How Do We Handle Compliance Costs When Laborers Want Full Daily Wages Without Deductions?

We have started a new business on June 12 and have approximately 85 laborers, out of which 20 are regular for production, and the remaining are for cleaning and maintenance. All the laborers are through a contractor. The factory is in Surat. The laborers are not interested in any deductions for PF and ESI and they want Rs. 300 as take-home daily wages. So far, the contractor has only paid the wages to the laborers and charged us with his commission. There has been no compliance so far. Furthermore, being a small contractor, he is not aware of all the compliance he needs to adhere to.

Concern About Compliance Costs

As the production in-charge, I am very concerned. The management has approved covering the cost of compliance for the contractor, but both the contractor and I are unsure of how to calculate the total compliance cost, including PF, ESI, paid leave, etc. Apart from PF and ESI, there are numerous other compliances to be met, and I wonder how to quantify these into amounts.

I kindly request seniors to email me calculations considering two workers who are being paid daily wages of Rs. 300. Please also suggest the agreement format we should have with the contractor.

Regards

Procedure for Obtaining PF and ESIC Numbers

I have no organization, but I want to get a contract for less than 20 laborers. I need to obtain a new PF number for the laborers and an ESIC number. Do the PF Office provide me with a PF number and ESIC Number? Otherwise, do I need an organization? What should I do for this? Please provide me with a procedure for this.

I am located in Vadodara, Gujarat.

Thanks,
Upendra.

Compliance with Statutory Provisions for PF and ESI

With reference to your query on the above topic, compliance with statutory provisions is mandatory to provide PF. ESI is the responsibility of the immediate employer (Contractor). Please make an agreement with the contractor with terms and conditions clearly outlined. Otherwise, the contract labor will be deemed as employees of the principal employer, and the responsibility falls on you.

You can take action by sending your email ID and contact number to my email address: [Email Removed For Privacy Reasons], so I can send you a copy of the agreement made with the contract labor engaged by the contractor.

For further clarifications, please feel free to contact me at [Phone Number Removed For Privacy Reasons].

Thanks and Regards,
P.V. Rama Rao.