Principal employer liability if contractor defaults on EPF payment - If the contractor has their own registration

Whether if the company can be held guilty for contractor default to pay EPF. If the contractor has their own registration and whether the penalty can be levied of principal employer for contractor default.

Hi Gourav,

Any person employed directly or through a contractor in an establishment or in connection with the work of the establishment would also be termed as the ‘employee’ of that particular establishment as per Section 2(f) of the EPF & MP Act, 1952.

It is needless to reiterate that all the above contract employees would need to be enrolled under the PF Code Number of the establishment.

In case if such contract employees are enrolled under a separate PF code No. of the contractor, it is the principal employer’s duty to ensure that contributions at the prescribed rates are deducted and remitted by the contractor in respect of the said contract employees failing which, being the principal employer, the establishment will held liable for the payment of such contributions also.

The below are the detailed explanations on the same as per the legal provisions.

Para 30. Payment of Contribution:

1. The employer shall, in the first instance, pay both the contribution payable by himself (in this Scheme referred to as the employer’s contribution) and also, on behalf of the member employed by him directly or by or through a contractor, the contribution payable by such member (in the Scheme referred to as the member’s contribution).

2. In respect of employees employed by or through a contractor, the contractor shall recover the contribution payable by such employee (in this Scheme referred to as the member’s contribution) and shall pay to the principal employer the amount of member’s contribution so deducted together with an equal amount of contribution (in this Scheme referred to as the employer’s contribution) and also administrative charges.

3. It shall be the responsibility of the principal employer to pay both the contribution payable by himself in respect of the employees directly employed by him and also in respect of the employees employed by or through a contractor and also administrative charges.[Explanation – For the purpose of this paragraph the expression “administrative charges” means such percentage of the pay (basic wages, dearness allowance, retaining allowance, if any, and cash value of food concessions admissible thereon) for the time being payable to the employees other than an excluded employee, and in respect of which provident fund contributions are payable as the Central Government may, in consultation with the Central Board and having regard to the resources of the Fund for meeting its normal administrative expenses, fix]

Para 36-B. Duties of Contractors. :

Every contractor shall, within seven days of the close of every month, submit to the principal employer a statement showing the recoveries of contributions in respect of employees employed by or through him and shall also furnish to him such information as the principal employer is required to furnish under the provisions of the Scheme to the Commissioner.

Hope, the above information suffices the need.

Thanks & Regards,

Dikshit T G S.

Hi Gourav,
yes; principal employer is the full & final liable person for any contractors Flaws.
in EPF even though the employee under Contractor Principal employer is the final responsible person for any payments or procedures.
not only for EPF in any law Principal Employer is final liable person about any issue which relates to his manufacturing process or services.
Regards
Ramnarayan
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9701821205

Hi all
If the contractor is having seperate Provident fund A/c no and it has seperate identity as an establishment
the principal employer is not liable for any legal action.
regards

Mr. Bt_gujarat
having a PF Number wont define that he/she is a principal employer or contract employer. Its just an account number where his PF related transactions will take place.
If contractor is having separate identity & (separate Premises) then he wont be call as contract employer he will be called as Principal employer for that Separateness.
before raising any topic please go though with the Act. in most of the Acts section 2 filled with definitions those are more important, if u studied those u'll get clear understanding about who is a contractor and who is a principal employer. (Ref: contract labour act)

What action the PF and ESIC will take if Prinicpal Employer also not pay as it has already paid to the Contrator?

if the Prinicpal Employer does not bother to ensure that the contractor has paid the ESI/PF, then the ESI & PF offices will accordingly penalise the Principle Employer for not ensring the same. Thus , the princliple employer needs to check on the same by collecting the respective ESI/PF challans from the contractor.

Even though the contractor has separate code Number for both ESI and EPF and remitting the contribution of both employee and employer, working in different project sites, will the principle employer has the right to ask the contractor to remit all EPF & ESI contribution to the principle employers code Numbers?
Appreciate your clarification please.
Thanks & regards.
S.Muralidaran

36-B. Duties of contractors
Every contractor shall, within seven days of the close of every month, submit to the principal employer a statement showing the recoveries of contributions
in respect of employees employed by or through him and shall also furnish to him such information as the principal employer is required to furnish under
the provisions of the Scheme to the Commissioner.

If contractor submit EPF & ESIC, after its cut off date (15th & 21th of the next month). what is the liability of principal employer.
Is that principal employer liable for delay in payment & could be penalize by dept.