Esi Wages Materials With Labour - Doc Download

Hi Seniors in HR
This Mohan HR Manager from Coimbatore if our Factory Building is extend what are the Labour of the Construction Workers.
60% Materials
40% Labour
if the total amount is 100000.00
Materials Rs.60000.00
Labour Wages Rs.40000.00
We should calculate 6.5% from the Labour Wages this is correct or Not.
S.Mohan
Manager-HR
Coimbatore-641050
Mobile : 94430 42311

1. Sir, though in the past, there were some instructions of ESIC to deem some %age of amount as wages of the total bill of repair and maintenance/construction, but, in my opinion, such instructions are hardly followed by law enforcing agencies. The competent authorities are empowered to assess contributions deeming 100% amount as wage content. Therefore, this system is risky and in some cases can result into loss to employer by payment of heavy amounts of interests and damages on late payment of contributions. In this system, the names of the workers/employees who were put on work are not disclosed and hence will not be able to claim various benefits including accident insurance under said Act if the situation may arise in any case.

2. The best way, in my opinion, is to ask your contractor or concerned official to maintain the Bills/Vouchers/ accounts of such purchase of material and employment records i.e. Attendance & Wages Registers of the employees deputed for such work and pay their contribution correctly under above Act regularly in time and submit their forms and returns regularly. As and when any officer will visit for verification of records, above records can be shown by indicating that the compliance in respect of workers engaged for extension of building was done on actual basis.

Dear Mr Mohan
PFA copy of Madras HC judgement in which it has been held that in the absence of details relating to labour and materials, ESI contribution will have to be paid @ 25 % of the total cost. In case if you need more details / documents, pl contact us.
Regards
N Nataraajhan, Sakthi Management Services (HP : + 91 94835 17402 ; e-mail : [Login to view])