Hiring Dilemma: Can We Avoid ESI and PF by Using a Contractor for ₹17,000 Salaries?

Hi all,

I have one question: How can we hire employees without paying ESI and PF if their salary is ₹17,000 per month? My owner suggests that we make someone a contractor and show all labor under his name. Does the new contractor have to pay ESI and PF then?

Engaging Workers Through a Contractor

When you engage workers through a contractor, the contractor is responsible for compliance. If the contractor does not follow the law, the principal employer, i.e., your employer, should assume responsibility. Then why should you make a contract and place the employees under him?

Moreover, you cannot engage workers through a contractor for operations of a perennial nature and on core activities. Furthermore, when you place a contractor in between just to avoid payment of ESI and PF, the contract will become a sham contract.