Is It Fair for a Principal Employer to Demand EPF Registration for Small Firms?

I am a civil contractor based in Pune. I have been working with a reputed construction company in Mumbai for the past year. Recently, the principal employer has made it mandatory for all contractors to register under the EPF Act.

However, my proprietary firm employs fewer than 20 employees directly or indirectly. On any given day, the number of workers on the site is less than 20, including supervisory staff. We fail to understand why the principal employer can compel us to register under the EPF Act when the law does not mandate it.

Please advise.

Regards,
ARP

If the principal employer has registered with EPF, you also have to register. The number of employees working with you is immaterial.

Regards,
Abbas.P.S

Understanding PF Rules for Contractors

There are two different rules that apply in your case.

The general rule is that PF applies to all businesses with 20 or more employees. However, the concept has been extended to factories instead of just businesses. So, for a factory, if there are more than 20 persons working, all of them are required to be covered under PF irrespective of who they work for. Therefore, the Principal Employer (PE) is definitely entitled to insist on all contractors being PF registered.

Regards

EPF Act Registration for Contractors

Your employees are working for the Principal Employer. When their establishment/organization is covered under the EPF Act, you should also get registered or covered under the EPF Act.

Regards,
Ganesh H.N

It's not the Principal. Yes, the principal employer can do so. The rule does not stop you from providing social security benefits to your employees, whether 20 or less. The principal employer is equally responsible for contractual employees working under his premises, the same as his permanent employees.