Hi Rekha,
The following are some do's and don'ts for Principal Employers in engaging Contract Labour:
* Before engaging a contractor, the employer should ensure that there is no notification by the government prohibiting the contract labour system in that particular industry.
* The establishment, in the first instance, must ensure that they have a registration certificate from the competent authority as provided under Section 7 of the Contract Labour (R&A) Act, 1970 before proceeding to engage the contract labour.
* The establishment must ensure that they issue a certificate in Form-V to the contractor for obtaining a license as provided in the act.
* It must be ensured that the contractor who is employing more than 20 persons has a valid license issued in his name by the competent authority as provided under the Act.
* The work for which contract labour is engaged is not of a perennial nature.
* The payment of wages to the employees employed by the contractor is disbursed to his employees by the contractor himself or his nominee, and the principal employer has to depute his representative to be present and sign the payment register as a token of having disbursed the salary in his presence by the contractor.
* There should not be any supervision and control by the principal employer in respect of employees employed by the contractor to fulfill the obligation of the contract.
* Discipline of the employees of the contractor in the discharge of duties must be regulated by the contractor and not by the principal employer.
* Leave for the employees of the contractor must be sanctioned by the contractor and not by the principal employer.
* No advance should be paid by the principal employer to the contractor's employees directly. Only the contractor must regulate the same.
* Maintenance of all types of records regarding the employees employed by the contractor should be the contractor's responsibility, and the principal employer should not intervene in such matters.
* If the establishment is covered by the EPF and ESI Acts, then preference should be given to those contractors who have their own code numbers under these Acts.
* To ensure compliance with the obligations pertaining to the various provisions regarding amenities and benefits as prescribed under the Act.
* To ensure the submission of the Annual return to the prescribed authority in the prescribed form under the Act.
* An undertaking by the contractor to have complied with the provisions of the applicable law has to be obtained by the principal employer.
Hope these points will help you clarify your queries.
You may please refer to the respective Acts to learn more about the components of wages under PF and ESI.
Regards,
PRADEEP