Contractor PF Sub-Code Dilemma: Should We Advise L&T to Get One for Our Project?

Respected seniors,

This is Ramu, working as DM-HR in the manufacturing sector. My query is that we have engaged one contractor (L&T) for a plant expansion project. As per our terms and conditions, PF & ESI employer contributions will be reimbursed by the company on submission of paid challans & ECR files. As per our advice, L&T has obtained an ESI sub-code at the Sub-Regional office, which falls within the coverage limits of our industry. However, for PF, L&T is contributing under the main code, which covers a large number of employees, including contract employees from other areas. L&T is engaging around 2000 workmen on our premises for the expansion project. The PF ECR files submitted by L&T contain information on more than 10,000 employees.

Can we advise the contractor to obtain the PF sub-code?

Regards, Ramu

For EPF, the contractor can submit the selective employees' ECR separately under their main code. It will generate a separate ECR for those employees who are engaged in your place. No need to get a sub-code.

Even in the case of ESI, in specific circumstances, they could provide employees with their principal code without getting a sub-code.

Sub-code for Subcontractors Without PF Registration

The sub-code for a subcontractor is needed when such a contractor does not have PF Registration (PF Code). However, if the subcontractor is an establishment covered under the PF Act, it does not need to contribute to PF under the L&T code; rather, it can use its own code. Since L&T has only 2,000 workers out of the 10,000 for which it is complying, it means most of the other contractors are large and have sufficient numerical strength to attract PF coverage.

Furthermore, as far as these contractors are concerned, they will have a tough time convincing the PF Inspectors of having complied with PF provisions for these laborers through the L&T Code. From experience, it can be safely said that as far as the principal employer is concerned (which you are, in any case), and regarding the laborers of these contractors, it is better that the PF is complied with at the respective contractor level.

But for any contractor not covered under the PF Act, there is no choice except to get them covered under the code of L&T.