Building Construction and PF Deductions: Do I Need to Deduct PF for Hired Labor?

Dear seniors,

My question is, if I am required to construct my new building and I hire a contractor for the complete construction of my building, who then hires labor for the construction work, is it necessary to deduct PF from the labor or not? However, he does deduct ESIC.

Kindly provide your opinion.

Regards,
Ravi Khandelwal

Dear Ravi,

Please clarify whether your establishment is already covered under EPF Act. What is this new building? Are you engaging contract labor in connection with the work of your establishment? Before awarding a contract to your contractor, you have to specify the statutory compliance required from the contractor.

Dear Mr. Shrinath,

This is my new organization, so till present I didn't take EPF registration. The new building will be used in the future for a manufacturing unit. Yes, I am engaging contract labor through a contractor to build the new building.

Kindly provide your feedback.

Regards,
Ravi Khandelwal

Dear Mr. Ravi, From your reply, it is confirmed that you have engaged a contractor to construct a building. Please furnish details of the contractor—whether he is covered under the EPF/ESI Act. If he is covered under the relevant acts, he has to comply with the same. While awarding a labor contract, you as the principal employer have to verify the labor contractor's statutory registration and compliance.

Why is the contractor complying with the ESI Act and not complying with the EPF Act?

You have all the records of the labor contractor. Please verify and revert with your specific query.

Dear Ravi Khandelwal ji, You are the Principal Employer of a construction site. You are a developer or builder involved in business.

EPFO and ESIC Registration Requirements

If you are employing more than 20 persons, including contract laborers, then you have to register with EPFO and comply accordingly. If you are employing more than 10 persons, including contract laborers, then you have to register with ESIC and comply accordingly.

PT and MP Labour Welfare Fund Compliance

Even if you have a single employee, you need to obtain a PT number and comply accordingly. Similarly, even with a single employee, you need to obtain an MP Labour Welfare Fund number and comply accordingly.

CLRA Registration Requirements

If you are executing any work in any place with the help of 20 or more contract laborers, then you have to obtain registration under CLRA. Your contractor is required to obtain a license if they employ 20 or more laborers in that specific place.

BOCW Act Compliance

If you employ 10 or more construction workers at any place, you need to register such a place under the BOCW Act. Additionally, you are required to register your construction workers as beneficiaries under the BOCW Act and pay a cess at 1% of the construction cost.