Statutory Obligations Of Principal Employer Under Contract Labour Act.

Dear Sir(s), I am working for a Public Limited Company. We have engaging contractors for supply of labour. While fixing contract amount, we have considered minimum wages, Employers contributions to PF and ESI, WC premium, TDS, bonus, etc for contract labour. We have Principal Employer registration and the contractor has Labour licence, PF and ESI registrations, PAN etc. The bills are paid by cheque. In spite of this, if the contractor, having received all statutory payments, default the statutory payments like PF contributions, ESI, etc., what will be the responsibility of Principal employer. We have proof of payment to Contractor. Kindly advise.
Regards,
CVR.

Dear CVR,
As ultimate responsibility lies on the principal employer, you have to produce the proofs for statutory remittances of your contractor. We have received notices to pay the dues for the defaulted contractors which amounts upto 10 crores. proof of payment to the contractor doesn't matters. you have to produce the proof of statutory remittances for those contract employees. Before clearing the bills of the contractors you shall collect the copy of the documents such as Attendance, Wage Register, PF challan, PF ECR, ESI Challan , ESI contribution list, Bonus register, Half Yearly Returns by the contractor etc.
The problem is some contractors will work for one year and they will windup, after few years we are liable to answer the authorities hence at that time you cannot trace those contractors.
It is advised to collect the aforesaid documents to safeguard the company. Call us for further clarification if any.

Dear Mr. CVR,
Statutory compliance is very vast subject matter in terms of various labour laws/Acts/ Rules prevailing and practiced on PAN India basis.
It's very difficult to give a very logical & convincing reply on your queries raised by you.
However, if you really intend to protect the interest of your organisation by law abiding Company , we will appreciate your response to guide you in best way towards core statutory compliances.
You may reach to me on mail cell number. +91 9004588487.
Anil Kumar

Yes, principal contractor is still liable.
I also agree with Mr. Madangopalswamy, in that before releasing each and every payment against bill of the contractor concerned, retain say 30-40% (equivalent to statutory deductions and a bit more). Release such retention only when the contractor shows the proof of correct deduction and payment (challans) / returns and other statutory compliances to your satisfaction; in future. For the past transactions seek legal help & see if the contractors' payment can be withheld even now.
A S Bhat

Principal employer is equally responsible in this case. Please conduct the audit of contractor on a monthly basis to ascertain the compliance is met.