Managing PF for Unpredictable Daily Wage Workers in Civil Engineering Construction?

I am about to start a business in civil engineering construction. However, the labor force is not constant; they may or may not continue the next day (practically). In this case, how can we pay PF for such labor?

Thank you.

If you consider their basic salary to be more than 6,500, then they are excluded from PF. However, you need to think about the upcoming bill for raising the PF ceiling from 6,500 to 15,000.

Regards,
Tushar Swar

As per the amendment given a long time ago, even if a person worked for just one day, we have to pay PF. However, the PF Act will only be applicable if the number of employees is 20 or more.

Regards,
Bhaskar
Head - HR

Thanks, Eniya. In fact, I was also looking for some advice in this matter—I request your valid opinion on deducting PF for the daily laborers in case the total strength is more than 20. It is difficult to keep track of employees' accounts as they keep changing every day. How should we handle this?

Regards,
Marymol

First of all, you will be required to take a registration from the PF Department of your locality only when the total number of employees, including contract laborers, reaches 20 or more in any month.

Secondly, you need to consider the salary/wage pattern of all employees, including contract employees. If the Basic & DA of employees is up to Rs 6,500 per month, excluding allowances, you have to pay PF contribution to those employees who have worked even for one day. It is important to calculate the day's wages payable or to be paid, on which you have to deduct 12% (only on basic & DA) from the wages of the concerned employee/contract labor as PF contribution. The employer's contribution will have to be paid at a rate of 13.61% on one day's wages. Therefore, the employer and employee contributions together at 25.61% will have to be deposited by the 15th of the following month.

Regards,
Sibabrata Majumdar
Management Consultant- Legal & HR
[Phone Number Removed For Privacy Reasons]

I completely agree with the comment of Sibabrata Ji. Apart from this, I would like to further add that if you do not deduct the contribution from the employees' salary and remit it timely, then it may be possible that at the time of EPF Inspection, the department can calculate it as a default payment and also impose interest on the same. Also, note that at that time, you will have to pay the entire amount.

So, be particular about this.

Regards.

Whether you are in a business in civil engineering construction or any other activity, and you are in a Schedule I Industry of the Act, and the Act is applicable to your establishment, even though your laborers are not constant and may not continue the next day with you, and your laborers may be migrant in nature, and the laborers may be hired in a multi-tier system, i.e., engaged through contract/subcontract/sub-subcontract/sub-subcontract...; there is no direct or indirect control of you on the laborers, and it may be practically impossible for you to make the compliance under the Act in respect of such persons, and there may be uncertainty as of today whether the laborers will get their contribution back or not, YOU ARE LIABLE FOR PF DEDUCTION.

All these points are well discussed in the matter of the Builders' Association of India, Mumbai HC Nagpur Bench.

The funda of Rs. 6500/- is being misinterpreted by most of us, and therefore, the question is asked by me to one of the learned friends, Mr. Tushar Swar.

Members should discuss this post.

Regards.

If PF has to be paid for daily wage laborers, who may or may not work on a daily basis, a PF account needs to be opened in each laborer's name. PF should be paid at a rate of 25.x% for the number of days the laborer works or for the entire month of 30 days.