Dear Seniors,
One of our contractors is not assisting us with the PF withdrawal for the laborers recruited from him. He has stopped responding to our calls. How can we facilitate the laborers' PF withdrawal without their intervention?
Please suggest.
Regards,
Saunee
From India, New Delhi
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13One of our contractors is not assisting us with the PF withdrawal for the laborers recruited from him. He has stopped responding to our calls. How can we facilitate the laborers' PF withdrawal without their intervention?
Please suggest.
Regards,
Saunee
From India, New Delhi
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Yes, it is a serious and foolish activity committed by your company's contractor.
Solutions
1. You can complain against the contractor to the company head. Usually, if any contractor fails or makes a mistake, the company will be responsible as the principal employer, as per the Contract Labour Act 1970. They can sign and cooperate to release the PF amounts. Violation leads to labor court action.
2. In recent amendments to the PF laws by the Modi government, no signatures of the employer are necessary to withdraw workers' PF amounts. Please check the PF website for feedback on all your doubts. All the best.
From India, Nellore
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Solutions
1. You can complain against the contractor to the company head. Usually, if any contractor fails or makes a mistake, the company will be responsible as the principal employer, as per the Contract Labour Act 1970. They can sign and cooperate to release the PF amounts. Violation leads to labor court action.
2. In recent amendments to the PF laws by the Modi government, no signatures of the employer are necessary to withdraw workers' PF amounts. Please check the PF website for feedback on all your doubts. All the best.
From India, Nellore
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This is a common problem faced by small contractors. You have not mentioned whether the contract has ended, and if so, whether you have released all the payments. If any amount is due for payment, please apply pressure to first resolve the matter. Legally, you cannot stop a contractor's payment on such issues unless it is not provided for in the agreement.
However, as per the latest PF Office notification, if the contractor has a separate PF Code than the PE, the PE is not liable to be involved in PF-related issues. But as a labor welfare PE, on ethical grounds, we always delve deep to resolve all issues related to contract labor.
Clarification Needed
Please clarify the following points:
- Period of Contract
- Whether the contract has ended
- Full payment made to the contractor
- Whether you had previously asked the contractor to submit PF challans and ECR
- Whether you have any details related to UAN and PF numbers of contractual labor
Based on the above information, we can advise on how to overcome the situation.
From India, Delhi
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However, as per the latest PF Office notification, if the contractor has a separate PF Code than the PE, the PE is not liable to be involved in PF-related issues. But as a labor welfare PE, on ethical grounds, we always delve deep to resolve all issues related to contract labor.
Clarification Needed
Please clarify the following points:
- Period of Contract
- Whether the contract has ended
- Full payment made to the contractor
- Whether you had previously asked the contractor to submit PF challans and ECR
- Whether you have any details related to UAN and PF numbers of contractual labor
Based on the above information, we can advise on how to overcome the situation.
From India, Delhi
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We had to terminate their contract when they did not provide enough support in resolving this issue. We have sent several letters and emails asking them to fulfill their responsibilities. As the issue started 5-6 months ago, we have kept their payment on hold. However, it seems that they don't bother about this now, as their MD has also switched off his phone. When we sent our people to their locations, we found out that they have closed the offices and did not share new location details. Even all the speed posts sent to them have come back to us undelivered.
I have spoken to the PF office in Kanpur regarding the same, and they have asked us to send the withdrawal forms along with an application explaining why we terminated the contract. We will be doing so. According to them, they will first call the contractor and ask him to attest the forms.
I hope the laborers get their money soon.
Could you please help by sharing the notification for PF where it is mentioned that if the contractor has a separate code, PE will not be responsible for PF? I need to know that in its entirety.
Thank you so much.
Regards, Saunee
From India, New Delhi
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I have spoken to the PF office in Kanpur regarding the same, and they have asked us to send the withdrawal forms along with an application explaining why we terminated the contract. We will be doing so. According to them, they will first call the contractor and ask him to attest the forms.
I hope the laborers get their money soon.
Could you please help by sharing the notification for PF where it is mentioned that if the contractor has a separate code, PE will not be responsible for PF? I need to know that in its entirety.
Thank you so much.
Regards, Saunee
From India, New Delhi
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If the contract has not terminated yet, please don't release the payment. I hope the contractor is making labor payments.
You can deduct the PF contribution amounts from their bill along with some administrative charges. The PF of contractual labor can be deposited into the PE PF Code.
If the speed post is returned undelivered, I advise you to send your queries, letters, and reminders through the email IDs of the respective person.
You can seek advice from a consultant to close the matter as soon as possible. Prolonging it will create more trouble for you because the matter can lead to more legal implications as well (outstanding payment to the contractor, other statutory payments to labor like EL, gratuity, etc.).
However, regarding the PF notification, I was a little confused. There was no notification issued by the EPFO, but there were some judgments by the honorable courts.
Please find attached one case law shared by Mr. H L Kumar (I downloaded it from Labour Law Reporter | A Practical Journal on Labour Laws & HR Management).
I hope this will fulfill your requirements.
From India, Delhi
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You can deduct the PF contribution amounts from their bill along with some administrative charges. The PF of contractual labor can be deposited into the PE PF Code.
If the speed post is returned undelivered, I advise you to send your queries, letters, and reminders through the email IDs of the respective person.
You can seek advice from a consultant to close the matter as soon as possible. Prolonging it will create more trouble for you because the matter can lead to more legal implications as well (outstanding payment to the contractor, other statutory payments to labor like EL, gratuity, etc.).
However, regarding the PF notification, I was a little confused. There was no notification issued by the EPFO, but there were some judgments by the honorable courts.
Please find attached one case law shared by Mr. H L Kumar (I downloaded it from Labour Law Reporter | A Practical Journal on Labour Laws & HR Management).
I hope this will fulfill your requirements.
From India, Delhi
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Thank you, Mr. Pan Singh, for your help! We have not paid the contractor. Where wages were concerned, we have paid laborers directly and debited the contractor for the same. For PF withdrawal, we have assisted most of the employees in getting their withdrawals done. For the remaining few, we are trying to facilitate direct processing.
Regards,
Saunee
From India, New Delhi
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Regards,
Saunee
From India, New Delhi
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Thank you for your appreciation. I hope the related case law will help you strengthen your case in front of your management. However, I tried to upload a Word format file, which I was unable to do, so I have shared the link instead.
Advisory on Labor Wages and Contractor Management
Please note that paying wages directly to labor and reimbursing the amount to the contractor for an extended period is not advisable. If you encounter any issues, please consider changing the contractor promptly, providing the necessary notice period as per the agreement and mutual understanding. Your company must be registered with PF-ESI, and therefore, you are expected to offer those benefits to contractual labor as well.
If the contractor possesses a Labor License for your contract, you can also notify the Labor Office about this.
Currently, you are only disbursing wages without depositing PF-ESI for the laborers. In case the laborers are working in high-risk areas and an incident occurs, the entire liability will fall on you.
To prevent such a situation, please engage a new contractor who is registered with PF-ESI and complies with other regulations.
Regards
From India, Delhi
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Advisory on Labor Wages and Contractor Management
Please note that paying wages directly to labor and reimbursing the amount to the contractor for an extended period is not advisable. If you encounter any issues, please consider changing the contractor promptly, providing the necessary notice period as per the agreement and mutual understanding. Your company must be registered with PF-ESI, and therefore, you are expected to offer those benefits to contractual labor as well.
If the contractor possesses a Labor License for your contract, you can also notify the Labor Office about this.
Currently, you are only disbursing wages without depositing PF-ESI for the laborers. In case the laborers are working in high-risk areas and an incident occurs, the entire liability will fall on you.
To prevent such a situation, please engage a new contractor who is registered with PF-ESI and complies with other regulations.
Regards
From India, Delhi
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Understanding Employer Responsibilities for PF Withdrawal
The Principal Employer or even the contractor is not responsible or required to get the PF amounts withdrawn or released to the worker. That responsibility remains with the PF authorities to release the amount, provided the workers fill in the forms and submit the required supporting documents. The responsibility of the employer is limited to compliance with the PF scheme, which is to deduct the relevant amount from the wages/salary and deposit it along with the employer's contribution to the PF authorities.
You need to ensure that the contractor has paid the PF and filed the returns on time (and of course, filed them correctly). If you have not paid him his contract amount for some months, it is unlikely he would have done that or even paid wages for the remaining period. That would be a more important issue.
Facilitating PF Withdrawal Without Contractor Assistance
As regards the release of the PF, to prevent industrial relation issues, you can hire a consultant to help the workers fill in the forms and submit them to the authorities. Go to the PF portal, and you will see the procedure for the same given very clearly. The signature of the contractor is no longer critical to this matter.
From India, Mumbai
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The Principal Employer or even the contractor is not responsible or required to get the PF amounts withdrawn or released to the worker. That responsibility remains with the PF authorities to release the amount, provided the workers fill in the forms and submit the required supporting documents. The responsibility of the employer is limited to compliance with the PF scheme, which is to deduct the relevant amount from the wages/salary and deposit it along with the employer's contribution to the PF authorities.
You need to ensure that the contractor has paid the PF and filed the returns on time (and of course, filed them correctly). If you have not paid him his contract amount for some months, it is unlikely he would have done that or even paid wages for the remaining period. That would be a more important issue.
Facilitating PF Withdrawal Without Contractor Assistance
As regards the release of the PF, to prevent industrial relation issues, you can hire a consultant to help the workers fill in the forms and submit them to the authorities. Go to the PF portal, and you will see the procedure for the same given very clearly. The signature of the contractor is no longer critical to this matter.
From India, Mumbai
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Early PF withdrawal won’t be easy.pdf
Guide Lines for PF Withdrawal.doc