PF Audit Dilemma: Are We Really Liable for Casual Labor Payments Under the PF Act 1952?

Dear Seniors,

I am requesting your assistance with the following cases:

We recently underwent a PF audit at our factory, during which the PF inspector raised a demand concerning work contract expenses. However, we have paid varying amounts to contract casual laborers in different states, with each laborer receiving a daily wage of 260 Rupees. None of the laborers worked for more than 15 days in a month. Despite this, the PF inspector has imposed a liability based on the total wages paid.

My query is whether we are obligated to pay the liability amount under the PF Act 1952?

I urgently await your response.

Thanks & Regards,
Varun Sharma

Dear Mr. Varun Sharma, Did you cross-check with the PF Inspector on what grounds he raised the liability amount? Kindly study the PF Act 1952 carefully to respond to their queries accurately. Always remember, these individuals may be corrupt and could be indirectly seeking bribes. Try to interpret their body language.

With profound regards,

If you have engaged casual labor in connection with your business, then you are supposed to pay contributions in respect of them. The demand of the PF inspector cannot be overruled. But before making payments, please take an opportunity to explain your situation very well. Once the observation report is made by the enforcement officer, it will become difficult to withdraw. Therefore, take the officer into confidence.

Dear skhadir, this is a common website. Do not make such statements. Certainly, there are a lot of corrupt persons in India (perhaps there may not be anyone in your place), but do not make general statements using words like 'idiots' in a forum like this.

Regards,
Madhu.T.K

Dear Mr. Khadir, I absolutely agree with you. This is an international forum, and professionals should express their experiences. HR professionals know very well about the PF Inspectors.

Regards,
Tribikram
[Email Removed For Privacy Reasons]

Please read what I have written carefully and take it in its spirit only. I have not deviated from the topic, and I have given the answer to the query to the best of my knowledge. Please also go through my other posts to see whether I have ever taken this forum as an individual's forum.

Regards,
Madhu.T.K

Could you please explain on which grounds the demand raised by the PF inspector is correct?

Regards,
Tribikram

PF Inspector's Authority and Conduct

As a matter of fact, the PF Inspector can demand the wage sheet, attendance register, PF Remittance Details from the IR Department, and the bill payment details from the Accounts department. He will then compare the payment details with the wage sheet and further PF Remittance Details. He does not have the right to claim information about the payment of workmen or any other details.

As mentioned by Mr. Khadir, the PF Inspector is only interested in the "Vitamin M" and nothing else. It is important to understand the body language of this individual and fulfill his requirements after bargaining. Otherwise, he may cause significant trouble and disrupt your peace of mind, not allowing you to work in tranquility.

With Warm Regards,

S. Bhaskar

Dear Bhaskar, the issue of a bribe is different, but you can easily understand why PF contributions are not paid for casual labor. Please understand that if we do not pay contributions, we are held responsible. I believe there is no doubt that if we engage labor at a rate more than 6500/-, we should fill out Form 11 to declare about EPF. If the employee is not covered under EPF at any time, we can consider them an excluded employee.

If we fail to categorize them as excluded employees, then we are responsible for any repercussions from the PF inspector or enforcement officer. If I am mistaken, please inform me.

Ashok

Dear Ashok,

The PF Inspector can call any workman and ask for his PF Number or his details for checking the 100% coverage of PF and not about the liability and other things which are nowhere concerned with him. Hope we are not discussing here regarding the PF exempted employees. For casual laborers also, we have to deduct the PF. If you are not deducting from the casual laborers, then you have to show their PF details and explain that both the employee and employer share are being paid by the employer/contractor. Then it can be easily sorted out.

With warm regards,
S. Bhaskar

Dear All,

We have paid the casual laborers on a daily basis as per the Minimum Wages Act. The case is as follows: Casual laborers are paid 260 rupees daily. None of them worked more than 20 days in a month. The paid amount of rupees is Rs. 5200 per month. We have not deposited PF on such amounts. If we calculate the total wage for a month, then it will be 260*26 = 6760 (Basic Wage amount) is exempted.

The question is, "Whether we will pay the recovery amount on the paid amount?"

Thanks,
Varun

PF Inspector's Role and Casual Laborers

The PF Inspector can call any workman and ask for his PF Number or his details to check the 100% coverage of PF. This is not about the liability and other things which are not his concern. I hope we are not discussing PF-exempted employees here. For casual laborers, we also have to deduct the PF. If you are not deducting from the casual laborers, then you must show their PF details and explain that both the employee and employer shares are being paid by the employer/contractor. This can be easily sorted out.

With warm regards,
S. Bhaskar

Dear Sir, I can easily understand the fact of this discussion regarding the query about excluded or covered employees. It was clarified by Varun's last post (dated 24/09/2011).

Thanks and Best Regards,
Ashok

Coverage of Employees for Part of the Month

Coverage of employees engaged for a part of the month is based on the daily rate amount paid for the days worked and then multiplied by 30 to determine the applicable coverage in the case of ESI, as there is a separate notification in this regard. However, there appears to be no such notification from EPFO.

Regards,
Madhu.T.K

Dear Skhadir/Madhu, I believe we should collaborate to explore the relevant provisions of the PF law in the given circumstances, focusing on highlighting established legal principles rather than expressing egoistic opinions towards one another.

Regards,
Subhomoy Chakraborty
Advocate

Dear Mr. Subhomoy Chakraborty, if you have a solution or information, kindly present the same because I am not a lawyer to have an update the way you people do. Moreover, I am following this thread to update my knowledge.

With profound regards,

Dear Mr. Subhomoy Chakraborty,

Shall we expect some expert reply from you for this query, which is required by our member? We are in the learning stage, as said by Mr. Khadir. Hence, we cannot derive a conclusion for this query. Please shed some light on this issue instead of creating heat, as I hope we are only indulging in discussion and not in argument.

Dear Mr. Subhomoy, It was your perception and interpretation level for which I can't help you, as every individual has their own style of perception. If you had gone through my first post, you would find my query: "On what grounds has the PF OFFICER raised the liability against casual labor?" We have been practicing QUERY-BASED DISCUSSIONS to understand the ORIGINATOR/MEMBER and his issues to be addressed proportionately with precise information that should cater to his requirements. This process has helped us gather a substantial amount of information, as the diagnosis was very much essential to interpret and submit our reply.

I understand it's FESTIVAL TIME, but it just started a couple of days ago. Perhaps by now, you should have submitted your expert advice. Moreover, I am not an expert to comment precisely on any subject matter. I am just sharing my knowledge proportionate to the query.

With profound regards,