Navigating PF Registration and Labor License Requirements for Contractors with 20+ Employees

If any contractor has more than 20 employees:

1. Is it necessary to go for PF registration, or can those workers be paid through the Client PF Sub code?

2. What is the minimum number of workers required to obtain a labor license?

Regards, Naveen

Answer to your first question: A contractor with 20 or more employees overall is liable to register under the PF Act.

Answer to your second question: A contractor with 20 or more employees in a particular establishment is liable to obtain a Labour License under CLRA.

Firstly, eligibility for PF is for any person who is employed for work of an establishment or employed through a contractor in connection with the work of an establishment.

Applicability:

- Every establishment which is a factory engaged in any industry specified in Schedule 1 and in which 20 or more persons are employed.
- Any other establishment employing 20 or more persons which the Central Government may, by notification, specify in this regard.
- Any establishment employing even less than 20 persons can be covered voluntarily under Section 1(4) of the Act.

Secondly, to obtain the labor license and Registration of Establishment, the principal employer employing 20 or more workers through the contractor or the contractors on deposit of the required fee in Form 1 (as per Section 7).

Thank you.

I would suggest that the contractor, if having 20 or more employees, must obtain their own PF Code number. This is important because, in the event of a contract with a new employer or company in the future, the employees of the contractor will be more secure in terms of PF benefits, especially regarding EPS.

Regards,
Chandok A.K.
RPFC (Retd.)