Temporary Labor and PF Deductions: Are We Required to Deduct for Short-term Hires?

Dear Sir,

My company provides cleaning services to government organizations on a contract basis. We have to provide a minimum labor force on a daily basis. If we fail to do so, they penalize us. Therefore, sometimes we have to arrange temporary labor from local sources, for which we pay minimum wages to these temporary laborers. My question is, is PF deduction applicable to their wages?

Thank you.

I am giving you point-wise replies/suggestions as follows:

Compliance with Labor Laws

1) My company provides cleaning services to government organizations on a contract basis.

Answer: Since you have registered your firm under the Shops & Establishment Act and also under the Contract Labour Act for supplying manpower to government organizations, you should adhere to the provisions of both acts. You should follow the Payment of Minimum Wages Act applicable to your area and the ESI Act if the manpower supplied and engaged is greater than 10. If you are working in an area covered by ESI, including the zone, and supplying this quantity of manpower or more, with a total employment of over 20 including your office staff/supervisors, you should register with EPFO and deposit the PF contribution as an employer. Deduct the same ratio (@12%) on the basic salary you are paying to your workers.

Temporary Labor Arrangements

2) We have to arrange temporary labor from local places:

It does not matter whether you are engaging temporary workers; they will all be entitled to Minimum Wages, ESI, PF, and Bonus (if worked for more than 30 days) in a year.

Query Regarding PF for Casual Workers

I have a query regarding PF. I work in the construction industry where the availability of labor is a difficult task. We pay them in cash as they are:

1. Casual & Migratory Workers
2. Most of them don't have bank accounts or any photo ID for opening bank accounts
3. They work under a labor contractor.

PF authorities are issuing notices and forcing us to enroll these casual workers under EPF, or else they are serving us notices. According to them, even if a worker worked for a day, PF needs to be deducted. While making it compulsory, workers are threatening to leave the work. We are in great trouble. After convincing, we could get the IDs of a couple of workers who had Aadhar and proof of address. And obviously, we are paying above the committed amount (from our pockets).

Recently, I heard that if a person has worked for more than 60 days, then only they should be made a member of PF. I am not sure how far it is true.

Kindly advise.

Regards,
Satya

For Sub-Contractors

For sub-contractors (item rate contractors with manpower), the thumb rule, as per the PF Authority, is that at least 30% of the work done value will be the labor wages cost, depending on the nature of the job.

For Labour Contractors/Manpower Suppliers

For labor contractors/manpower suppliers, at least 90% of the total work done value will be allocated as labor cost.

Hi all,

I have a query regarding the PF thumb rule. I work in the construction industry.

Sub-contractors (item rate contractors with manpower)

1. The thumb rule (as per PF authority) states that at least 30% of the work done value will be the labor wages cost, subject to the nature of the job.

Labor contractors/manpower suppliers

2. At least 90% will be labor cost on the total work done value. I am not sure how true this is.

Kindly advise.

Somen Mandal