Compensation & Benefits for Employees
ESI & PF Applicable to All Employees Either Engaged Directly/Indirectly
ESI & PF become applicable to all employees irrespective of their designations or whether they have been taken on a probationary basis or on a contract basis (individually or through a labor supplier) on a daily or weekly basis where their total emoluments are Rs. 7500/- pm for ESI and Rs. 6500/- for PF. They are required to be covered under the act.
According to the latest court judgment, the ESI department is insisting that the employer deduct contributions from parties doing job work either inside the premises of the factory/establishment or outside at the party's premises. Previously, the employer, by providing supporting documents, did not deduct ESI for the parties who had worked outside the premises since the parties were different entities and did not work exclusively for the employer alone. This was proven by providing sales invoices and delivery challans showing that materials were sent out and no workmen were engaged by the principal employer to perform the work. However, after this debatable judgment, the employer was instructed to deduct ESI for job work since the principal employer has discretionary powers to reject materials where there is supervisory control over the party. Based on this, the employer is asked to deduct @6.50% from the labor bill and pay this amount via a separate challan. If the party has a separate ESI code, they may be asked to provide a copy of the paid challan along with the returns submitted at the time of payment of labor bills. This approach broadens the net for ESI coverage.
Even Provident Fund authorities have taken the same stance, insisting that the employer deduct 25.61%, similar to deducting TDS from the labor bill of the party, and pay the amount in a separate challan every month. They have also begun to request particulars of the parties from whom TDS is being recovered, planning to make this a mandatory annual return each year.
From India, Madras
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3ESI & PF Applicable to All Employees Either Engaged Directly/Indirectly
ESI & PF become applicable to all employees irrespective of their designations or whether they have been taken on a probationary basis or on a contract basis (individually or through a labor supplier) on a daily or weekly basis where their total emoluments are Rs. 7500/- pm for ESI and Rs. 6500/- for PF. They are required to be covered under the act.
According to the latest court judgment, the ESI department is insisting that the employer deduct contributions from parties doing job work either inside the premises of the factory/establishment or outside at the party's premises. Previously, the employer, by providing supporting documents, did not deduct ESI for the parties who had worked outside the premises since the parties were different entities and did not work exclusively for the employer alone. This was proven by providing sales invoices and delivery challans showing that materials were sent out and no workmen were engaged by the principal employer to perform the work. However, after this debatable judgment, the employer was instructed to deduct ESI for job work since the principal employer has discretionary powers to reject materials where there is supervisory control over the party. Based on this, the employer is asked to deduct @6.50% from the labor bill and pay this amount via a separate challan. If the party has a separate ESI code, they may be asked to provide a copy of the paid challan along with the returns submitted at the time of payment of labor bills. This approach broadens the net for ESI coverage.
Even Provident Fund authorities have taken the same stance, insisting that the employer deduct 25.61%, similar to deducting TDS from the labor bill of the party, and pay the amount in a separate challan every month. They have also begun to request particulars of the parties from whom TDS is being recovered, planning to make this a mandatory annual return each year.
From India, Madras
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Hi, For ESI the total emoluments of Rs.7500 is correct. But for PF Rs.6500 is not the toal emoluments, it is only the Basic of your Salary. Regards, Manjunath
From India, Hyderabad
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From India, Hyderabad
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Hi,
Yes, on ESi, the views expressed are in vogue. Several judgments are prevalent on this matter. When job work is done outside by another independent company and there is clear exclusivity, the courts have considered them to be a separate entity.
On EPF, there has not been such insistence as they have not taken subcontracts for coverage, but on a case-to-case basis, this has to be examined, and a conclusive decision arrived at. For example, home workers in the case of the Agarbathi industry, beedi rolling, silk looms, to name a few, are applicability noted cases.
This subject has been debated for the past two decades, but no one seems to have the definition amended for the act to remove this ambiguity.
HRG-Rajaram
From United States
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Yes, on ESi, the views expressed are in vogue. Several judgments are prevalent on this matter. When job work is done outside by another independent company and there is clear exclusivity, the courts have considered them to be a separate entity.
On EPF, there has not been such insistence as they have not taken subcontracts for coverage, but on a case-to-case basis, this has to be examined, and a conclusive decision arrived at. For example, home workers in the case of the Agarbathi industry, beedi rolling, silk looms, to name a few, are applicability noted cases.
This subject has been debated for the past two decades, but no one seems to have the definition amended for the act to remove this ambiguity.
HRG-Rajaram
From United States
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Further, I wish to bring to the notice of all the viewers the point raised by the Provident Fund authorities:
It states, "As per Section 6 and Section 8A read with Paragraph 30(2) and 30(3) and Paragraph 32 of EPF & MP Act, 1952, the principal employer is only responsible for contractors' compliance, whether contractors/subcontractors have independent code number." Furthermore, in order to streamline/regulate compliance in respect of contractors/subcontractors/outsourcing agencies/service providers and employees, a proforma has been devised as Annexure B. All establishments (exempted/unexempted) are directed to furnish this annexure immediately.
From India, Madras
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It states, "As per Section 6 and Section 8A read with Paragraph 30(2) and 30(3) and Paragraph 32 of EPF & MP Act, 1952, the principal employer is only responsible for contractors' compliance, whether contractors/subcontractors have independent code number." Furthermore, in order to streamline/regulate compliance in respect of contractors/subcontractors/outsourcing agencies/service providers and employees, a proforma has been devised as Annexure B. All establishments (exempted/unexempted) are directed to furnish this annexure immediately.
From India, Madras
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PMS COmpensation and Benefits.doc
Annual return(Form-R). pdf
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(Fact Checked)-The user's reply contains accurate information regarding the responsibilities of the principal employer towards contractors/subcontractors under the EPF & MP Act, 1952. There is a requirement for establishments to furnish the prescribed proforma for compliance purposes. (1 Acknowledge point)