Is My Labor Contractor Required to Deduct PF and ESI for 18 Workers?

Hi, I am running a business with 50 employees. Among them, 32 are hired by me, and 18 are hired by a labor contractor. I just need to clarify whether the labor contractor should opt for PF & ESI as the number does not exceed 20. Please guide me on whether to ask the labor contractor to deduct PF & ESI from the 18 workers' salaries.

The act is applicable to you and he is your contractor. As such, it becomes applicable to him also, irrespective of his manpower.

Yes, the labor contractor must opt for his own PF & ESI registration and obtain his own PF & ESI code to start deducting PF & ESI contributions from the employees' salaries. Although the qualifying number required is 20, the departments will register him. In the future, when more employees are engaged through the contractor due to business growth, this will be very useful.

He should also deduct ESI & PF and deposit them with the concerned department.

Warm Regards,
Bharat Gera
HR Consultant