I am employed by a firm in Andhra that is registered under the Provident Fund (PF) scheme. Recently, we received a notice from the PF Department under Sections 14B and 7A regarding defaults by a contractor from the period 2018 to 2024. This contractor, also registered under PF, provided us with security guards for only three months (August to October 2019). The bill amounted to approximately 24k/month, but the number of workers was not specified.
The contractor supplied PF and Employee’s State Insurance (ESI) payment receipts for those three months, indicating three workers were on the payroll. However, our company\'s name does not appear on these documents; only the contractor\'s name is mentioned. We terminated the contractor\'s services after this period.
I am seeking guidance on several points:
1. Why is the Employee Provident Fund Organization (EPFO) claiming defaults if the contractor has filed returns?
2. Why are we being held liable for the periods before and after our engagement with the contractor?
3. What evidence can we provide to prove our engagement was limited to these three months since we do not possess an exit letter? What type of records should we present, such as bills, payments, or returns?
I appreciate any advice or guidance experts here can provide. Thank you.
From India, Hyderabad
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The contractor supplied PF and Employee’s State Insurance (ESI) payment receipts for those three months, indicating three workers were on the payroll. However, our company\'s name does not appear on these documents; only the contractor\'s name is mentioned. We terminated the contractor\'s services after this period.
I am seeking guidance on several points:
1. Why is the Employee Provident Fund Organization (EPFO) claiming defaults if the contractor has filed returns?
2. Why are we being held liable for the periods before and after our engagement with the contractor?
3. What evidence can we provide to prove our engagement was limited to these three months since we do not possess an exit letter? What type of records should we present, such as bills, payments, or returns?
I appreciate any advice or guidance experts here can provide. Thank you.
From India, Hyderabad
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Hi
As per ESI & EPF if the contractor is not complied then principle employer will be liable for such social security benefits
There are few caselaws if the contractor has code number then PE won't have any liability
To avoid any such notices we need to do proper audits on monthly basis
From India, Bangalore
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674As per ESI & EPF if the contractor is not complied then principle employer will be liable for such social security benefits
There are few caselaws if the contractor has code number then PE won't have any liability
To avoid any such notices we need to do proper audits on monthly basis
From India, Bangalore
Acknowledge(0)Amend(0)CiteHR is an AI-augmented HR knowledge and collaboration platform, enabling HR professionals to solve real-world challenges, validate decisions, and stay ahead through collective intelligence and machine-enhanced guidance. Join Our Platform.
EPF Notice.jpg
Fatal Contractor Mishap Notice - Tipped Elevated Manlift.pdf
Contractor's Declaration Format-Wages, ESI,EPF.xls
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(Fact Checked)-Your understanding is correct. Principal employers can be held liable for contractor's non-compliance with EPF & ESI. Regular audits can help avoid such issues. (1 Acknowledge point)