How Do You Handle PF Contributions for Contractual Workers Without a Contractor PF Account?

Hi, please suggest how to remit PF contributions for contractual employees when the contractor does not have a PF account.

You must ensure that your contractor applies for PF Registration and deducts for all the employees/workers engaged by the contractors.

Furthermore, you can insist that all contractors (existing and newly joining) submit copies of PF, ESI, and ST Registration, along with monthly remittance details and copies of Challans.

Even for one day, we have to deduct the PF for the workers. It is the contractor's responsibility. If he is not remitting or not submitting the PF Challan along with the workers' PF remittance details, you have to deduct the amount of PF (employee + employer share = 25.61%) and keep it with you until the contractor submits the PF Challan. If he fails to remit, then you can remit directly to his account.

EPF & MP Act Compliance for Contractual Employees

When an establishment or contractor not having registration under the EPF & MP Act is engaged for providing services on contract, the employees of the contractor will have to be added to the manpower strength of the principal employer. Compliance with the provisions of the Act in respect of such employees falls on the principal employer. The methodology for such remittance is detailed in the Act, and it has its own implications.

Instead, I would suggest that you award contracts for services to establishments that have establishment Code Numbers under the EPF & MP Act, ESI Act, etc., for the following reasons:

1. You will receive better services because such companies are generally established ones with large manpower support, business dealings with various other companies, and better management practices.

2. They will comply with the provisions of these Acts as Employers, and therefore, you won't have to bear the burden of compliance on behalf of your contractors.

However, you may insist on the production of proof of remittance of contributions under the relevant Acts concerning their employees deployed in your establishment as a precondition for processing bills by inserting suitable clauses in the contract agreement. This will ensure that there are no defaults by such establishments that could lead to actions against your company by the authorities under these Acts.

Regards

If the contractor does not have their own code, they should not remit the contributions of their workers under your code and should deduct the amount from the contractor's bill.

Regards,
Varghese Mathew

Options for Remitting PF Contributions

In the instant case, the options are:

1. The employer can pay both the PF contributions for the employees under his PF code number, including arrears.

2. The second option is that the contractor should immediately approach and get a PF code number from the concerned regional PF office. He can pay both the contributions by DD and obtain a code number.

3. If both the principal employer and contractor do not have facilities to pay, the third option is to pay the PF contributions through a third-party service provider who will pay the PF contributions under his code number and provide the services on payment of service charges.

Regards,
M. Venkatraghavan
[Phone Number Removed For Privacy Reasons]

Accountability and Responsibility in Contractor Management

Principal employers are accountable, and contractors are responsible. If the contractor is not registered under EPF and ESI, then ask them to register within a specific time frame. When hiring a contractor, ensure that they are registered according to the applicable law. If not, you may remit the contract employees' contributions from your code and deduct it from their invoice. This practice was implemented for some contractors in my previous organization. Hope this information proves helpful.

Regards

Hi, a simple way to handle this situation is that if the contractor does not have a PF account, you can deduct both the employee and employer shares and deposit them into your PF account number.

Regards,
P.K.J

You have mentioned that the contractor does not have a PF account but did not mention the reason, which is very important to know. If the contractor is a petty contractor with fewer than 20 employees altogether on his payroll and working exclusively for you, he is not liable to register himself with EPFO, meaning he is not required to have a PF account. In such a case, you need to ensure that the employees of such a contractor working for you are covered under PF under your code.

How to Remit PF Contributions of Contractor Employees

You have the option to either include the names of contractor employees in your ECR or upload a separate ECR. Although the system allows for multiple ECRs, I would rather suggest not doing so. I recommend including the names in your ECR. Furthermore, I advise you to avoid such contractors in the future. I do not recommend compliance with third-party payrolls for various reasons. The same advice applies to other statutory remittances as well.

Dear Seniors,

Please guide me on whether it is possible to generate multiple challans from a single EPF Code/Account. We have a company EPF code, but our contractor does not have an EPF code. Previously, we generated club ECR and challans.

Kindly advise if it is possible to generate multiple ECRs for the employer and a contractor. If so, please explain how it can be done and provide the necessary steps.

Thank you,
Kiran Bhatkande

Yes, generation of multiple challans is very much possible. You can generate different challans for your company staff and another challan for your contractual staff. This will make your work easier during an audit.

If a contractor does not have PF registration, you should either have them register in PF, or as a principal employer, you have to remit contributions under your PF code.