Managing Sub-contractor Compliance: Can We Handle Their Legal Formalities?

Dear All, I am working with a construction company, and we have sixteen subcontractors. However, they don't maintain all registers, EPF deductions, and other legal formalities. We deduct the EPF amount from their bill, and we have a contract labor license on their behalf. Can we maintain all registers on their behalf?

Regards, Alok

Maintaining Subcontractor Registers and Compliance

You have to maintain subcontractor-wise attendance registers such as Form XIII, Wages Register, Muster Roll, OT Register, and Registers of Advances, Fines, and Damages or Loss (Forms XX, XXI & XXII). This is because you have obtained the Labour Licence under the Contractor Labour Act, so you are required to maintain these records.

You must also maintain Form V, Form X, and PF Account Numbers for all the workmen, and you have to submit their PF as required. Ensure that their Wages Register, Attendance Register, and PF Challan remittance details are maintained consistently, making sure there are no variations or discrepancies.

All the best.

The CLRA provides that statutory coverage is to be provided at one point, primarily by the contractor. If the contractor is not an organized person or a professional, then the burden shifts to the PE.

Regards

Rajanassociates

https://www.citehr.com/285737-legal-...ndustry-7.html

Your company seems to be the principal contractor, and you have engaged a subcontractor. As a principal contractor, you must ensure that all subcontractors meet the legal requirements for their contract workers. In your case, the subcontractor doesn't. Hence, I request you to kindly maintain a consolidated register and record with respect to the subcontractor and other WC/ESI/PF/Minimum wages/Payment of wages/Building and other construction workers/Cess/Contract Labour/ISMW/etc.

Regards,
UKS
www.vedaconsultants.com

Contractor and Subcontractor Licensing Under CLA

The term "Contractor" defined in the CLA includes a subcontractor. Therefore, all that is applicable to a contractor is equally applicable to a subcontractor. In case the subcontractor does not have a license, then under the CLA, all contract labor employed by them will be deemed to have been employed by the principal contractor. This is the fallout of not asking the subcontractor to obtain a license. Your license should include the number of contract labor employed by the subcontractor.

First of all, the Principal Employer has to register/add the contractor's name in the Certificate of Registration (In Form II), for which a register is maintained at the Labour Commissioner's office. If your name is not available, then you cannot obtain the License under CLA. Your PE should add your name to the Contractor's list; only then can you apply for a license under the Contract Labour Act.

Mr. Bhaskar has rightly mentioned the list of registers to be maintained from your end as the principal employer. Furthermore, since your company is involved in construction work, you have to apply for registration under the BOCW Act as well. After obtaining registration, you must also ensure that all the registers/records required under this Act are maintained.

Thanks,

AK Sharma
Sr. Manager - HR

Dear Mr. Sharma,

We have a BOCW License; however, it is necessary to maintain all the registers under the BOCW Act & Contract Labour Act. If we prepare wages register & workmen employed by the contractor under CLA.

Regards,
Alok

Dear Alok Singh,

Mr. Bhaskar has rightly mentioned the list of registers to be maintained from your end as the principal employer. Furthermore, since your company is engaged in construction work, you have to apply for registration under the BOCW Act as well. After obtaining registration, you must continue to maintain all the registers/records required under this Act.

Thanks,
AK Sharma
Sr. Manager - HR

Guidelines for Preparing Registers and Paysheets

When preparing the Muster Roll, Wages Register, and Overtime Register, you need to mention all the form numbers as per the relevant acts such as BOCW, CLA, Minimum Wages, etc., at the top as headers. The paysheet you prepare should be one single document.

I hope this clears up any doubts you may have.

Regards

Dear Contributors in the above subject,

Please clarify the following. I am an HR Manager in a Construction Company in Chennai, Tamil Nadu.

Subcontractor Inclusion in R.C.

1. We have more than 100 subcontractors. At the time of taking R.C., we are not in a position to fix the subcontractors. It is only possible on a stage-wise basis as the work progresses. How can we include these subcontractors in the R.C. of the principal employer?

Maintaining Statutory Records

2. I agree with maintaining all statutory records specified in various Acts. How is it possible to maintain them contractor-wise? Since Form 9 in the EPF Act needs to be maintained only in a consolidated manner, do we need to take a subcode, or can it be done otherwise? Is it possible to obtain sub-codes for more than 100 subcontractors? Under these circumstances, please guide me on how to ensure compliance.

Regards,
Anbu Loganathan
Manager HR
[Phone Number Removed For Privacy Reasons]
[Email Removed For Privacy Reasons]

You are the Principal Employer and are responsible for maintaining all the legal/statutory registers and forms. It is essential that you insist the sub-contractor obtain separate licenses and registrations for PF, E.S.I, etc.

Regards,
S. G. Arasanal
Manager - HR & Admin

You may hire a contractor or subcontractor. The contractor must independently maintain all the following requirements, and you have to ensure they are adhering to the legal aspects as prescribed by the Contractor Labour Act because you are the principal employer. This includes all legal/statutory obligations such as licenses, P.F and E.S.I, PAN card, police authority letters, etc.

Regards,

S.G. Arasanal
Manager-HR & Admin

When you say that you have contractors, this means you are the principal employer, do you agree? This means the contract labor license has to be taken by the contractor and not by the principal employer.

Secondly, each contractor has to apply for a contract labor license (in Form IV) along with Form V (issued by you) only when he employs 20 employees or more. Otherwise, obtaining a contract labor license is not required. However, the registers as per the CLRA Act need to be maintained by each contractor.

You can deduct the PF amount from the bills of your contractor and remit it to the EPFO in his code or your code.

When you say that you are going to maintain the registers, the purpose of having the contractor is not served. Hence, I suggest you educate the contractors on how to maintain the registers, and you can ensure the accuracy of the same by periodically reviewing them.

If you do all the jobs including monitoring attendance, payroll processing of his employees, giving direction with respect to their day-to-day jobs, this would simply mean you have a "Sham contract." All these employees will be treated as your employees, and you need to take them on your payroll in case they demand it in the future. Hence, please take care.

Regards,
Balaji

Dear Alok, you can, but let them do it. First, select contractors whom you think are capable of maintaining all statutory obligations and keep some retention money from their bill. If they fail to make statutory payments on time, you may use their retention money with a penalty.

Afterward, you will find them on the right path.

Thanking you,

Regards,
S R Pandey

Hi Alok, I am okay with everything, but by doing everything on behalf of the contractors, you are inviting bigger problems for your organization. It would be better to educate the contractors and assist them in maintaining everything. This advice comes from my practical experience after serving 40 years in the personnel department of a large construction group.

Thanks,
S N Banerjee

Please explain to me if the factory of the Principal Employer is in an exempted area under the ESI, and the office of the contractor is covered by the ESI, will the workers of the contractors who are working on the premises of the Principal Employer be covered under the ESI or not?

Under the EPF & MP Act 1952, the Principal Employer is responsible for compliance with all the employees employed directly or through contractors. Therefore, it is advisable to have control over all contractor employees concerning PF, even if sub-contractors have their own code numbers.

Please ensure all necessary steps are taken to verify that PF is deposited every month before the 15th to avoid penalties and interest on late deposits. It is recommended to withhold an equivalent amount until you are satisfied that PF for all employees has been deposited.

Regards,
Chandok
Ex-RPFC
[Phone Number Removed For Privacy Reasons]

As per the CLRS Act, it is mandatory that you maintain all the statutory records. According to the subcontractors provision, it is the responsibility of the principal employer to maintain all the records.

Best Regards,
Lakhan Trivedi

Dear Mr. Banarjee, we are a contractor, and we have already obtained a contract license for 1,000 people, and we have 16 sub-contractors. Can I maintain all registers as a contractor on behalf of the sub-contractor? Because the contractor's responsibilities include maintaining all registers such as fines, deductions, workmen employed by the contractor, advances...

Regards, Alok

Obviously, Mr. Alok, you have to maintain all the nil registers and Form XIII, Form XVI, XVII, and XXIII for all the subcontractors. You also have to deduct the PF for them and remit the same. If a Labor Inspector comes to your site, he will ask for the license holder and not the subcontractor. If you produce the same, there will not be any problem, and the matter will be closed there itself. However, if you fail to do so, then the question will go to the principal employer. The principal employer will ensure this at your cost—mind it, at your cost. So, it is better to seek help from your subcontractors and maintain the same to safeguard yourself.

You can maintain the register on behalf of them, but it should appear as if they are maintaining it themselves.

Thank you for your reply. I am maintaining all registers under the CLA Act, subcontractor-wise. How can we maintain the workmen engaged by the contractor on behalf of subcontractors?

Regards,
Alok