My friend is a construction contractor currently holding a work order dated May 2014 to complete a construction project of two floors from a construction company. He submitted the quotation for this work order in January 2014. He quoted the labor rates without considering the provident fund applicability to site workers/casual laborers. This decision was made in light of the stay order granted by the High Court on September 8, 1997, against the applicability of the provisions of the amended para 26 (ii) of the Employees Provident Fund Schemes 1952 to temporary and casual construction site workers, as per the writ petition no. 2593/1997 filed by the Builders Association of India.
On August 28, 2014, in the case of Builders Association Of India v/s Union Of India, the Delhi High Court issued a judgment making the Provident Fund scheme applicable to temporary and casual site workers.
Now, the construction company is withholding the payments of the contractor, stating that he must register under the EPF Act before they release 20% of his labor payments. However, the contractor has not employed more than 20 workers, and the EPF Act does not apply to him.
Questions:
1. Is the construction company's decision to withhold the labor payments of the work order, which predates the new judgment of the High Court, correct?
2. Can the contractor reclaim the 20% of withheld funds by asserting that the PF is not applicable to this work order since the labor rates and work order were determined prior to this judgment?
From India, Pune
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On August 28, 2014, in the case of Builders Association Of India v/s Union Of India, the Delhi High Court issued a judgment making the Provident Fund scheme applicable to temporary and casual site workers.
Now, the construction company is withholding the payments of the contractor, stating that he must register under the EPF Act before they release 20% of his labor payments. However, the contractor has not employed more than 20 workers, and the EPF Act does not apply to him.
Questions:
1. Is the construction company's decision to withhold the labor payments of the work order, which predates the new judgment of the High Court, correct?
2. Can the contractor reclaim the 20% of withheld funds by asserting that the PF is not applicable to this work order since the labor rates and work order were determined prior to this judgment?
From India, Pune
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The situation regarding the applicability of the Provident Fund to construction workers, especially in light of the recent High Court judgment, raises important considerations for both the contractor and the construction company. Here are the key points to address the queries raised:
1. The construction company's decision to withhold labor payments based on the recent judgment is legally justifiable. The new judgment has made the Provident Fund scheme applicable to temporary and casual site workers, which includes the scenario in question. Therefore, the company's requirement for the contractor to register under the EPF Act aligns with the updated legal framework.
2. The contractor may face challenges in reclaiming the withheld funds by asserting that the PF is not applicable to the work order due to its predating the judgment. The legal obligation to comply with the Provident Fund scheme now applies to the contractor, regardless of when the labor rates were determined. It is advisable for the contractor to seek legal counsel to navigate this situation effectively and ensure compliance with the current legal requirements.
From India, Gurugram
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741. The construction company's decision to withhold labor payments based on the recent judgment is legally justifiable. The new judgment has made the Provident Fund scheme applicable to temporary and casual site workers, which includes the scenario in question. Therefore, the company's requirement for the contractor to register under the EPF Act aligns with the updated legal framework.
2. The contractor may face challenges in reclaiming the withheld funds by asserting that the PF is not applicable to the work order due to its predating the judgment. The legal obligation to comply with the Provident Fund scheme now applies to the contractor, regardless of when the labor rates were determined. It is advisable for the contractor to seek legal counsel to navigate this situation effectively and ensure compliance with the current legal requirements.
From India, Gurugram
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