Managing Compliance for 4 Employees Across States: Which Rules Apply?

My company is in Bangalore, and we follow Karnataka rules for all our salary and other regulations. We have taken AMC from a company in another state where our technicians and engineers are deployed. Could you please let me know which statutory compliance our company needs to follow? It is very difficult for us to manage different compliance for only 4 employees.

Thanks,
Ms. Seema

If you have obtained a license under the Contract Labour Act for those individuals, then you must adhere to the central rules. It is advisable to follow the central rules for those employees to facilitate their work, or you can choose to comply with the respective state's Shops & Est Act.

Regards,
M. Vinay Kumar

Basically, from our company, a few team members are currently at a client site under an Annual Maintenance Contract. Our company is mid-sized, with fewer than 70 employees. We are here to ensure we are following all the regular compliance regulations of our state.

Compliance at Client Site

We want to clarify whether for employees at the client site, their legal department requires us to adhere to the compliance standards of the large manufacturing company they are working for. Should we follow their compliance rules and salary breakdown specific to that state, or should we stick to our own state regulations since they are our employees?

Categorization of Labor

Additionally, I would like to understand how we should categorize skilled, semi-skilled, and unskilled labor.

Thanks & Regards

I understand that you are a contractor supporting the Principal Employer by deploying your resources at their premises, which are in another state. In this case, you are a contractor and are supposed to comply with the Contract Labour Act. However, the applicability of the Contract Labour Act needs to be verified based on the number of your employees (contract laborers) where you have been deployed, or as per state rules (not sure about the nature of the business of your principal employer).

In any case, you are supposed to maintain certain mandatory statutory registers separately for those contract workers, whether they come under the CLRA Act or the Minimum Wages Act based on the applicability.

Compliance Requirements for Client Locations

There are different acts that apply, and your compliance requirements at the client's place need to be based on a number of factors.

1. If you have 20 or more employees at one client location, you need a license under the Contract Labour Act. If not, then you do not need a license.

2. You need to have PF registration at your head office and pay PF for all employees other than exempt employees. You may need to show proof of payment of statutory dues to the client.

3. You need to register for ESIC and cover all employees with a gross salary of up to ₹25,000. Do this also at the central location, but ensure that family photo smart cards are issued to all employees, even if they are not in Bangalore. Again, proof of coverage needs to be shown to the client.

4. You need to maintain an attendance register, leave register, fines register, advance register, and muster roll/wage register at each location, properly filled and kept up to date.

5. Payment of wages (other than direct transfer to the bank) should be made in the presence of a representative of the principal employer (client), and their signature/certificate should be taken on the last page of the wage registers for each month.

The above requirements are not negotiable and are part of the cost of doing business. These should have been taken into account when quoting for the work.

I'm suggesting a simple way. I know you are a contractor and you provide a few employees to your principal employer in another state. You want to know whose state rules you'll follow. Don't worry; first of all, you are required to take a labor license from there on behalf of those companies. However, I think you are not eligible for a contract labor license because you deploy only four employees. Hence, you are required to maintain a few registers under the Contract Labor Act, and it's applicable for all India. The details are given below:

1. Form - XIII
2. Form - XIV
3. Form - XV
4. Form - XVI
5. Form - XVII
6. Form - XIX
7. Form - XX
8. Form - XXI
9. Form - XXII
10. Form - XXIII

EPFO & ESIC deductions from your employees' deposits at your main code.

If you have any queries about compliance, you can contact me through my email address [Email Removed For Privacy Reasons].

Thanks & Regards,
Ashish Shaw

Position and Compliance Guidance

The respective State Government's rules framed under the Contract Labour (Regulation & Abolition) Act 1970 shall naturally apply to the establishment (and all other establishments located in that state's jurisdiction) of the principal employer who has engaged your establishment (via Form IV & V) to deploy the agreed number of contract labour within their premises for the work of the principal employer given on contract to your establishment.

Please be guided accordingly. The classification of skilled, semi-skilled, and unskilled can be ascertained from the respective State Government notification. Further, the moot point is not the number of contract labour engaged by the contractor-company/establishment but the will to be a compliant company and remain so all along. The choice is yours. The law of the land will take its course, sooner than later. So, beware.

Regards,
Kritarth Team of Compliance Outsourcing Advisory

Kritarth Consulting Pvt Ltd, Kritarth Consulting Private Limited
Bengaluru Unit
12th Oct 2014.

Your employees are employees of your company based in BLR. They are deputed (wherever, in this case, out of Karnataka). All your statutory compliances will be controlled from BLR. The only thing you should ensure is that their wages/salaries are greater than those prevailing location's Statutory Minimum Wage. If there are any other problems, kindly take contact again.

Cheers!

Regards,
Samvedan
October 20, 2014