Understanding ESI and PF Responsibilities for Contract Workers: What Should Employers Know?

Dear All,

We are registered for PF and ESI for permanent employees, and we pay it regularly. We are in the business of running multiplexes, and we have contractors in our establishment for various sites at Jaipur, Ajmer, and Meerut, each of them not having more than 20 manpower (Housekeeping and security), thus they do not pay ESI and PF to them.

1) As a principal employer, do we require registration in the labor office?
2) If the contractor does not pay PF, ESI as he has not employed more than 20 employees, does our liability still arise to pay the same to contractual employees?
3) Please also guide as to apart from this what all registrations and legal compliances we require keeping in mind the business?

It would be of great help if seniors help in this context.

Regards,
Suruchi

Dear Suruchi,

According to the law, all the responsibilities come to the principal employer if they have engaged the labor through a contract and the contractor does not have the PF & Esic numbers. Perhaps your organization is in multiplexes across India. Registration is not compulsory for contractors with fewer than 20 employees in one location. However, if in one location you have two contractors, each with fewer than 20 workers, registration is compulsory.

Thank you for your response, sir. This indicates that we need to register ourselves as the principal employer with the appropriate authority and also pay PF and ESI on behalf of the contractors. If I am correct, please confirm.

Dear Seniors,

Please share your opinion on my third point as well.

Dear Suruchi, Dear All,

We are registered for PF and ESI for permanent employees, and we pay it regularly. We are in the business of running multiplexes, and we have contractors in our establishment for various sites at Jaipur, Ajmer, and Meerut. Each of them does not have more than 20 manpower (housekeeping and security), so they do not pay ESI and PF to them.

1) As a principal employer, do we require registration in the labor office? - "Yes"
2) If the contractor does not pay PF, ESI as he has not employed more than 20 employees, does our liability still arise to pay the same to contractual employees? - "Yes"
3) Please also guide as to apart from this what all registrations and legal compliances we require keeping in mind the business? - Better engage those contractors who have ESI & PF numbers.

In case of queries, please do call. - Prashant - 9850401160

Dear Friend,

The ESI & PF are applicable to all employees, including contract labor employees. If the contractor does not have PF & ESI registration, the principal employer is responsible and should make the payments under the main code of the principal employer. The licensing process varies in each state; the principal employer must obtain a certificate from the relevant labor department if there are more than 20 contract employees. The required number of contract employees for obtaining a contractor labor license also varies from state to state. For example, in Andhra Pradesh, the contract labor license is required if the number of contract employees exceeds 5.

Thank you.

While engaging contract labor, the principal employer becomes responsible for legal compliance. So, you need to take care of these things:

1. Register your company with the labor office under contract labor.
2. Ensure that the contractor/s obtain a license and renew it.
3. Provide proof of payment of wages - the law stipulates that the payment must be made to the contract labor in the presence of the principal employer's representative. At the very least, payment proof for the contractor's employees needs to be collected from the contractors.
4. It is essential to ensure that minimum wages, as per the law, are paid.
5. Collect and maintain records of payment proof for PF and ESI. The payment should be made by the contractors, but you need to have the proof.

Please do not worry; assistance for registration and licensing-related queries can be sought from the labor office. It simply requires you to build a good rapport with them.

According to the law, all the responsibilities fall on the principal employer if they have engaged labor through a contract and the contractor does not have PF & ESIC numbers. Perhaps your organization operates multiplexes across India. Registration is not compulsory for contractors with fewer than 20 employees at one location. However, if in one location you have two contractors, each with fewer than 20 workers, then registration is compulsory.

Responsibility of the Principal Employer

I have a question regarding the responsibility of the principal employer when work is done by vendors, subcontractors, or other contractors who may be working at multiple locations, including with us. If A is the principal employer and receives jobs from many contractors without their own ESIC numbers, what is the responsibility of the principal employer towards them? Please assist me in understanding this as it is essential.

Regards,
Anil
[Phone Number Removed For Privacy Reasons]

Hi everyone, we are a facility management company. Could anyone please tell me which license is required for multiplex cleaning? Instead of shops & establishments, is there another license we need to take care of that I am unaware of? Please guide me if anyone knows.

Thanks,
Gopal Maru

I actually wanted to clarify that the principal client is requiring PF and ESI challans against the work done on a contract turnkey basis.

1. As all employees (20 in all) in our company are drawing more than ₹16,500 per month, should it not be applicable?
2. Also, will the registration be required, or will just a return copy fulfill the client's requirement?
3. In the ESIC case, is it necessary that if registered in some other state and working in another state & location—say, registered in Lucknow and the contract is in Patna—one needs to inform the department about the location change? What will be the procedure then?

Thank you.

As per the PF Act, any employer who engages 20 or more employees, either directly or indirectly through a contractor, should be covered by the PF Act. The payment of contributions to the PF department by the principal employer or contractor is an internal matter between the employer and contractor. However, anyone must pay the eligible employees' contributions to the PF department, i.e., those earning below Rs 6500/- Basic+DA. Salaried employees only need to be covered by PF; the rest is at the management's discretion.

Thank you.

Dear Senior’s,
Im working in a Construction company as a HR. In this present my query is,
Did we should pay PF & ESIC for Subcontractor also? Please suggest me.