Managing ESI Returns for Contractors: How to Handle Non-compliance at Your Unit?

Sir, we have a contractor who is engaged in two to three companies as a contractor under the same firm. Although we regularly deposit ESI contributions on his behalf for the employees engaged at our premises, he hasn't deposited the contributions for employees engaged at the other companies. Additionally, he hasn't filed the returns. Now, I need to know if there are any options available for us to file returns for his employees working at our unit.

Dear Gyalpo,

There is a provision that exists in the ESI Act whereby the Principal Employer (company in which you are employed) can deposit the contributions towards ESI and PF for the employees of the Contractor. It is your responsibility to ensure that the contractor adheres to various legal and statutory requirements. However, the Principal Employer can deduct such contributions from the invoices raised by the contractor.

Regards,
Nawazish

Sir, I need to know, can my contractor file the ESIC return of his employees who are engaged at my unit only since he hasn't deposited the contributions of other employees engaged at other companies.

Primary responsibility lies with the contractor to file the returns towards ESIC for its employees. In case he fails to do the same, the principal employer has to deposit the contribution for the contract employee. The amount of contribution made by the principal employer in this regard needs to be recovered from the payment made to the contractor.

Hope my reply answers your query.

Hi,

You can ask the contractor to remit the separate challan for your company so that you can easily find the ESI contributions of the employer and employees. Ask him to submit the challans for every month along with the relevant returns.

Regards,
Muthu

Hi, Gyalpo,

The responsibility of the P.E. will not dissolve by giving a contract to others. Now, I suggest you file the ESI Returns regarding the workmen engaged through the contractor on your company code, as you have deposited the contributions on your company code. I also suggest that the contractor apply for an individual code number since they have contracts with other companies as well. Then, ask them to deposit the statutory payments separately for your company workers and remit the same after depositing.

Thank you.

Mr. Gyalpo,

The reason for non-submission of the returns might be that the contractor doesn't have the ESIC numbers of the other company employees. There is a solution for this problem. You can ask the contractor to file supplementary returns for your employees only. Later, once he has obtained 100% of the ESIC numbers, he can submit the entire returns for the pending employees.

Regards,
Keshav Reddy.

First of all, not filing ESI returns is very risky on the part of the principal employer. Insist on the contractor to pay the same soon. To have better control over the contractor, you need to ask for a copy of the monthly challan from the contractor for the remittance. Ask him to produce records like Form 7, 6, etc., on a monthly basis if you could help him prepare the same in an Excel sheet and tell him to submit it to the ESI local office while keeping a file copy with you.

Regards,
Devarajan

Dear Mr. Gyalpo,

Section 40 of the ESI Act clearly states that it is your responsibility to comply in respect of contract employees as well. Accordingly, what you have done is correct. Now, you can submit the ESI return in Form 5, superscribing on the top of the form as "CONTRACTOR," and submit the same to the concerned local office. Only then will your liability cease.

Dear Mr. Gyalpo,

If your company has deposited the ESI dues (both shares) on behalf of such default contractor, you can submit the ESI return for contractor employees of your company on behalf of the contractor. This return would enable you to provide facilities and all benefits to your contractor employees. Please ensure that the amount on the challan is clearly tallied with your contractor staff salary.

Thanks & Regards,

Ajay Shukla, Kanpur
09839066035

My contractor has P.F. & ESIC Code, and the deposits we made were under his code. Here, I need to know if he can file the returns for employees engaged in our company only, excluding the rest of his employees who are engaged at other companies, as their contributions have not been deposited.

Dear Mr. Reddy,

Your suggestion seems suitable for my problems if there is a provision for supplementary return filing procedure. Thanks for your guidance.

With regards,
Pasang

Yes, Mr. Gyalpo, you can submit the ESI return for your company employees under your contractor's name. However, the PF return would be submitted consolidated for all employees.