Formalities Before Engaging Contractors
1) Collect one-time documents like Contractors PF RC, ESIC RC, PT RC, Shops & Establishment RC, ROC RC, PAN Copy, Service Tax RC, etc., and keep them properly recorded.
2) While negotiating rates with a contractor, many companies often make the mistake of considering the lowest quote. Ensure that they quote the minimum wages as prescribed by the law for the particular categories of employment/establishment and all other cost factors such as PF, ESI, Professional Tax, Labour Welfare Fund (if any), and compliance with the House Rent Allowance Act if applicable. Otherwise, in case of any differential payments or violations, the principal employer is bound to pay the same.
3) Have proper agreements on stamp paper depending on the contract's value; mention all clauses scientifically, with a focus on statutory payments/compliances and other service regulations to avoid disputes.
4) Ensure that insurance covers all contract employees, where the ESIC Act is not enforced; obtain a Workmen Compensation Policy in lieu of the ESIC Act.
5) As a principal employer, obtain a Registration Certificate in Form 2 under the CLRA Act before engaging any contractor.
6) Insist that the contractor obtains a CLRA License in case they engage 20 (some states 10) or more employees.
7) Make amendments to Form 2 by providing the list of contractors as and when their contract is renewed or new contractors are engaged. Alternatively, maintain a separate annexure with the license.
8) Send a notice of commencement of contract work or completion of contract work to the Labor Department as applicable.
9) File half-yearly and annual returns as required.
10) Very importantly, as a principal employer, verify the contractor's muster and wage registers on a monthly basis and certify the same. Many companies do not adhere to this. Additionally, obtain their ESI, PF payment details, wage slips, employment cards, workmen register, etc.
By following the above guidelines, your establishment will be secure.
1) Collect one-time documents like Contractors PF RC, ESIC RC, PT RC, Shops & Establishment RC, ROC RC, PAN Copy, Service Tax RC, etc., and keep them properly recorded.
2) While negotiating rates with a contractor, many companies often make the mistake of considering the lowest quote. Ensure that they quote the minimum wages as prescribed by the law for the particular categories of employment/establishment and all other cost factors such as PF, ESI, Professional Tax, Labour Welfare Fund (if any), and compliance with the House Rent Allowance Act if applicable. Otherwise, in case of any differential payments or violations, the principal employer is bound to pay the same.
3) Have proper agreements on stamp paper depending on the contract's value; mention all clauses scientifically, with a focus on statutory payments/compliances and other service regulations to avoid disputes.
4) Ensure that insurance covers all contract employees, where the ESIC Act is not enforced; obtain a Workmen Compensation Policy in lieu of the ESIC Act.
5) As a principal employer, obtain a Registration Certificate in Form 2 under the CLRA Act before engaging any contractor.
6) Insist that the contractor obtains a CLRA License in case they engage 20 (some states 10) or more employees.
7) Make amendments to Form 2 by providing the list of contractors as and when their contract is renewed or new contractors are engaged. Alternatively, maintain a separate annexure with the license.
8) Send a notice of commencement of contract work or completion of contract work to the Labor Department as applicable.
9) File half-yearly and annual returns as required.
10) Very importantly, as a principal employer, verify the contractor's muster and wage registers on a monthly basis and certify the same. Many companies do not adhere to this. Additionally, obtain their ESI, PF payment details, wage slips, employment cards, workmen register, etc.
By following the above guidelines, your establishment will be secure.