If the contractors have separate codes, they can remit the ESI and EPF for their workmen under their respective codes. The principal employer can collect a copy of the ECR/Challan highlighting the names of workers that the concerned contractor has deployed in the plant of the principal employer. However, if the contractor has no ESI/PF registration, then the principal employer must register the workers of the contractor under his registration on the same portal where the direct employees of the principal employer are available. The employer then shows the wages, contribution due from the employee, and the contribution due by the employer, and pays the same along with the direct employees. The principal employer then has to collect back the amount from the contractor by deduction from the amounts payable to the contractor.
Under the second case, the employees of the contractor will be on the rolls of the principal employer for all intents and purposes. For instance, if an accident takes place, the principal employer should send an accident report to ESIC. If any worker requires an advance from PF, he has to approve the request, and so on. The workers will feel that they are employees of the principal employer only, which may create issues in the future. Therefore, it is advisable to award the contract only to those who have ESI and EPF registrations.