Dear,
Your primary responsibility should be to check whether the contractor's employees (before they enter the factory premises itself) are covered by him under the act, i.e., whether they have individual insurance numbers either by way of holding Temp I-Card (TIC) or Permanent I-Card (PIC). Only this ensures that the contract employees have been registered under ESIC.
In most cases, the contractor's firm would have a code number, but his employees would not have an individual insurance number issued by ESIC—meaning these employees have not been registered. Therefore, in the event of any accident, ESI would not be able to cover the employees who are not registered with it. Consequently, it could not provide them with any compensation. As a result, the employees would subsequently revoke the provisions of the Workmen's Compensation Act. This could have serious financial implications on the company and could even question the role of the HR personnel working for the company. First, ensure this, then proceed to the act of retention of monies from the contractor. Prevention is better than cure.
From India, Madras
1Your primary responsibility should be to check whether the contractor's employees (before they enter the factory premises itself) are covered by him under the act, i.e., whether they have individual insurance numbers either by way of holding Temp I-Card (TIC) or Permanent I-Card (PIC). Only this ensures that the contract employees have been registered under ESIC.
In most cases, the contractor's firm would have a code number, but his employees would not have an individual insurance number issued by ESIC—meaning these employees have not been registered. Therefore, in the event of any accident, ESI would not be able to cover the employees who are not registered with it. Consequently, it could not provide them with any compensation. As a result, the employees would subsequently revoke the provisions of the Workmen's Compensation Act. This could have serious financial implications on the company and could even question the role of the HR personnel working for the company. First, ensure this, then proceed to the act of retention of monies from the contractor. Prevention is better than cure.
From India, Madras
Both are statutory payments and fall under social security legislation. Violation of these attracts heavy penalties. In the case of accidents or unforeseen events, the principal employer is responsible for payments under ESI and PF, in addition to compensation as applicable.
Regarding liability, these payments are to be made as follows:
1. PF - Employer contribution is 12%, and employee contribution is 12% on Basic salary and DA, if any. If basic and DA do not exist, payment should be based on consolidated payment. Otherwise, wages need to be bifurcated into components such as Basic, HRA, and other allowances as per company policy.
2. ESI - ESI contributions are to be made on the total salary (salary includes all payments up to Rs10,000/-).
3. It is only a brief explanation; simply paying is not sufficient. We have to maintain documents and registers in addition to submitting half-yearly/annual returns for both.
- Patrudu
From India, Hyderabad
Regarding liability, these payments are to be made as follows:
1. PF - Employer contribution is 12%, and employee contribution is 12% on Basic salary and DA, if any. If basic and DA do not exist, payment should be based on consolidated payment. Otherwise, wages need to be bifurcated into components such as Basic, HRA, and other allowances as per company policy.
2. ESI - ESI contributions are to be made on the total salary (salary includes all payments up to Rs10,000/-).
3. It is only a brief explanation; simply paying is not sufficient. We have to maintain documents and registers in addition to submitting half-yearly/annual returns for both.
- Patrudu
From India, Hyderabad
we can deduct the full amount of PF CONTRIBUTION (BOTH) and also ESIC CONTRIBUTION (BOth) from his monthly bill and penal intrest if any
Dear Sir,
Could you please provide me with complete information and some case studies regarding the ESI Act? I have been searching for this for a long time but have not been able to find satisfactory material. Additionally, could you suggest some recommended reading materials and provide links to websites that I can refer to?
With Regards,
Priyanka Singh
Email: priyanka.karvy@gmail.com
From India, Jaipur
Could you please provide me with complete information and some case studies regarding the ESI Act? I have been searching for this for a long time but have not been able to find satisfactory material. Additionally, could you suggest some recommended reading materials and provide links to websites that I can refer to?
With Regards,
Priyanka Singh
Email: priyanka.karvy@gmail.com
From India, Jaipur
Respected Mr. Madhu,
Thanks, but I'm still confused regarding the stop payment for the contractor. How much can we stop? Has the government made any law for this?
I believe you can make payments and deduct the remittance amount towards ESI & PF from the contractor's bills. Holding payments will not serve any purpose towards compliance with the laws. Additionally, any default in payment from the contractor will ultimately become a liability of the principal employer, as stated in the laws.
Regards,
Sumit Kumar
Thanks, but I'm still confused regarding the stop payment for the contractor. How much can we stop? Has the government made any law for this?
I believe you can make payments and deduct the remittance amount towards ESI & PF from the contractor's bills. Holding payments will not serve any purpose towards compliance with the laws. Additionally, any default in payment from the contractor will ultimately become a liability of the principal employer, as stated in the laws.
Regards,
Sumit Kumar
Dear,
Please calculate the average amount based on previous (ESI/PF) challans paid by the contractor and debit the same to his bill and credit to ESI/PF account. An excess payment to ESI/PF account doesn't cause any problem. Issue a warning letter and make sure that it doesn't repeat.
Need any more info... Please feel free to reply... I too have dealt with the same problem.
Regards, Sachin M.
From India, Chicalim
Please calculate the average amount based on previous (ESI/PF) challans paid by the contractor and debit the same to his bill and credit to ESI/PF account. An excess payment to ESI/PF account doesn't cause any problem. Issue a warning letter and make sure that it doesn't repeat.
Need any more info... Please feel free to reply... I too have dealt with the same problem.
Regards, Sachin M.
From India, Chicalim
Yes, Definately you can hold the payment and deduct the whole contribution from contractor’s bill. sumt
From India, Ghaziabad
From India, Ghaziabad
The following things can be done to avoid these statutory complexities:
1. An amount can be deducted from the contractor's payment as retention money, which can be paid back to him after he has wound up his operation and met the statutory compliance.
SUDIPTA
From India, Calcutta
1. An amount can be deducted from the contractor's payment as retention money, which can be paid back to him after he has wound up his operation and met the statutory compliance.
SUDIPTA
From India, Calcutta
There is no separate law governing how to manage a contractor. It all depends upon the company's policy. If you are sure that the contractor will deposit all statutory payments on time, you can go ahead with full payment. But to be on the safer side, it is always better to keep a portion of the amount pending so that any payments due by the contractor to the government authorities could be recovered easily. How much to be retained shall be worked out taking into account the wages payable to the contractor's employees, ESI/EPF contributions, etc. Why don't you retain the total bill for at least one month at every stage of payment? Appraise it.
Regards, Madhu.T.K
From India, Kannur
Regards, Madhu.T.K
From India, Kannur
Dear Supriya,
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Regards, Sudha.GS
From India, Madras
We are Aparajitha Corporate Services (P) Ltd, an emerging leader in the HR-KPO sector, with a Pan-India presence, and expertise in Labor laws of various states.
Contract Labour Regulatory Services - Our progress is marked with good and effective ideas and applicability in regulating the Contract Labour for our prestigious clients.
For further details, please contact Mr. Rajesh at 999 493 9987 or email at rajesh@aparajitha.com.
Regards, Sudha.GS
From India, Madras
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