PF Withdrawal Issue: How Should I Handle a Contractor's Default on Payments?

Dear Seniors, I am a new HR joiner. There is an issue regarding the PF withdrawal of one of the contract employees who has now left the company. Upon verification, it was found that the PF amount was not remitted to the PF Office by the contractor. As a result, the application of the employee working under the aforementioned contractor has not been processed at the PF Office. What course of action should be initiated? Please guide me.

Liability of the Principal Employer

There is a liability on the Principal Employer if the contractor fails to pay wages to his workers and also to deposit PF and other statutory dues. In this case, the Principal Employer should have checked whether timely and regular wages are being distributed and contributions are deposited.

Now, what the Principal Employer can best do is to deposit the PF contribution immediately and recover the same from the Contractor from his bills. Incidentally, the concerned worker can still claim his PF outstanding irrespective of whether the contributions have been deposited or not by the contractor. It is up to the PF Office how to recover the dues from the Employer. The PF Office cannot deny the claim on the pretext that contributions are not deposited.

I would advise the worker to approach the District Consumer's Redressal Forum (Consumer Court) for relief.

Thank you for your valuable suggestion. As you suggested, make the payment from the Principal Employer and get repaid by the contractor by withholding his bill. However, that contractor is no longer working with us. In this situation, what action can be taken? I kindly request your help to solve this problem as soon as possible.

It's better to pay all dues from the Principal Employer's fund to avoid any inquiry or to fulfill statutory compliance. I also recommend fulfilling all statutory compliance that your contractor was lacking.

As Mr. Kulkarni and Puneet have suggested, the statutory dues and salary payment responsibility lie with the principal employer. You have not checked the statutory payments before making the full and final settlement of the contractor, so it would be your loss. Therefore, it is advisable to pay it off to avoid further consequences.

Dear Seniors,

We too have the same issue. In that situation, how can we make the payment through the PF portal? Please advise on the appropriate way the payments should be made.

Regards,
Kasthuri

Issue with PF Contributions for Contract Workers

One PSU had a civil contract workmen, and they have been paid their bill regularly every month by the concerned PSU. Notice issued by PF authorities on PSU because PSU is a principal employer, to pay PF contributions of the civil contract employees to the government as the PF contributions were not paid by the contractor so far. PSU's stand is that they have paid the contractor's bill regularly, and there is nothing pending at PSU's end to settle the contractor further. In the meantime, PSU accounts were audited for many years, and nothing has been mentioned about the non-payment of PF contributions to the government. Now PSU has no records (salary and attendance) of the employees who have been engaged by PSU.

The highlight of this case is there is no claim from any of the employees on PF dues so far. What is the stand PSU should take now? Please advise since it is very urgent.