Dear Seniors & Friends, please guide me on the following point:
If a contractor submits EPF & ESIC after the cut-off date (15th & 21st of the next month), what is the liability of the principal employer? Is the principal employer liable for the delay in payment and could be penalized by the department?
From India, Calcutta
Acknowledge(0)
Amend(0)
If a contractor submits EPF & ESIC after the cut-off date (15th & 21st of the next month), what is the liability of the principal employer? Is the principal employer liable for the delay in payment and could be penalized by the department?
From India, Calcutta
Acknowledge(0)Amend(0)
Dear Mr. Gaurav,
Principally, the principal employer can’t held responsible for delay by the contractor in PF-ESI contributions. Even in a recent case law, Hon’ble court has given judgement if the contractor has separate PF code than PE can’t be held responsible (attaching the article, which I recd from here only).
I would suggest you to deeply check and monitor whether the contractor is depositing the contribution as per dedcution or not. Many contractor deduct higher PF-ESI and deposit less. Even in online process also they do by modifing the ECR, days and wages. Sometime in order to show to the PE they prepare online ECR with actual wages in r/o all employee than cancelled the ECR and prepare another one with less contribution. In such case if any workmen file case in labour court and make party to the PE as well, than you have to appear to the labour court for the hearing.
In such case if the contractor is unable to deposit the short fund (contribution) than you may be asked to compensate. In order to overcome to the situation at time of contract completion before making final payment, first ask the contractor to complete all statutory components. Wait till all employees get their fund (either withdrawal or transfer), Bonus, Gratuity, Leave etc pymt. Than ask the contractor to submit NO DEMAND CERTIFICATE (which he will obtain from getting signature of all employees).
You can demand the same certificate from the contractor to safeguard your company in the future as well.
Hope you will agree with my point, fellow members can put more light on the matter.
From India, Delhi
Acknowledge(0)Amend(0)
238Principally, the principal employer can’t held responsible for delay by the contractor in PF-ESI contributions. Even in a recent case law, Hon’ble court has given judgement if the contractor has separate PF code than PE can’t be held responsible (attaching the article, which I recd from here only).
I would suggest you to deeply check and monitor whether the contractor is depositing the contribution as per dedcution or not. Many contractor deduct higher PF-ESI and deposit less. Even in online process also they do by modifing the ECR, days and wages. Sometime in order to show to the PE they prepare online ECR with actual wages in r/o all employee than cancelled the ECR and prepare another one with less contribution. In such case if any workmen file case in labour court and make party to the PE as well, than you have to appear to the labour court for the hearing.
In such case if the contractor is unable to deposit the short fund (contribution) than you may be asked to compensate. In order to overcome to the situation at time of contract completion before making final payment, first ask the contractor to complete all statutory components. Wait till all employees get their fund (either withdrawal or transfer), Bonus, Gratuity, Leave etc pymt. Than ask the contractor to submit NO DEMAND CERTIFICATE (which he will obtain from getting signature of all employees).
You can demand the same certificate from the contractor to safeguard your company in the future as well.
Hope you will agree with my point, fellow members can put more light on the matter.
From India, Delhi
Acknowledge(0)Amend(0)
Please link the contractor in your ESI Employer Portal. You can check the online ESI remittance position by logging into the ESI Employee portal with the ESI Insurance number. Before passing his bill for payment, ensure both PF and ESI compliance based on available records, both physical and online. Furthermore, you can also take a letter from the contractor stating that he indemnifies the Principal Employer against any future liability. Put proper systems in place to track compliance by the contractor.
From India, New Delhi
Acknowledge(0)Amend(0)
From India, New Delhi
Acknowledge(0)Amend(0)
As a principal employer, you can ask the contractor to share their login IDs and passwords for ESI and PF. When processing the bill, you can validate their claims for ESI & PF and confirm the authenticity of these claims.
The principal employer is not liable for any wrongdoing by the contractor if it is evident that they were not involved in any collusion.
From India, Thane
Acknowledge(0)Amend(0)
The principal employer is not liable for any wrongdoing by the contractor if it is evident that they were not involved in any collusion.
From India, Thane
Acknowledge(0)Amend(0)Engage with peers to discuss and resolve work and business challenges collaboratively - share and document your knowledge. Our AI-powered platform, features real-time fact-checking, peer reviews, and an extensive historical knowledge base. - Join & Be Part Of Our Community.
Contract employee & Principal employer 2017.pdf
NOTE ON PRINCIPAL EMPLOYER TO ENGAGE CONTRACT LABOUR.pptx