Dear All Please let me know the liabilities of principal employer in terms of statutory liabilities like PF, ESI, gratuity, bonus, leaves etc.
I have gone thru the search option in the site and found several replies but they are contradictory. Hence posting this question again.
Kindly reply at the earliest.

From India, Mumbai
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The term Principal employer is usually used in relation to an employer who appoints employees through a contractor. Basically there is no difference between the terms- Employer and Principal employer. When used in the context of contract employees, it becomes principal employer. As all employees (subject to the wages ceiling fixed under the different legislations) whether directly employed or through a contractor are working for the employer, it is his respnsibility to implement the labour enactments in his establishment. Accordingly, the employer has to remit the PF dues of his employees in time and recover the employees' share from the salary of the employees. Similar is the case of ESI. At the same time it becomes the responsibility of the Principal employer (for whom the contracted employees work) to remit the EPF, ESI etc of the employees employed through contractor and certainly he can deduct the same- both share- from the payment to be made to the contractor. That means though contracted employees are employees of the contractor but are working for another and that another person, the principal employer, is respnsible for the initial payment of dues and are recoverable from the contractor as if he had made the payment of ESI or PF on behalf of the contractor.

The word "occupier" is also used in certain Acts such as Factories Act, Payment of Bonus Act etc which has the scope of Principal employer.

The Principal employer is responsible for implementation of labour welfare and social security measures provided under different labour and factory enactments.



From India, Kannur

Thanks Sir for reply.
Now it is very clear to me. Kindly also explain that other than ESI and EPF, is there any other statutory liablity in terms of money for which the contractor should charge principal employer (thru monthly bills).
kindly clarify.
best regards,

From India, Mumbai

In fact there can be a Labour Welfare Fund which is administered by the respective State Govt. I am not sure whether you have it in your State. The contribution is very less and is payable half yearly. The amount is to be paid by the Principal employer and recovered from the contractor.

Similarly, the Profession Tax which is a subject of local self government, is to be paid in respect of employees employed through contractor. This is because, the source of earning is the place where the profession tax becomes due and since the contracted employees are working in the premises of the principal employer, it becomes the duty of the principal employer to pay the profession tax but can recover from the contractor.

Under the Payment of Bonus Act, there is no specific provision to bear the bonus by the principal employer. In fact, bonus is primarily based on the profit of the company and it may not match with the profit of the contractor.

There is no provision in the Payment of Gratuity Act also to pay gratuity of employees employed through contractor. Here also, gratuity is payable only to those who have minimum 5 years 'continuous service' which is normally impossible for employees employed through contractor.



From India, Kannur

Dear All, Is there any liablity on the Principal employer in caseof any accident of contract employee and if any what is the extent of such liability. Regards Vandana
From United States, Wilton

Hey..hope the attached is helpful to you in some ways :) regards - r o u l e t t e
From India, Mumbai

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File Type: ppt HR Satutory Compliances.ppt (1.44 MB, 2325 views)


I need Statutory compliances details for every month & quarterly, half yearly & yearly thnx
From India, Gurgaon
Sanjeev Sood
Dear All
In our organisation we've more than 10 employees on regular pay role. We have impemented 'Employer-Employee Insurance scheme of LIC' Where employer pays the entire insurance premium (and claims deduction u/s 37(1) of IT act as legitimate business expenditure and pay FBT) but beneficiary of insurance claim is employee or his/her nominee. On leaving the organisation individual policy is to be assigned to employee as terminal benfeit where maturity proceeds are tax free u/s 10 (10D) in the hands of employee.
Do we still have to subscribe to ESI scheme?
Does this provision that we have made fullfills any of our other statuatory obligation towards employees?

From India, Mumbai
Anandhi subramanian
Dear Sir, Pleae tell me the procedure of Notice period Employer & Employee. Please revert back to this mail. Regards, Anandhi Hariharan Chennai
From India, Madras
Hi ,
i need what are the pf practises followed in pharmaceutical companies to be replicated and i working in a pharma company our company has established 3 years back so i want to know our company is applicable to payment of bonus act or not if not i need the reason

From India, Hyderabad

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