Is EPF Registration Necessary for Small Contractors? How to Handle Withheld Payments?

One of my friends is a construction contractor and has been engaging fewer than 20 laborers; hence, EPF registration is not mandatory. Presently, he is working with a construction company that is withholding 20% of labor payments due to non-registration under the EPF Act. The company is instructing him to get registered under the EPF Act.

He has pleaded with them, stating that as the number of workers is not more than 20, EPF does not apply to him, and the construction company can deduct the EPF contributions under their PF code. To this, the company is responding that it will significantly increase their workload; therefore, they will not deduct the PF contributions under their head and are instructing the contractor to get registered under it.

Questions:

1. Should the contractor register himself under the EPF Act voluntarily even though he is not eligible?
2. What is another way to retrieve the withheld money from the company?

If the principal employer has registered with EPF, the contractor is bound to register, regardless of the number of employees. The only way out to get exempted is not to work with such an employer.

Regards,
Abbas.P.S

EPF Registration and Compliance for Contract Employees

Once the principal employer is registered under EPF (and all other acts which are normally applicable to the principal employer like ESI, Gratuity, Bonus, Workmen Compensation, Leaves, Minimum Wages, DA), it is applicable for contract employees. It does not matter how many manpower are with the contractor. Even if it is just one person, it is applicable.

If the contractor is working only for a particular principal and has fewer employees, in that case, he can do the compliances under the principal's code number. Otherwise, it is most advisable to have his own registrations under various acts as it is always to his benefit.

If he wishes to make compliance under the principal's code number, he needs to produce all his relevant wage records as well as P & L accounts. The principal may not agree to this, and they will deduct straight away 25.61%, which is impractical. The principal engages the contractor to reduce/restrict their efforts for compliances under various acts as well as to reduce/share their efforts.

Regards,
Pramod Thakar

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EPF Registration and Liability in Construction Contracts

If the principal employer (construction company) is not registered under EPF, then the contractor also does not need to register under EPF. Whose liability will it be?

Understanding the Role of a Principal Employer

The term "Principal Employer" is defined as follows: "If you are providing services under contract to someone else, whether an individual, company, firm, etc., it becomes a subcontract as per the law. Your status as a subcontractor is determined by the Principal to whom you are providing services. If the Principal falls under the bracket of EPF, then it is evident that you/your company is also obligated to register."

Regards,
Ramakant

EPF Coverage for Contractors

If the principal employer is covered under the EPF, the contractor should also be covered under the EPF Act. Otherwise, it is the duty of the principal employer to deduct the contribution of the contractual worker and submit it under his own code number. If the number of workers is less than twenty-one, they can be registered voluntarily under section 1(4) of the EPF Act.

Regards,
S S Rawat.

EPF Act Applicability for Contractors

In any act, the manpower of contractors is to be included with the employer to check the applicability of the act. If the employee strength of both exceeds 20, the EPF Act is applicable to the organization, and it must obtain registration under EPF with retrospective effect. If a contractor is engaging fewer than 20 workers each, he or she will face difficulty in obtaining registration, but there are legal ways out of this situation.

By the way, I possess extensive knowledge of the BOCW Act.

Regards,
Shrikant Prabhudesai
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