AMC Service Provider Is Contrator Establishment Or Not

Hi all,
In our organisation we have many AMC for airconditioner/weigh bridge/Comupter peripheral etc.My qeury is can we treat them as contractor establishment .Kindly give your views.
Mantu71

AMC is not a labour contract coming under the Contract Labour (Regulation and Abolition) Act but it is a work contract. Under AMC a particular work, ie, the repairs and maintenance is given of some assets, is given to an outsider and the payment is fixed irrespective of the number of repairs done and irrespctive of number of employees engaged for the purpose. Therefore, no element of employee- employer relationship is present in such contracts.
Regards,
Madhu.T.K

Dear Mr.Madhu,
In our organisation, we have provided space for many food and snacks vendors to sell their food products. The food products are not provided at subsidised price and are purchased by the employees. Will such also vendors be considered as contractors.
regards
R S Biswal

Since it is not a statutory canteen like arrangement, they will not become contractors of your establishment.
Regards
Madhu.T.K

Dear Mr.Madhu

I differ from what you said in your first post in this thread. The CLRA Act defines the term "contractor" in section 2(c) as follows "contractor" in relation to an establishment means a person who undertakes to produce a given result for the establishment other than mere supply of goods or articles of manufacture to such establishment through contract labour or who supplies contract labour for any work of the establishment and includes a sub-contractor. This definition contemplates two types of contractors. Firstly a contractor who undertakes to produce a given result for the establishment other than mere supply of goods or articles of manufacture to such establishment through contract labour. Secondly, a contractor who supplies contract labour for any work of the establishment. The term "contractor" includes a "sub-contractor" also. It is clear that the first part of the definition relates to work contract and the second part of the definition relates to labour contract. Therefore my view is that both work contract and labour contract are covered by the provisions of the Contract Labour(Regulation and Abolition) Act, subject of course to the other conditions of the CLRA Act.

With regards

totally agree with your view, absolutaly interpretation are correct. But in thes how they will manage the ESI & PF complaince or contribution of such employees who used to change every single day, today someone, day after tommorrow some other. please advise.

Mr.Madhu, What is the requirement of Statutory canteen. we are an IT establishment with more than 10,000 employees working in the premises.
regards
R S Biswal

Dear Mr. V. Harikrishnen
I feel that this Act applies to every establishment where 20 or more than 20 workmen are employed. So the definitions on which you have relied must fulfil this crieteria first. Generally AMC contract consist of servicing and replacing the parts of machines and this is not the continuous activity. This takes place even once in 3 months or 6 months as well. Therefore I differ from your opinion and in my view the AMC contracts does not fall in perview of Contract Labour Act.

Please go through a circular of ESIC giving clarifications on various items as to its applicability for coverage and contribution. It says that AMC is outside the purview of ESI contribution. Moreover, it is a payment given to an agency not based on the actual days of working or labour involved. There is no commitment that this much of services should be done and the Principal employer does not know the number of persons engaged for the purpose. It is reproduced in Hassan Cooperative Milk Producers' Society Union Ltd Vs. Asst Regional Director, ESI Corporation (2010 LLR 561) that if the employer has no idea about the number of persons to be engaged by the contractor, the principal employer- labour relationship can not be proved. The case of AMC is also similar and moreover, it is a lumpsum amount paid from which labour cost can not be taken out separately.

Statutory canteen is a concept in Factories Act. If a factory is employing 250 employees and the state govt. has issued notifications regarding setting up of a canteen for the benefit of the employees, then that canteen will be treated as statutory canteen and the employees of that canteen will be covered by ESI and EPF. Therefore, if in an IT company a shop is functioning then the employees will not become employees of the IT company. However, if there is a settlement or an understanding with the employees that you will be getting the benefit of easy shopping within the compound either at a concessional rate or at a credit rate adjustable/ recoverable from salary or with a similar arrangements, then it will become every easy for the ESI authorities to establish that the canteens/ malls are run by the employer or set up for the benefit of employees as part of their welfare schemes (which would directly or indirectly would have hit the CTC agreed) and if so, the employees of that canteen/ malls will be treated as labour of the employer.

Regards,

Madhu.T.K

Sorry, I did not attach the document. Please find the attachment.
Regards,
Madhu.T.K