I work in a PSU and engage a lot of contract workers through contractors. In our agreement with contractors, it is stipulated that the contractor needs to register all his employees under PF and ESIC. However, many times we have noticed that the contractor refuses to enroll all employees, stating that it is optional for employees earning more than Rs. 6501. Could you please clarify whether it is correct on the part of the contractor to do so, or as a principal employer, can we force the contractors to enroll all employees in EPF?
Thank you.
From India, Mumbai
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1Thank you.
From India, Mumbai
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If you appoint a contractor for labor supply, it is the duty of the principal employer or their agent (GM or HR) to ensure that the labor contractor submits Form 5 (joining of new member) and deposits the EPF amount into their account. You can demand from the contractor all legal compliances, such as the wages register, monthly EPF challans, EPF Form 5, W.C. policy, and ESIC challan.
Thank you.
From India, Mumbai
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Thank you.
From India, Mumbai
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As the Principal Employer, you are liable for compliance with labor laws and social securities concerning contractor employees working on your premises. Therefore, it is necessary for you to ensure that your contractors handle these compliances properly.
Monthly Compliance Documentation
Each month, you should request copies of the following documents regarding contract employees engaged on your premises by your contractors:
- Muster roll and wage register, noting: PF not deducted for excluded employees as defined under the EPF & MP Act;
- PF challan and ECR, highlighting the names of employees engaged on your premises;
- ESI challan and contribution list, with emphasis on the names of employees engaged on your premises;
- PT Challan;
- MLW challan when applicable.
Additionally, you should obtain a suitable undertaking cum indemnity from contractors to comply with all provisions of relevant labor laws and indemnify you.
Engage a Consultant/Adviser
It is advisable to engage a Consultant/Adviser and conduct a third-party audit of compliance by such Consultant/Adviser.
I understand you are based in Mumbai. Please feel free to reach out to me to establish a commercial contract for the suggested services.
Best regards,
From India, Mumbai
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Monthly Compliance Documentation
Each month, you should request copies of the following documents regarding contract employees engaged on your premises by your contractors:
- Muster roll and wage register, noting: PF not deducted for excluded employees as defined under the EPF & MP Act;
- PF challan and ECR, highlighting the names of employees engaged on your premises;
- ESI challan and contribution list, with emphasis on the names of employees engaged on your premises;
- PT Challan;
- MLW challan when applicable.
Additionally, you should obtain a suitable undertaking cum indemnity from contractors to comply with all provisions of relevant labor laws and indemnify you.
Engage a Consultant/Adviser
It is advisable to engage a Consultant/Adviser and conduct a third-party audit of compliance by such Consultant/Adviser.
I understand you are based in Mumbai. Please feel free to reach out to me to establish a commercial contract for the suggested services.
Best regards,
From India, Mumbai
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Clarification on PF Enrollment for Contract Workers
The contractor is right. For all employees with a basic + DA of over 6500 per month, PF is optional at the decision of the employee. So, he is right in not opting for PF for such employees. However, there are several riders on the option:
- The worker must not be an existing member of PF (if they had PF at previous employment, then they cannot opt out now unless they have closed that account and received their money back).
- They must have a starting salary of more than 6500 (it does not apply where the salary increased to 6500).
- They need to fill the relevant form at the time of joining asking for exemption. Once they are under PF, they cannot opt out.
From my knowledge and experience, contractors are going to give minimum wages only, and I find it difficult to believe the workers have a starting salary above 6500.
From India, Mumbai
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The contractor is right. For all employees with a basic + DA of over 6500 per month, PF is optional at the decision of the employee. So, he is right in not opting for PF for such employees. However, there are several riders on the option:
- The worker must not be an existing member of PF (if they had PF at previous employment, then they cannot opt out now unless they have closed that account and received their money back).
- They must have a starting salary of more than 6500 (it does not apply where the salary increased to 6500).
- They need to fill the relevant form at the time of joining asking for exemption. Once they are under PF, they cannot opt out.
From my knowledge and experience, contractors are going to give minimum wages only, and I find it difficult to believe the workers have a starting salary above 6500.
From India, Mumbai
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Dear Saswataji,
I have a query. We have a factory where we have given job contracts to individuals, for example, one for repairing A/C and another for furniture repair. My query is whether we need to deduct PF from these individuals. They are doing the work themselves, with no other person working with them. It's a job contract that requires them to complete the tasks of A/C repairing and furniture repair.
Looking forward to your reply.
With regards,
akatrap
From India, Mumbai
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I have a query. We have a factory where we have given job contracts to individuals, for example, one for repairing A/C and another for furniture repair. My query is whether we need to deduct PF from these individuals. They are doing the work themselves, with no other person working with them. It's a job contract that requires them to complete the tasks of A/C repairing and furniture repair.
Looking forward to your reply.
With regards,
akatrap
From India, Mumbai
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Provident fund.zip
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