Navigating PF Coverage for Temporary Workers: How to Handle High Attrition Rates?

I am working in a Steel Furniture Manufacturing Company. We have employed some temporary workers for manufacturing purposes, and their gross salary is around Rs. 6000/- on average.

PF Coverage for Temporary Workers

As per the PF rules, even temporary workers are supposed to be covered under the PF benefit. However, due to the high attrition rate, it is not conducive for us to bring all the employees under the scheme. Can anyone please suggest the best alternative without violating the rules?

With best regards,
Debasish

Inclusion of Temporary Workers in EPF and ESI Coverage

It is always desirable to bring temporary workers under EPF and ESI coverage. The suggestion to set the salary (basic + DA) just above Rs 6,500 is not practical because the EPF Organization can increase the salary limit for coverage at any time. Discussions are ongoing to raise the salary ceiling to Rs 9,000 or more, to include more employees under the EPF net. Therefore, setting the salary at Rs 6,501 from the current gross of Rs 6,000 will not serve your purpose.

Similarly, engaging temporary employees through a contractor will not benefit you much as the principal employer. You must ensure that employees engaged by the contractor receive all statutory benefits like PF, ESI, and minimum wages. This will become your cost or liability, and in addition, the contractor should be paid a service charge. Besides this, service tax will also have to be paid. In your case, the employees appear to be engaged in regular work, and engaging contract labor in work of a regular nature, where a regular employee can be engaged, is illegal under the Contract Labour (Regulation and Abolition) Act.

From my practical knowledge as an IR person, I have seen that contract labor often resorts to strikes to press their demands. When they strike, the principal employer is often brought in for negotiations or forced to negotiate with the contract workers. Eventually, the contract itself may become a sham contract, resulting in a regularization claim by the employees. Therefore, I do not advise you to bring the employees under a contractor.

Regards,
Madhu.T.K

Nowadays, the minimum wage itself is more than Rs 6500. It is better to fix the salary consolidated at Rs 6600 or more, exempt from PF provisions, and pay the other statutory provisions such as ESI, PT, etc., to lessen the financial burden.