Can Contractors Use Principal Employer's EPF and ESI Codes for Employee Contributions?

Hi everybody,

Please help with this topic. If a contractor does not have a P.F and E.S.I code number, can he remit the E.P.F and E.S.I contributions for his employees through the Principal Employer's E.P.F and E.S.I code number? Are there any legal points regarding this matter? Please mention them.

Regards,
Paulraj

Hi Paulraj,

The contractor does not have any code for PF or ESI, neither can he deduct the money against PF/ESI nor can he get this amount deposited through the principal employer. If he is depositing the amount for employees on a third-party role, these employees would be considered as a part of the principal employer's headcount.

Hope this clears your doubt.
Mohit

Hi Ram,

I am not clear about your explanation regarding the third-party role. Could you please explain the topic again?

Regards, Ram

Yes, he can. But as far as possible, he should get a separate code number under both acts, since if there was a dispute regarding claiming permanency, this factor could be in favor of contract workers.

Regards.

Hi all,

It's the duty of the principal employer to ensure that the contractor has a proper PF number and ESI code before sanctioning the contract. Failure to comply with these requirements would be seen as a failure of the principal employer.

If the principal employer allows the contractor to use his PF & ESI codes for depositing contractor employees' PF & ESI amounts, such employees can be deemed to be in the employment of the principal employer.

ASSharma

Hi,

If the principal employer allows the contractor to remit the contribution for contractor employees through the principal employer code number, then who can sign the claiming forms (Form 19 & 10C)?

Regards,
Paulraj

Hi all,

In continuation of what I stated earlier, there is one option of remitting the contributions of the contractual employees through the account of the principal employer, but that would be an extreme step. There is a pitfall in this approach, namely that a direct relationship, however nascent it might be, is established between the principal employer and the contractual workmen. This is my view, but I have not come across any precedence in terms of litigations over such situations. Any views and knowledge on this issue are welcome as they shall clarify my doubts regarding this point.

Regards,
RK

Dear Paulraj,

Yes, for ESI, the contractor can be covered under the Principal Employer's Code. There is a column in ESI Membership form where you are required to indicate if the employee is working directly or through a contractor. We all do it, and there is no problem.

Now, for EPF, the contractor needs to apply himself. One copy of the original Form V under the Contract Labour (Regulation and Abolition) Act and an undertaking by the Principal Employer to fulfill all obligations, along with the Application Form, need to be submitted to the PF Authorities. There is also a provision for allocating sub-codes in PF. Kindly meet the PRO of EPF in your region/locality for further details. Carry all details relating to Manpower Strength of all Contractors, Date of Engagement, date of expiry of Contracts, Form V issued, along with your Registration under Contract Labour Act.

Regards,
SC