Are We Required to Pay ESI/PF for Contractors in Our Civil Contracting Projects?

Dear All, we are a company specializing in civil contracting. For each project, we employ not only our regular staff, but we also engage contractors who undertake the work based on labor rates, charging us per square meter. These contractors provide only labor, whereas we supply all necessary materials. In our balance sheet, these payments are categorized under JOBWORK. Could anyone advise whether we are obligated to pay ESI/PF on the job work portion of our balance sheet?

Regards.

It is the primary responsibility of the contractor concerned to comply with all the applicable statutory regulations. As the principal employer in this case, your organization must ensure that the contractors you engage comply with all the enactments. In case they fail to do so, you will have to take up all the responsibilities on their behalf.

My Suggestions Are as Follows:

I. When engaging any contractor, ensure they have valid PF, ESIC, and Professional Tax registration.

II. Instruct all your contractors to submit the monthly challan for PF, ESI, and P. Tax remittance along with the monthly invoice, without which no bills shall be processed.

III. Instruct the contractors to submit the Half-Yearly return for ESIC and Annual Return for PF.

IV. Ensure the contractor pays at least the prescribed "minimum wages" rate as applicable for your state.

V. Ensure your contractor obtains the Labor License upon reaching the critical size of manpower deployment (either 20 or 10, depending on the state).

You can also consider our expertise in contract labor service that we offer on a pan-India basis.

Regards