Navigating Labor Licenses: Do We Need PF and ESI for Contractor-Sourced Workers?

We are a client company applying for a labor license. However, we source labor from a labor contractor. I want to know if it is applicable to us for PF, ESI, registration, depositing PF, ESI, and other registers.

I agree with Arnab. You don't have to apply for a labor license; instead, you have to apply for a labor registration certificate by filling out Form 1, and your contractor has to apply for a labor license. Additionally, you have to provide Form 5 to the contractor before he applies for a labor license.

Furthermore, ESI is not applicable to construction laborers. Therefore, please ensure that your contractor has CAR and WC policies for their staff/workers.

Regards,
Ruchi

I agree with Ms. Ruchi. The construction sector is not under ESI coverage; therefore, we must ensure a CAR policy.

Regards,
TVSR

Warm hello to members. I have my views and want to share them with you all. Kindly correct me if I'm wrong.

1. ESI coverage is done area-wise, not industry-wise.
2. All contract labor should be covered under EPF and ESI.
3. The principal employer has to ensure all statutory compliances of the contractor after obtaining RC and issuing Form V.
4. The principal employer is liable, as well as the contractor, for statutory dues.

Regards,
SK Deka

The construction industry is exempt from ESI as per the notification dated 14th June 1999. The rest of points 3 and 4 are absolutely correct.

Regards,
Ruchi

[QUOTE=sunita meena;1946022]When your establishment is covered by PF, any person who works in your establishment and is not otherwise excluded shall be covered by PF. The same applies to ESI as well. Therefore, even if the contractor has fewer than 20 employees, his employees working for you should be covered by EPF. So, he has to take PF registration. If the company has nine employees, they may have to opt for voluntary coverage of PF. If the contractor fails to get voluntary coverage, as the principal employer, you have to provide coverage to the contractor's workers who worked with you under your PF code.

You can keep the contractors with a separate Sub Code if your contractor fails to obtain PF Registration.

Thanks & Regards,
B. RAVIMURUGAN
Senior HR & IR Professional.

Any company engaging 5 or more employees at the client's location should have a Contract Labour License. As a client, you need to provide a work order and Form V to your contracted company to obtain the CLRI. In all statutory cases, as the principal employer, you are liable for all employee-related issues. As a client, you should ensure that the contracted company is fulfilling all statutory requirements. Every month, you need to cross-check and audit 14 types of documents before processing their bills.

Regards,
Karthik

Please advise if there are any separate rules under the Gujarat Labour Act regarding Form 5 for subcontractors of the main contractor. Kindly provide guidance on this matter.

Thank you,

Pratik

Dear Jayanta,

Your P.E. (Professional Engineer) has to submit Form 5 through your contractor, specifying you as a subcontractor for the said contractor.

Thanks & Regards,

B. Ravimurugan
Chief Manager - HR & Legal
Natrust
M: [Phone Number Removed For Privacy Reasons]