How Can We Resolve Client Objections to Our Labor Payment Process in a PSU?

As per the rules and regulations for the payment method, we are working in a PSU. We are appointed as a labor supply agency for supplying labor as we cannot directly recruit labor on a contract basis. However, we are maintaining all documents directly by ourselves except for the payment. We pay our labor through an agency. Somehow, our client objects to making payments to our labor through another agency because we have not issued Form V to our agency.

Documents that prove the liability of labor is directly on us:

• We maintain the muster roll and issue wage slips directly to our labor.
• We issue employment cards to the workmen.
• We maintain statutory registers of all the workmen.
• We maintain the workmen register.
• We deduct PF & ESIC and deposit the same through our cheque.

We directly transfer the amount of wages of our labor through NEFT but through another agency's cheque. Please suggest how to resolve this situation.

Regards,
NPMB

Dear NPMB,

I have a doubt about how you can deposit the PF & ESIC from your account. If you have hired labor through any agency, then PF & ESIC will be deposited by that agency's account, not directly by you. It's mandatory to issue Form V. The agency will pay the salary slip and job card in their own name.

Thank you.

I need some information from your end:

1. Can you share with us what is the employee strength of labor supplier agencies in your organization? Is it below 20 or not?
2. Has any work order been issued to the labor supplier? If possible, could you provide a copy of the work order?
3. In the wage slip and all statutory records, is the name of the employer listed as the contractor or not?
4. Since you are a PSU, do you have your own PF trust or do you deposit the PF amount in the EPF office?

Thanks/Regards,
Ratikanta Rath

Since you have outsourced to an agency for the supply of labor, you are not supposed to maintain any register on your own. The contractor has to maintain the Muster Roll, Wage Register, O.T. Register, etc. The principal employer has to sign the wage register to ensure that wages are disbursed as per the entries made in the register. The principal employer has no direct control over contract labor. Payment of EPF & ESI is the responsibility of the contractor. Since contributing to EPF & ESI schemes is mandatory, the principal employer has the liability to ensure whether the contributions are remitted by the contractor properly or not. The principal employer should not issue pay slips or identity cards to the outsourced workers. The contractor has to fulfill these tasks.

Regards,
N. Lokanadha Babu, Manager-HR

Dear, you should discontinue the practice of maintaining registers, paying PF, and ESIC from your account. The labor can claim regularization of their employment if you continue the current practice.