than 20 workers at a time, he should have a license as well. All these are non-compliances.
One-Time Settlement and Future Compliance
In respect of completed projects, the ESI will allow a one-time settlement by paying the required contribution of 4 percent of 60% of the cost of the project. There is no such settlement under EPF. However, in the absence of inspection and if the client is not concerned about legal compliances, you can also remain silent. Still, when you take on another project, please ensure that compliance will make you feel secure, even though it may cost you a bit.
From India, Kannur
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Dear Sir,
Thank you for your brief explanation. Is there a provision to secure my company from future damage? Can we make an agreement on stamp paper between the company and the contractor, declaring that all future damage or penalty would be borne by the contractor? Otherwise, are there any other alternatives to safeguard ourselves?
From India, Surat
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Thank you for your brief explanation. Is there a provision to secure my company from future damage? Can we make an agreement on stamp paper between the company and the contractor, declaring that all future damage or penalty would be borne by the contractor? Otherwise, are there any other alternatives to safeguard ourselves?
From India, Surat
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Contractor Liability for Past and Future Projects
Past liabilities cannot be imposed on the contractor. For future projects, you can draft a legally binding contract that will make the contractor solely responsible for contributions and payments due for their employees.
From India, Kannur
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Past liabilities cannot be imposed on the contractor. For future projects, you can draft a legally binding contract that will make the contractor solely responsible for contributions and payments due for their employees.
From India, Kannur
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Labr laws for Vendor compliance Management.pdf
Labour laws compliance.doc