Compensation & Benefits for Employees
ESI & PF Applicable to All Employees Either Engaged Directly/Indirectly
ESI & PF become applicable to all employees irrespective of their designations or whether they have been taken on a probationary basis or on a contract basis (individually or through a labor supplier) on a daily or weekly basis where their total emoluments are Rs. 7500/- pm for ESI and Rs. 6500/- for PF. They are required to be covered under the act.
According to the latest court judgment, the ESI department is insisting that the employer deduct contributions from parties doing job work either inside the premises of the factory/establishment or outside at the party's premises. Previously, the employer, by providing supporting documents, did not deduct ESI for the parties who had worked outside the premises since the parties were different entities and did not work exclusively for the employer alone. This was proven by providing sales invoices and delivery challans showing that materials were sent out and no workmen were engaged by the principal employer to perform the work. However, after this debatable judgment, the employer was instructed to deduct ESI for job work since the principal employer has discretionary powers to reject materials where there is supervisory control over the party. Based on this, the employer is asked to deduct @6.50% from the labor bill and pay this amount via a separate challan. If the party has a separate ESI code, they may be asked to provide a copy of the paid challan along with the returns submitted at the time of payment of labor bills. This approach broadens the net for ESI coverage.
Even Provident Fund authorities have taken the same stance, insisting that the employer deduct 25.61%, similar to deducting TDS from the labor bill of the party, and pay the amount in a separate challan every month. They have also begun to request particulars of the parties from whom TDS is being recovered, planning to make this a mandatory annual return each year.
ESI & PF Applicable to All Employees Either Engaged Directly/Indirectly
ESI & PF become applicable to all employees irrespective of their designations or whether they have been taken on a probationary basis or on a contract basis (individually or through a labor supplier) on a daily or weekly basis where their total emoluments are Rs. 7500/- pm for ESI and Rs. 6500/- for PF. They are required to be covered under the act.
According to the latest court judgment, the ESI department is insisting that the employer deduct contributions from parties doing job work either inside the premises of the factory/establishment or outside at the party's premises. Previously, the employer, by providing supporting documents, did not deduct ESI for the parties who had worked outside the premises since the parties were different entities and did not work exclusively for the employer alone. This was proven by providing sales invoices and delivery challans showing that materials were sent out and no workmen were engaged by the principal employer to perform the work. However, after this debatable judgment, the employer was instructed to deduct ESI for job work since the principal employer has discretionary powers to reject materials where there is supervisory control over the party. Based on this, the employer is asked to deduct @6.50% from the labor bill and pay this amount via a separate challan. If the party has a separate ESI code, they may be asked to provide a copy of the paid challan along with the returns submitted at the time of payment of labor bills. This approach broadens the net for ESI coverage.
Even Provident Fund authorities have taken the same stance, insisting that the employer deduct 25.61%, similar to deducting TDS from the labor bill of the party, and pay the amount in a separate challan every month. They have also begun to request particulars of the parties from whom TDS is being recovered, planning to make this a mandatory annual return each year.