Dear all,
I have another query. If I add these workers to the payroll temporarily, do I have to pay them PF, ESIC, Gratuity, etc.? And after 3-4 months, if I give them a break, am I responsible for paying all these contributions? (As some part of the country will get deducted from these workers' payment as well). If somebody claims all these contributions, do I have to be responsible for paying them?
From India, Pune
13I have another query. If I add these workers to the payroll temporarily, do I have to pay them PF, ESIC, Gratuity, etc.? And after 3-4 months, if I give them a break, am I responsible for paying all these contributions? (As some part of the country will get deducted from these workers' payment as well). If somebody claims all these contributions, do I have to be responsible for paying them?
From India, Pune
Hi,
If it is on a fixed-term contract, then the company is responsible. If there is a contract, the contractor is responsible for payment, and the company needs to take adequate care to ensure that the contractor has made payment of statutory dues.
Under the Contract Labour Law, firstly, the contractor is responsible for the payment of statutory dues. If the contractor doesn't pay, then the principal is responsible. This means that if the contractor doesn't comply, the company will be liable for payments.
Warm Regards,
Ca Vikas Goel
From India, Mumbai
If it is on a fixed-term contract, then the company is responsible. If there is a contract, the contractor is responsible for payment, and the company needs to take adequate care to ensure that the contractor has made payment of statutory dues.
Under the Contract Labour Law, firstly, the contractor is responsible for the payment of statutory dues. If the contractor doesn't pay, then the principal is responsible. This means that if the contractor doesn't comply, the company will be liable for payments.
Warm Regards,
Ca Vikas Goel
From India, Mumbai
Dear Vikas,
Thanks for your clarification. It seems that the information provided by the poser of the problem was quite inadequate. From this, a clear inference can be made that some fictitious recruitment has been asked to be shown as malpractice by the management to siphon out funds of the company for illegal purposes. If this were not the case, the author of the thread would not have any cause for worry. There is a significant difference between showing and actually making the recruitment of temporary staff. I presume that she feared showing artificial staff temporarily without actually recruiting for those positions.
To be frank, I have observed in some companies/corporations that the management adopts such tactics, either to illegally fill their own coffers or to bribe auditors. This may be due to inadequate auditor compensation, a desire for more than approved compensation, tax evasion, showing fictitious profits, or negating losses in loss-making companies. I have also seen management employing auditors' own staff or their relatives to assist, sometimes through associated audit companies, to justify needs and avoid complex situations in audit reports to prevent shareholder backlash.
I apologize for my candid discussion. As a CA, I trust you are familiar with such situations and appreciate my input on the matter.
PS Dhingra
Vigilance & Transformation Management Consultant
Dhingra Group of Management & Educational Consultants
New Delhi
From India, Delhi
Thanks for your clarification. It seems that the information provided by the poser of the problem was quite inadequate. From this, a clear inference can be made that some fictitious recruitment has been asked to be shown as malpractice by the management to siphon out funds of the company for illegal purposes. If this were not the case, the author of the thread would not have any cause for worry. There is a significant difference between showing and actually making the recruitment of temporary staff. I presume that she feared showing artificial staff temporarily without actually recruiting for those positions.
To be frank, I have observed in some companies/corporations that the management adopts such tactics, either to illegally fill their own coffers or to bribe auditors. This may be due to inadequate auditor compensation, a desire for more than approved compensation, tax evasion, showing fictitious profits, or negating losses in loss-making companies. I have also seen management employing auditors' own staff or their relatives to assist, sometimes through associated audit companies, to justify needs and avoid complex situations in audit reports to prevent shareholder backlash.
I apologize for my candid discussion. As a CA, I trust you are familiar with such situations and appreciate my input on the matter.
PS Dhingra
Vigilance & Transformation Management Consultant
Dhingra Group of Management & Educational Consultants
New Delhi
From India, Delhi
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