Concerned About PF Remittance by Contractor? How to Ensure Compliance and Protect Yourself

Hi,

I am operating our warehouse through C&F. Every month, they are charging us employers' share of PF, and we are paying them. However, I recently found out that employees who left a year ago have not received their PF amount, and the service provider is not responding adequately to our queries. My question is: what measures should be taken to ensure the agency is remitting PF to the authority? They show us some challans, but these do not contain employee details, leading to concerns that the payments might be for other purposes. Additionally, I am concerned about the legal implications for me if the service provider fails to remit the PF. What legal actions can I take against them?

Thanks & regards

Dear Shoji,

As per your query, if your contractor is not remitting the PF amount to the PF Department, then that would be the responsibility of the principal employer who comes into the picture.

Every principal employer is responsible to have a monthly check on the contractor on various statutory compliance, i.e., PF, ESIC, PT, MLWF, CLRA License Validity, Maintaining Register under the Act.

Now, straight to the point, if your contractor is showing you PF Challan and you are not satisfied with the challan, ask him to show the previous PF Returns of 3a & 6a which should be filed in the PF Office, wherein 3a you will have each employee's individual PS A/c number with the contractor PF Establishment code and accumulated amount for that financial year.

Stop the payment to the contractor with prior intimation, stating him to make 100% compliance for various statutory requirements and conduct a Statutory Audit so that the picture would be clear and your employees would be satisfied.

Lastly, if you still feel you need any help, kindly contact the undersigned for further queries.

Regards,

Ravikumar S.

9892028625

Hi,

You can assure yourself as Ravi said by asking for Form 3A, 6A, and you can also ask him for the yearly PF slip which is issued by the department. You can also take a declaration on the letterhead on a monthly basis stating that he has been remitting the PF of so and so employees in their so and so PF account. By doing that, to some extent, you would be able to safeguard yourself and also maintain some pressure upon him.

Regards,
Mukesh Mehta

All these suggestions are not foolproof. In a recent judgment delivered by the Honorable High Court of Delhi, it was stated that the Principal Employer is bound to deposit the contributions on account of the Contract Labour under the PF Scheme. Even if the Contractor has a separate or independent code number, the contributions are payable only by the Principal Employer.

However, the best suggestions are:
1) Ensure the disbursement of wages in the presence of the Principal Employer as stipulated under the CL(R&A) Act 1970.
2) Deposit the Contributions by the Principal Employer.
3) Ensure the submission of the Monthly and yearly returns by the Contractor regularly.
4) The monthly payment should be ensured only after these formalities are completed.

Dear Sir,

Let me add a few more suggestions put forth by Sh. S.K. Bhargava, as follows:

The principal employer may ask for the names and the P.F. account numbers of the employees posted by the contractor, and ask for copies of bank challans. They may withhold some security amount until they are satisfied, intimate the name and code number of the contractor to RPFC, ask for a copy of EO's inspection report if any, a copy of P.F. slips issued by the RPFC at the end of each year, etc. These points are in addition to the viewpoints of other contributors on this matter.

With regards,

Chandok
Ex-RPFC