How Can Contractors Handle ESI & PF Payments for Workers Who Left Without Completing Formalities?

Issue with ESI & PF Payment for Contract Workmen

This is related to the payment of ESI & PF for contract workmen. The labor contractor deployed workers at the Principal Employer's company before enrolling them under ESI & PF. When the contractor attempted to enroll them, he was unable to do so due to Aadhaar authentication failure for PF and the lack of bank account details of the workers. The contractor advised them to update their Aadhaar details and open a bank account to proceed further. However, the workmen left the work without completing the required steps.

As a result, the contractor could not pay ESI & PF for these workmen and defaulted on the payment to that extent. Now, the Principal Employer is insisting on the payment proof; otherwise, they will terminate the contract.

Options for ESI & PF Payment for Departed Employees

What options are available for the contractor to make the payment of ESI & PF for the employees who have left? Requesting clarification on this matter.

From the facts narrated, it appears that a few workmen of the contractor did not get their Aadhaar cards corrected, and consequently, their PF & ESI linkage couldn't be made. Now these workmen have left, and there is no possibility of them coming back. The Principal Employer (PE) has insisted on their coverage in both PF and ESI Schemes.

In the above background and to ensure due compliance, one possible way out is to deposit the contribution amount in its entirety and distribute it among various workmen. The contractor may have to bear both employer and employee contributions, but it is a lesser evil. In this way, there would be due compliance as regards the wages claimed to have been paid, and the records will be fine. Otherwise, let the contractor not bring the non-compliance part of wages on record and also not claim wages, contribution of PF & ESI for these workmen.