Worried About Missing Contractor Documents? What Happens if a Labor Inspector Visits?

I am working in a new setup manufacturing industry as an HR professional, and my unit is currently under construction. My concern is that the contractor did not submit any documents regarding labor or facilities. What will happen if the labor inspector visits? What is the method that I need to follow?

Thank you.

Are you talking about a labor contractor? If yes, have you asked them to submit the required documents?

Thank you.

If you have given the work order, then show them the Xerox copy of the work order. Simply, you may tell them that they have been asked to submit the required forms, e.g., supply of labor application form, registration form, professional tax number, sales tax number, PAN card number, PF & ESIC numbers.

Compliance Requirements for Labor Inspection

The labor inspector will come to check the attendance register. Leaves provided to employees should be clearly documented. In the leave register, time in, time out, lunch hours—everything should be very clear with the employee's signature.

You have to pay overtime as per the law. You must follow the minimum wages for unskilled and skilled employees as per the law.

Regards,
Upasana

Agreed as per your words, but we are discussing contract employees who are on third-party payroll. Therefore, you don't need to keep attendance records of contractual employees as per the Factory Act. You only need the monthly bill to ensure whether minimum wages have been paid or not, a copy of PF challan, and additionally, you may ask for an ECR copy to have a comprehensive record of contractors.

Regarding Your Points:

1. The labor inspector will come and check the attendance register.
2. Leave provided by you to the employees.
3. In the leave register, time in, time out, lunch hours—everything should be very clear with the employee's signature.
4. You have to pay overtime as per the law.
5. You have to follow the minimum wages for unskilled and skilled employees as per the law.

These records should be maintained only for company employees, not for contractual employees.

As you rightly said, the principal employer doesn't have to maintain all legal registers for contractor employees. However, it is our responsibility to keep a reality check on contractors' attendance, legal registers, and statutory requirements to be completed within time. If something goes wrong, the principal employer needs to bear all the repercussions.

Regards,
Snehalata

Thank you very much for participating in my query. I have submitted all the related documents as per Mr. Singh's instructions, including leave details, attendance records, shift timings, and clock-in and out times. All these details have been verified by him. The only issue is that the construction contractor does not have the workers' details, registers, or ESI information. Typically, every contractor should provide ESI details for all their workers, which has not been done in this case.

Process for HR Personnel Regarding Contractor Compliance

Please share with me the process that all HR personnel should follow regarding this case. I am not only interested in their ESI information but also in discussing all related matters.

Thank you,

Nagarjuna

If a construction contractor doesn't have workers' details, registers, or ESI details, then it is the concern of the HR person to take responsibility for that. For instance, if the total bill of the construction contractor is, let's say, 500,000 Rs., and he shows an amount of 50,000 as labor charges, then he is liable to show the PF record for the same. If he can't, then the concerned HR person is at fault. Therefore, you may ask and convey this message to your management. If they intervene in this matter, it can be resolved by offering some kind of bribe to the labor officer of the PF authorities. Everything I have mentioned is based on my practical experience because I have been through this situation.

Thank you.

When the factory building is under construction, there is no factory and no PF. Construction work should be given as a contract for service.

Regards,
Varghese Mathew

Applicability of the Contract Labour Act

The Contract Labour Act applies irrespective of whether your factory is in place or not, or if it is a shop/establishment. Where the Contract Labour Act applies, the attendance records and all other records required under the Factory Act, Payment of Wages Act, Minimum Wages Act, PF, and ESIC should be maintained for each location. Of course, a license under the Contract Labour Act is applicable. These are not dependent on whether you have a labor contract, service contract, or job work and irrespective of whether you pay per person, piece rate, or time rate.

In addition, since the factory is not set up, you will be covered under the Building and Other Construction Workers Act. Cess is applicable under that act and must be paid.