Contract Labor Dilemma: Who's Responsible for PF and ESI Contributions?

Dear sir or madam,

If a contract laborer is working in another company (Principal Employer), who will make the contributions for PF and ESI - the Principal Employer or the contractor?

Sir, under Section 40 and 41 of the ESI Act, 1948, both the principal employer and the contractor (immediate employer) are responsible and liable for the payment of contribution. Similar provisions, I think, may exist in the EPF and MPs Act, 1952.

Dear,

Legally speaking, in the case of a contract employee, the contractor is liable for EPF, ESI, and other statutory dues. However, the principal employer.

The HR is also responsible to ensure that the contract employee must not be deprived of any statutory dues such as EPF, ESI, bonus, etc.

Thanks & Regards,

V. Shakya
HR & Labour Law Advisor

Dear,

The contractor is liable to payment of ESI and PF. In case the contractor does not make payment for ESI and PF, then the principal employer is liable to make the contributions for ESI and PF.

Dear,

The contract employees, contractor is liable to EPF & ESI and other statutory dues. If the contractor is unable to pay, the principal employer is also liable to pay the same statutory payment to government agencies i.e., EPFO, ESIC, etc.

Thanks & Regards,
Madan Mohan (Advocate)
9971216078
HR & Labour Law Adviser, New Delhi

Contractors have to clear the payment of ESIC/PF/PT of their employees and submit the records or a certificate with reference that their labor statutory dues are paid up, along with the bill of labor.

In the absence of the above, the principal employer stands liable for the contributions of each employee at par with their regular employees.