Dear Seniors,
I have recently joined a manufacturing company and observed that the contractors here are locals and not professionals. I have also noticed that the laborers they supply are not paid according to the minimum wages act, and the PF challans are not attached as per the number of workers.
I would like to know how I can take action against them. When I informed the higher authorities about the issues with the contractors' bills, they mentioned that if we take any action against them, there will be a loss in production since all the laborers are from these contractors.
Regards,
Prachi
From India
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I have recently joined a manufacturing company and observed that the contractors here are locals and not professionals. I have also noticed that the laborers they supply are not paid according to the minimum wages act, and the PF challans are not attached as per the number of workers.
I would like to know how I can take action against them. When I informed the higher authorities about the issues with the contractors' bills, they mentioned that if we take any action against them, there will be a loss in production since all the laborers are from these contractors.
Regards,
Prachi
From India
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Dear Prachi,
I would like to ask some questions if you don't mind.
1) When did you join this organization?
2) Why, at the outset, did the company not engage professional contractors?
3) Do you pay minimum wages to contractors as per MW act?
4) Do you think that before taking any action against the contractor, negotiation may help to improve the situation?
Thank you.
From India, Pune
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47I would like to ask some questions if you don't mind.
1) When did you join this organization?
2) Why, at the outset, did the company not engage professional contractors?
3) Do you pay minimum wages to contractors as per MW act?
4) Do you think that before taking any action against the contractor, negotiation may help to improve the situation?
Thank you.
From India, Pune
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Dear Prashant,
I joined just 1 and a half months back. To avoid union management, a decision was taken not to have workers on the payroll; hence, contract labourers. The company could not engage professional contractors as the contractors here are the previous union leaders and pressured the management to take them as contractors, promising to supply skilled and unskilled labor to us.
We pay the contractors as per the Minimum Wages Act, but they are not further paying their workers. The contractors are not decent and have rowdy behavior. Although everyone in the company knows about their background, nobody is willing to speak against them, advising me also not to confront them.
Thanks,
Prachi
From India
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I joined just 1 and a half months back. To avoid union management, a decision was taken not to have workers on the payroll; hence, contract labourers. The company could not engage professional contractors as the contractors here are the previous union leaders and pressured the management to take them as contractors, promising to supply skilled and unskilled labor to us.
We pay the contractors as per the Minimum Wages Act, but they are not further paying their workers. The contractors are not decent and have rowdy behavior. Although everyone in the company knows about their background, nobody is willing to speak against them, advising me also not to confront them.
Thanks,
Prachi
From India
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The first thing you should review is the payment for contractor labor as per the Wages Act. Secondly, if you pay under the Minimum Wages Act to the contractor, your responsibilities include verifying the wages register or contributions paid via challan. Thirdly, if the contractor is unable to pay the contribution, you should terminate the contract.
From India, Pune
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From India, Pune
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Dear Friend,
This is a common problem that companies face, and hats off to you for identifying such an issue. However, the key is to convince your organization about the seriousness of such non-compliance. Ultimately, it is the principal employer who will be held responsible in the future for such non-compliance, leading to interest, damages, and potentially significant financial liabilities for the company.
Regards
From India, Vadodara
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This is a common problem that companies face, and hats off to you for identifying such an issue. However, the key is to convince your organization about the seriousness of such non-compliance. Ultimately, it is the principal employer who will be held responsible in the future for such non-compliance, leading to interest, damages, and potentially significant financial liabilities for the company.
Regards
From India, Vadodara
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Dear Friend,
As I agree with Mr. Kuljit, I suggest you to please calculate their non-compliance liability and hold their payments through the finance department. Otherwise, the principal employer is liable to pay with all interest and damages. Meanwhile, avoid such types of contractors in the plant.
Regards,
Santhosh NK
9964667593
From India
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As I agree with Mr. Kuljit, I suggest you to please calculate their non-compliance liability and hold their payments through the finance department. Otherwise, the principal employer is liable to pay with all interest and damages. Meanwhile, avoid such types of contractors in the plant.
Regards,
Santhosh NK
9964667593
From India
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Dear Prachi,
Greetings for the day,
Please review the advice of Kujeet and Santosh and request your accounts department to halt the payment of bills raised by your contractors. Additionally, ensure to inform your employers that they are accountable to cover any penalties and damages in case of any disputes arising.
Thanks & Regards,
Sumit Kumar Saxena
9899669071, 0120-4131277
From India, Ghaziabad
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Greetings for the day,
Please review the advice of Kujeet and Santosh and request your accounts department to halt the payment of bills raised by your contractors. Additionally, ensure to inform your employers that they are accountable to cover any penalties and damages in case of any disputes arising.
Thanks & Regards,
Sumit Kumar Saxena
9899669071, 0120-4131277
From India, Ghaziabad
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Hi Prechi,
As mentioned above, you have taken over the new assignment just 2 months back.
1. Have you checked whether your establishment has obtained registration for employing contract labor from the registering officer?
2. Are the existing contractors equipped with labor licenses for engaging 5 or more laborers in a day?
3. Do the contractors possess their own ESI & PF code numbers, or are you covering them under your company's code numbers?
If so, you award jobs to various contractors for executing tasks as per your requirements (Mechanical, Civil, Electrical, etc.).
Before awarding a contract, you must issue a Purchase Order detailing all terms and conditions, including statutory coverages and damage clauses, and obtain their consent.
Additionally, specify whether the job involves skilled, semi-skilled, or unskilled labor or requires a lump-sum payment.
Upon completion of the job, the user department must certify whether the work undertaken by the contractor aligns with the Purchase Order specifications.
Once the bill is approved by the user department for payment, it should be routed through the ESI/PF certification department for necessary deductions.
When the bill reaches the certification department (contract labor in charge), they should verify the mandays worked by their laborers (skilled, semi-skilled, and unskilled), attendance sheet, paysheet, and ensure that the ESI & PF employee and employer contributions (contractor's part) are deducted from their bills and forwarded to the Accounts department for payment to the contractor.
It is also the Principal Employer's responsibility to ensure that wages are paid to contract labor within the stipulated time (before the 10th of every month) to avoid non-compliance.
As the Principal Employer, it is our responsibility to ensure that contractors pay minimum wages under the Contract Labor (R&A) Act-1971.
Please consult with your local labor department for details on contract labor minimum wages and follow the regulations accordingly.
By following the above procedure, you will avoid any issues with contract labor or concerns regarding the payment of ESI/PF contributions. Failure to recover the PF/ESI contributions and failure to remit them to the concerned authorities within the stipulated time will make the Occupier/Factory Manager accountable.
I hope the above is clear.
Thank you and regards
From India, Hyderabad
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As mentioned above, you have taken over the new assignment just 2 months back.
1. Have you checked whether your establishment has obtained registration for employing contract labor from the registering officer?
2. Are the existing contractors equipped with labor licenses for engaging 5 or more laborers in a day?
3. Do the contractors possess their own ESI & PF code numbers, or are you covering them under your company's code numbers?
If so, you award jobs to various contractors for executing tasks as per your requirements (Mechanical, Civil, Electrical, etc.).
Before awarding a contract, you must issue a Purchase Order detailing all terms and conditions, including statutory coverages and damage clauses, and obtain their consent.
Additionally, specify whether the job involves skilled, semi-skilled, or unskilled labor or requires a lump-sum payment.
Upon completion of the job, the user department must certify whether the work undertaken by the contractor aligns with the Purchase Order specifications.
Once the bill is approved by the user department for payment, it should be routed through the ESI/PF certification department for necessary deductions.
When the bill reaches the certification department (contract labor in charge), they should verify the mandays worked by their laborers (skilled, semi-skilled, and unskilled), attendance sheet, paysheet, and ensure that the ESI & PF employee and employer contributions (contractor's part) are deducted from their bills and forwarded to the Accounts department for payment to the contractor.
It is also the Principal Employer's responsibility to ensure that wages are paid to contract labor within the stipulated time (before the 10th of every month) to avoid non-compliance.
As the Principal Employer, it is our responsibility to ensure that contractors pay minimum wages under the Contract Labor (R&A) Act-1971.
Please consult with your local labor department for details on contract labor minimum wages and follow the regulations accordingly.
By following the above procedure, you will avoid any issues with contract labor or concerns regarding the payment of ESI/PF contributions. Failure to recover the PF/ESI contributions and failure to remit them to the concerned authorities within the stipulated time will make the Occupier/Factory Manager accountable.
I hope the above is clear.
Thank you and regards
From India, Hyderabad
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Hi Prechi,
The best thing to implement is to pay the ESI & PF from your side. The wage disbursement should be done in the presence of the management representative to clear the payment and only pay the commission amount to the contractor. If this is implemented, you will be complying with everything and not giving any scope to the contractor. Initially, there may be some issues from the contractor, but over time, the workers will appreciate you because they are receiving higher amounts. They may even be willing to depart from the contractor and support you and your organization. Therefore, try to win the people over.
Regards,
Kameswarao
From India, Hyderabad
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The best thing to implement is to pay the ESI & PF from your side. The wage disbursement should be done in the presence of the management representative to clear the payment and only pay the commission amount to the contractor. If this is implemented, you will be complying with everything and not giving any scope to the contractor. Initially, there may be some issues from the contractor, but over time, the workers will appreciate you because they are receiving higher amounts. They may even be willing to depart from the contractor and support you and your organization. Therefore, try to win the people over.
Regards,
Kameswarao
From India, Hyderabad
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