Should Contract Shoe Makers Be Included in ESIC and EPF? Seeking HR Guidance

Hello All HR,

Our company is a shoe manufacturer, and some individuals are working here on a contract basis. They are paid Rs. 50/- for making one pair of shoes as per the terms of the contract. Please guide me on whether I should include these contract employees under ESIC & EPF.

Regards,
Atul Tomer

Sir,

1) All the employees, including contract employees, should be covered under the ESI, PF, and Bonus Acts.
2) When entering into a contract, you are required to calculate the statutory benefits and fix the rate with the contractor. The contractor is responsible for providing all the benefits. If the contractor fails to do so, the principal employer is responsible for ensuring the same.

Regards,
PGR

Are you talking about employees working through a contractor, or are you referring to direct employees who are paid on a piece-rate basis?

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Let me know if you need any further assistance.

In our factory, some employees are working through contractors, while others are working on a piece-rate basis.

In that case, the reply by PGR is correct. All the employees, including piece rate, must be covered in PF and ESIC.

In addition, please ensure that the workers are getting at least minimum wages, even if the number of shoes made is less.

Sir,

In respect of the contract, it cannot be confirmed whether the payment shall exceed the minimum wages or be below the minimum wages. It depends on how many shoe pieces the contractor has made, and the payment shall be made accordingly.

It is the duty of the principal employer to ensure that each contract worker gets paid at least minimum wages. You are required to be present during payment of wages (or scrutinize bank records of payment) and you are liable for paying any difference. Whether you are paying per piece, or whether the contractor pays per piece, it does not matter. No contract worker can be paid less than minimum wages. This is clearly provided for in the minimum wages act.