Hi All,
Please share your valuable views regarding PF/ESI contributions of subcontractors. As the Principal Company responsible for statutory compliances, can the principal company pay the compliances on behalf of contractors who regularly make delayed PF/ESI contributions? How can we prevent delayed payments from contractors? Your insights on streamlining our organization's processes would be greatly appreciated.
Thanks & Regards, K. Srinivas HR Executive
From India, Hyderabad
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Please share your valuable views regarding PF/ESI contributions of subcontractors. As the Principal Company responsible for statutory compliances, can the principal company pay the compliances on behalf of contractors who regularly make delayed PF/ESI contributions? How can we prevent delayed payments from contractors? Your insights on streamlining our organization's processes would be greatly appreciated.
Thanks & Regards, K. Srinivas HR Executive
From India, Hyderabad
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Under Section 40, THE PRINCIPAL EMPLOYER SHALL PAY IN RESPECT OF EVERY EMPLOYEE, WHETHER DIRECTLY EMPLOYED BY HIM OR BY OR THROUGH AN IMMEDIATE EMPLOYER, BOTH THE EMPLOYER'S CONTRIBUTION AND THE EMPLOYEE'S CONTRIBUTION.
Notwithstanding anything contained in any other enactment but subject to the provisions of this Act and the regulations, if any, made thereunder, the principal employer shall, in the case of an employee directly employed by him (not being an exempted employee), be entitled to recover from the employee the employee's contribution by deduction from his wages and not otherwise:
PROVIDED that no such deduction shall be made from any wages other than such as relate to the period or part of the period in respect of which the contribution is payable, or in excess of the sum representing the employee's contribution for the period.
Notwithstanding any contract to the contrary, neither the principal employer nor the immediate employer shall be entitled to deduct the employer's contribution from any wages payable to an employee or otherwise to recover it from him.
Any sum deducted by the principal employer from wages under this Act shall be deemed to have been entrusted to him by the employee for the purpose of paying the contribution in respect of which it was deducted.
The principal employer shall bear the expenses of remitting the contributions to the Corporation.
Under Section 41, A principal employer who has paid the contribution in respect of an employee employed by or through an immediate employer shall be entitled to recover the amount of the contribution so paid (that is to say the employer's contribution as well as the employee's contribution, if any) from the immediate employer, either by deduction from any amount payable to him by the principal employer under any contract or as a debt payable by the immediate employer. The immediate employer shall maintain a register of employees employed by or through him as provided in the regulations and submit the same to the principal employer before the settlement of any amount payable under this clause. In the case referred to in subsection (1), the immediate employer shall be entitled to recover the employee's contribution from the employee employed by or through him by deduction from wages and not otherwise, subject to the conditions specified in the proviso to subsection (2) of Section 40.
From India, Kolkata
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180Notwithstanding anything contained in any other enactment but subject to the provisions of this Act and the regulations, if any, made thereunder, the principal employer shall, in the case of an employee directly employed by him (not being an exempted employee), be entitled to recover from the employee the employee's contribution by deduction from his wages and not otherwise:
PROVIDED that no such deduction shall be made from any wages other than such as relate to the period or part of the period in respect of which the contribution is payable, or in excess of the sum representing the employee's contribution for the period.
Notwithstanding any contract to the contrary, neither the principal employer nor the immediate employer shall be entitled to deduct the employer's contribution from any wages payable to an employee or otherwise to recover it from him.
Any sum deducted by the principal employer from wages under this Act shall be deemed to have been entrusted to him by the employee for the purpose of paying the contribution in respect of which it was deducted.
The principal employer shall bear the expenses of remitting the contributions to the Corporation.
Under Section 41, A principal employer who has paid the contribution in respect of an employee employed by or through an immediate employer shall be entitled to recover the amount of the contribution so paid (that is to say the employer's contribution as well as the employee's contribution, if any) from the immediate employer, either by deduction from any amount payable to him by the principal employer under any contract or as a debt payable by the immediate employer. The immediate employer shall maintain a register of employees employed by or through him as provided in the regulations and submit the same to the principal employer before the settlement of any amount payable under this clause. In the case referred to in subsection (1), the immediate employer shall be entitled to recover the employee's contribution from the employee employed by or through him by deduction from wages and not otherwise, subject to the conditions specified in the proviso to subsection (2) of Section 40.
From India, Kolkata
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Better to get a sub-code and deposit the contribution of the contract workmen in that sub-code or else engage an agency for legal compliance in the engagement of contractors and contract workmen.
N Nataraajhan, Sakthi Management Services (Hp: +919483517402; email: natraj@sakthimanagement.com)
From India, Bangalore
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N Nataraajhan, Sakthi Management Services (Hp: +919483517402; email: natraj@sakthimanagement.com)
From India, Bangalore
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1. Sir, the employer can deposit the contribution under the ESI Act, 1948, following the same pattern or procedure as they do for their direct employees. There is no special procedure laid down for compliance regarding employees of contractors.
2. However, to demonstrate correct compliance regarding contractor employees, the principal employer should, in my opinion, deposit the contribution separately through a separate challan or online procedure. Additionally, it is advisable to retain records or copies of payment of wages by the contractor. This documentation will be crucial during record verification by the SSO/Inspection Authorities to substantiate compliance.
From India, Noida
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2. However, to demonstrate correct compliance regarding contractor employees, the principal employer should, in my opinion, deposit the contribution separately through a separate challan or online procedure. Additionally, it is advisable to retain records or copies of payment of wages by the contractor. This documentation will be crucial during record verification by the SSO/Inspection Authorities to substantiate compliance.
From India, Noida
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If, in case, the Principal Employer deposits the PF/ESI contributions of the contract workmen under his Code, and in the absence of Registration/License as per CLRA Act, and proper records such as attendance, wages registers, etc., courts may decide the contract workmen as direct workmen of the Company. Therefore, it is advisable to obtain sub-codes or at least deposit the contributions through separate challans.
Regards,
N. Nataraajhan
Sakthi Management Services
(Hp: +91 94835 17402; email: natraj@sakthimanagement.com)
From India, Bangalore
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Regards,
N. Nataraajhan
Sakthi Management Services
(Hp: +91 94835 17402; email: natraj@sakthimanagement.com)
From India, Bangalore
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