Can Principal Employers Pay PF and ESI Directly When Contractors Fail? Here's How

Some contractors take PF and ESI amounts by claiming in the bill and fail to pay. In such cases, can the principal employer directly make the payment? If yes, what is the procedure?

Why not Mohan? You can make appropriate deductions from his bill. However, it is suggested to ask the contractors to comply with PF & ESI. Why not make a checklist for verification and follow it before releasing his or their payment.

It is simply taking his establishment codes and making payment from our end.

It is not advisable to do so. Always engage a contractor who has the codes. Alternatively, the contractor can show the manpower on the muster roll of someone who has the code numbers. In such a case, there will have to be a formal agreement in this regard.

Dear Mr. SHRIKANT PRA,

I am advising to pay in the Contractor's code only. Not in the employer's code, but the employer can pay from his account and adjust/deduct in the payable amount/invoice of the Contractor.

Inferences are less important than actual compliance, in my opinion.

The principal employer has an overall responsibility to ensure that compliance is met on time by their contractors.

Inferences are of less importance than actual compliance in my opinion.

The principal employer has an overall responsibility to ensure that compliance is met on time by their contractors.

Contractor's Responsibility for PF and ESI Dues

It is always advisable to ask the contractor to remit the PF and ESI dues under their code numbers. If the principal employer (PE) remits the PF/ESI dues under their code numbers, the workers will have statutory proof of PF passbooks and ESI cards, as if they are directly employed by the PE. They are paid wages by the PE, and their contributions are being paid by them. Alternatively, you may consider entrusting the entire responsibility of contract labor management to an independent agency. If anybody requires any help or support, please contact us.

Regards