Understanding Labor Laws for Job Work: How to Protect Your Business from Penalties

Dear All,

Can anyone please tell me about the applicability of labor laws, including PF, on the organization that sends goods outside the premises for job work? What records should it keep to safeguard itself from penalties and offenses?

Thanks,
Varun

Hi Varun,

If you would be more specific, we would be in a position to answer better. If the employees are working on the payroll of an Indian company, they are entitled to PF and are covered by Indian Labour Laws. If they are not working in India or are not primarily employed in India, they would not be covered by Indian Labour Laws or the PF Act.

Note: An employee working on the payroll of an Indian company at a UK site would be considered as primarily employed in India.

Dear Sir,

There is an organization which sent its goods outside the premises for job work, and the party raises invoices as per the agreed rate with the organization for such job work (inclusive of labor charges). Now, the question is whether the company would be liable to keep track of records of the party as specified by labor laws or any other relevant law applicable in India.

Also, what would be the limitations on the organization regarding such job work.

If it is a manufacturing unit and the bill has been paid according to the terms and conditions to the jobwork company, I don't think that you should be liable for the payment of PF. Only if the employees were on your payroll are you liable.

In this case, the employees are on the payroll of the jobwork contractor, so you are not legally bound to check whether he has paid PF or not. However, ensure that your labor contractor/jobwork contractor is registered with the labor office in your region.

Hello Varun! I hope the second company is not a subsidiary of the first company. If the management is substantially the same, even though the premises are distinct, then the units can be clubbed together. If company A and B have PF registration, then there is absolutely no problem for company A, and it will have no liability on the PF account for any activity carried out in another establishment recognized to be so by the PF organization. If the positions are different, then the matter has to be looked into in detail.

Thank you,
KK Nair