Are We Responsible for PF Contributions for Agency Workers in Our Garden Maintenance?

Query Regarding Provident Fund Contributions

I have a query regarding provident fund contributions. Details are given as under:

Ours is a manufacturing unit. We have no contract workers; our security staff and housekeeping staff are regular employees on the muster roll. No contract labor system is prevailing in our industry. As we have a garden in the surrounding area of our factory, we have entered into an AMC (Annual Maintenance Contract) with an agency for garden maintenance. The agency provides us with a monthly bill, and we pay them according to their bills. Such agencies do business not only with us but also with many clients like us.

In this kind of case, is the employer liable to pay PF contributions for the workers provided by such agencies? We have been asked by the PF authority to make contributions for these workers. Who can be the principal employer in these types of cases?

Your assistance in providing a solution and relevant case laws to support this matter is greatly appreciated.

With Regards,
A.V. Vashi

Firstly, clarify how many wages are paid to those employees. If the amount is less than 6500, then you have to pay PF. If the amount is higher than 6500, then you have to fill out Form 11 for those workers. However, according to the Minimum Wages Act, the central or state wages rate should be higher than 6500.

Please let me know if you need any further clarification.

Thank you.

As the principal employer, it will be your responsibility to fulfill the statutory obligations for workers working on the company premises, regardless of whether they are on contract or not.

Thanks,
Bijay

If such an agency has many clients like us, then who can be the principal employer?

Understanding AMC and Statutory Compliance

You, as a manufacturing company, have hired an agency on an Annual Maintenance Contract (AMC). The fact of the matter is that an AMC is also a contract; therefore, the terms of agreement in such AMCs should mention that statutory compliances against workers provided by such an agency under the contract will be borne by the agency. The charges for such compliance will also be borne by the agency and not the company. If the AMC is not set out properly, by default, it becomes the responsibility of the company as the principal employer to bear the statutory obligations, as workers are working on the premises and rendering services.

The agency may have many clients, like your company. The Service Level Agreements (SLAs) and agreement terms of the AMC matter.

The entire matter can be brought under the purview of the Contract Labor Act and then studied, as it seems to involve manpower issues for maintenance.

Also, if I am not mistaken, AMCs should not include manpower services or soft services under maintenance contracts. Otherwise, AMCs requiring manpower to provide such services should include clear clauses in the agreement terms on statutory compliance.

Regards,
Bijay