Can Principal Employers Submit PF & ESI Challans for Contractors? Understanding the Process and Liabilities

Principal Employer's Submission of PF & ESI Challans

Can a Principal Employer submit the PF & ESI Challans using his own code for his contractor? If yes, then what is the procedure and what are the liabilities that arise upon the Principal Employer?

Yes, the principal employer can enroll the employees engaged through the contractor under his registration if the contractor does not possess separate ESI/EPF registration of his own. The procedure remains the same. There are no consequences as long as the contract is genuine and the laborers are engaged in work that is not related to the core activities of the principal employer. Certainly, if the laborers are engaged in perennial activities or if the contract itself is a sham, there is a risk even if the laborers are covered under the contractor's registration.

Regards,
Madhu.T.K

I agree with Madhu TK. As a principal employer, you have the right to deposit the PF and ESI contributions of contractor employees working at your place. I would like to add that you need to ensure that you have registered the contractor in FORM-1, even if he has fewer than 20 contract laborers working with him. Please also ensure that you get a letter and an affidavit from the contractor declaring that he does not have a PF and ESI code number and wants to utilize yours to meet compliance. You should have a separate challan from the contractor for his employees, and his cheque should be used for remittance.

At no point in time should it appear that you, as the employer, are supervising their activity. It should only appear that you are a facilitator to the contractor for compliance purposes.

Thanks,

Regards,
Mritunjay Nath Sahu
GM(HR)