Understanding Provident Fund Obligations for a 280-Meter Wall Contract: Who's Responsible?

We are going to award a construction contract for a wall with 280 running meters to a contractor. However, we found that:

1. The contractor is not registered for the provident fund, and the proposal quoted to us is exclusive of PF. My inquiry is whether our company, as the principal contractor, has to take care of the provident fund or not.

2. As informed by the contractor, they estimate using laborers totaling 10-12 people. My inquiry is whether PF is applicable or not.

Anxiously awaiting your kind clarification.

Thank you in advance for your help.

Best regards,
June

Provident Fund and ESI Contribution for Construction Work

The construction of the wall is not directly connected to the nature of the work you are carrying out. Therefore, you need not contribute PF in respect of employees engaged for that work.

In respect of ESI contribution, there are different views regarding being directly connected to the nature of work. However, following the decision in ESI Corporation Vs Standard Pottery Works [2001 (3) KLT 55, 2001(4) LLN 377, 2001(II) LLJ 1208 (Ker)], employees engaged in the construction of compound wall work were held to have no nexus with the business of the establishment and hence not covered by the Act.

Regards,
Madhu.T.K

Dear friends,

Applicability of Acts for Factory Construction

If the wall is being constructed to guard a factory registered under the Factories Act '48, the Factories Act will be applicable. Otherwise, if the work order value is greater than 10 lakhs, the BOCW (RECS) Act '1995 will be applicable.

EPF & MP Act, '52 Applicability

However, in both cases, the EPF & MP Act, '52 will be applicable if the establishment has already been covered under the act due to crossing the minimum bar of 20 or more employees. If 20 employees have already been crossed, the contractor with even a single employee has to pay PF as the establishment is covered.

Secondly, the contractor without an allotted PF code may be given some time to get a PF registration code and submit such documents with individual PF codes of employees so engaged within a short date.

Regards

Thank you very much for your kind clarification. The purpose of constructing the compound wall is for social responsibility towards a primary school. In fact, we are a residential developer.

In conclusion, to construct a compound wall for social responsibility purposes with approximately 10-15 laborers by an unregistered contractor for PF, PF will be applicable and taken care of by the principal contractor, won't it? Please correct me if my understanding is wrong.

Looking forward to your kind confirmation.

Best regards,
June