Request to read the following post and guide on probable solutions. The post is a bit long as I have tried to cover all the aspects.
1. My Company (a PSU, manufacturing industry) outsourced the transport service since July’13. As per the terms and conditions of respective tender conditions, the transporters are required to comply with the provisions of relevant statutes, i.e. Minimum Wages, PF, ESI etc.
2. Contractors were given the contract based on their undertaking of obtaining of PF & ESI code shortly. However after getting the work order, these contractors were reluctant in furnishing documents in support of compliance of PF and ESI as they stated that they do not possess the PF & ESI code.
3. In the meantime, followed by an Audit Observation, Management has decided to deduct and withhold the applicable PF & ESI contribution amounts from the bills of the contractors.
4. After prolonged persuasions, the contractors agreed and obtained PF code from November’14. It also appeared that these contractors were covered under ESI code at the time of commencement of the contract (since January’13).
5. As per the present scenario, the contractors are depositing ESI from beginning i.e. July’13 but amount of deduction is lesser than estimated (as not deducted at par with minimum wages). Regarding PF, these contractors have started depositing PF contributions from November’14. An amount equivalent to PF & ESI contribution for the period from July’13 to October’14 has already been deducted from contractors’ bills and withhold by Accounts dept.
6. View above opinion is solicited on possible actions/measures to be taken by my Company as Principal Employer towards statutory compliance with specific views on the following:
(a) As the Transport Contractors did not have PF codes allotted in their firms names prior to Nov’14, so they are not able to deposit the PF contributions for the period between Jul 13 to Oct 14. My Company has deducted amount equivalent to PF and ESI liability of the contractors’ for the non coded period i.e. from Jul’13 to Oct’14 and retained the money as my Company cannot deposit the same in the code of the contractors and also cannot directly deposit to PF authorities and in no way contribution for the past period can be deposited by the Contractor too. What will be the viable and possible course of action to ensure compliance of PF for the non coded period.
As our Company is also not interested to hold the amount deducted on a/c of PF contribution amount recovered from the contractors’, what is the right course of action open to my company (Principal Employer) for statutory compliance.
(b) For Contractors’ who were having ESI code since commencement of the contract, what is possible option available for statutory compliance of ESI and whether the deducted money or part thereof may be returned to the Vendor.
Rgds,
DG
From India, Delhi
41. My Company (a PSU, manufacturing industry) outsourced the transport service since July’13. As per the terms and conditions of respective tender conditions, the transporters are required to comply with the provisions of relevant statutes, i.e. Minimum Wages, PF, ESI etc.
2. Contractors were given the contract based on their undertaking of obtaining of PF & ESI code shortly. However after getting the work order, these contractors were reluctant in furnishing documents in support of compliance of PF and ESI as they stated that they do not possess the PF & ESI code.
3. In the meantime, followed by an Audit Observation, Management has decided to deduct and withhold the applicable PF & ESI contribution amounts from the bills of the contractors.
4. After prolonged persuasions, the contractors agreed and obtained PF code from November’14. It also appeared that these contractors were covered under ESI code at the time of commencement of the contract (since January’13).
5. As per the present scenario, the contractors are depositing ESI from beginning i.e. July’13 but amount of deduction is lesser than estimated (as not deducted at par with minimum wages). Regarding PF, these contractors have started depositing PF contributions from November’14. An amount equivalent to PF & ESI contribution for the period from July’13 to October’14 has already been deducted from contractors’ bills and withhold by Accounts dept.
6. View above opinion is solicited on possible actions/measures to be taken by my Company as Principal Employer towards statutory compliance with specific views on the following:
(a) As the Transport Contractors did not have PF codes allotted in their firms names prior to Nov’14, so they are not able to deposit the PF contributions for the period between Jul 13 to Oct 14. My Company has deducted amount equivalent to PF and ESI liability of the contractors’ for the non coded period i.e. from Jul’13 to Oct’14 and retained the money as my Company cannot deposit the same in the code of the contractors and also cannot directly deposit to PF authorities and in no way contribution for the past period can be deposited by the Contractor too. What will be the viable and possible course of action to ensure compliance of PF for the non coded period.
As our Company is also not interested to hold the amount deducted on a/c of PF contribution amount recovered from the contractors’, what is the right course of action open to my company (Principal Employer) for statutory compliance.
(b) For Contractors’ who were having ESI code since commencement of the contract, what is possible option available for statutory compliance of ESI and whether the deducted money or part thereof may be returned to the Vendor.
Rgds,
DG
From India, Delhi
1. Sir, in my opinion, you can ask your contractors (when they have their separate code/registration numbers under EPF & ESI) to get their records and accounts inspected by EPFO & ESI appropriate authorities for the period of dispute and make compliance accordingly in respect of objections, if any, raised as a result of such inspections.
2. You can also inform above authorities the issues as mentioned by you in your this thread and ask such authorities to conduct the inspection of your accounts including the accounts of contractors and after such inspections are completed comply with their objections accordingly. I think, in this way, you can protect the interests of your establishment. However, the delay in such compliance will also result into levy of damages, interest etc. as is expected as a result of delay in compliance under above enactments and rules/regulations framed thereunder.
From India, Noida
2. You can also inform above authorities the issues as mentioned by you in your this thread and ask such authorities to conduct the inspection of your accounts including the accounts of contractors and after such inspections are completed comply with their objections accordingly. I think, in this way, you can protect the interests of your establishment. However, the delay in such compliance will also result into levy of damages, interest etc. as is expected as a result of delay in compliance under above enactments and rules/regulations framed thereunder.
From India, Noida
Saptarshi,
Yours is one of the very few complicated cases that I have come across till date, but is quite interesting.
Considering the fact that there are more parties involved in this offense and issues due to procedural aspects, I suggest you meet the AC of your group at the Regional PF Office and appraise him the situation. See what he has to say in this regard and follow his advice.
Please let me (& the forum) know the outcome of your discussion with the AC so that we all are informed as to what has to be done in such a scenario.
Thanks & All the Best.
A.B.
From India, Mumbai
Yours is one of the very few complicated cases that I have come across till date, but is quite interesting.
Considering the fact that there are more parties involved in this offense and issues due to procedural aspects, I suggest you meet the AC of your group at the Regional PF Office and appraise him the situation. See what he has to say in this regard and follow his advice.
Please let me (& the forum) know the outcome of your discussion with the AC so that we all are informed as to what has to be done in such a scenario.
Thanks & All the Best.
A.B.
From India, Mumbai
Hi,
I also agree with the above 2 statements of harsh and A.B. You can approach the the right authority in PF ( Asstt Commisioner) and ESI (office manager) for the same and make them aware of the scenario. they will definitely conduct an audit post which whatever required as per their suggestion need to be implemented. this is the best solution under your case. Pls share with us also whatever happen.
From India, New Delhi
I also agree with the above 2 statements of harsh and A.B. You can approach the the right authority in PF ( Asstt Commisioner) and ESI (office manager) for the same and make them aware of the scenario. they will definitely conduct an audit post which whatever required as per their suggestion need to be implemented. this is the best solution under your case. Pls share with us also whatever happen.
From India, New Delhi
Sir(s), with due regards, I will like to correct Mr. Harpreet Walia ( with reference to his remarks as above) that the appropriate officer in ESIC relating to revenue and inspection matters is the Deputy Regional Director or Regional Director of the Regional/Sub Regional Office of ESIC to which the unit/factory is attached. Branch Manager of ESIC has nothing to do with revenue matters. Branch Manager is the appropriate officer relating to registration of employees, their identity cards and payment of benefits to the insured persons etc. only. Inspection of records of any unit is to be conducted by the Social Security Officer (SSO) of the area on the directions of the appropriate Regional/Sub-Regional Office authorities as mentioned above.
From India, Noida
From India, Noida
Basically I do not find any employer employee relationship between you and the crew of the transport company and as such I do not think that the question of ESI and Pf will arise in your case. My feeling is that your contract with the transporter/s is a contract FOR service and not a contract OF service. In the latter one person (contractor) agrees to engage some workers to work for the principal employer and in such case the workers engaged are indirectly controlled by the employer and the amount is fixed based on the output given by them or rate of wages agreed at. Here, the workers come to your plant and do their work using your fixed assets/ equipment and raw materials. In the former case it is an arrangement whereby a person (transporter) agrees to transport certain things in return for a price per kilo meter and for discharging the service he is using his own vehicle (or hired by him, the cost of which is paid by him only), he himself fills fuel, carries out maintenance and pays wages to the driver and others. You do not know who is the driver or who will come today or who will come tomorrow. You are paying for the services the transporter is doing for you and the payment that you make is not salary or wages. If we start paying ESI and PF to all such services we will have to pay it for taxi hire charges also.
In view of the above, what is the significance of attraction of ESI and EPF on such charges. It is okay if the scenario is like, you have vehicles and the agency/ contractor sends drivers who will do the work as per your plan, you fill fuel and takes care of the maintenance of the vehicle, and at the end of the day/ month you pay the wages to him (plus some service charges to the transporter who engages the drivers) In such case you know who is engaged for today and it is certain that he will work only for you for that day. He is indirectly controlled by you. But in the former case, you do not have any relation with the driver/ crew because they are just like call taxi/ truck drivers who are paid an amount calculated based on kilo meter or some other terms. This is a case of Contract For Service which is outside the scope of Contract Labour (R&A) Act also.
Madhu.T.K
From India, Kannur
In view of the above, what is the significance of attraction of ESI and EPF on such charges. It is okay if the scenario is like, you have vehicles and the agency/ contractor sends drivers who will do the work as per your plan, you fill fuel and takes care of the maintenance of the vehicle, and at the end of the day/ month you pay the wages to him (plus some service charges to the transporter who engages the drivers) In such case you know who is engaged for today and it is certain that he will work only for you for that day. He is indirectly controlled by you. But in the former case, you do not have any relation with the driver/ crew because they are just like call taxi/ truck drivers who are paid an amount calculated based on kilo meter or some other terms. This is a case of Contract For Service which is outside the scope of Contract Labour (R&A) Act also.
Madhu.T.K
From India, Kannur
Dear Mr.Saptarshi,
I agree with the above 2 statements of harsh and A.B.
After PF inspection they can pay PF contribution from July-13 to Oct-14. The Inspector needs to mention in his report, stating that July-13 to Oct-14 contribution is pending and total amount of contribution then only contractor can pay balance amount. The Inspector will also needs to mention the PF applicable date as July-13, depend on the Transporters documents verifications.
Best Regards
Praveen B
From India, Bangalore
I agree with the above 2 statements of harsh and A.B.
After PF inspection they can pay PF contribution from July-13 to Oct-14. The Inspector needs to mention in his report, stating that July-13 to Oct-14 contribution is pending and total amount of contribution then only contractor can pay balance amount. The Inspector will also needs to mention the PF applicable date as July-13, depend on the Transporters documents verifications.
Best Regards
Praveen B
From India, Bangalore
I agree with Mr. Madhu T.K.
Basically, the drivers are not entering your premises. They are picking up your staff / workers from certain points to your factory & back. As such, I don't think ESI is your liability.
Similarly, for PF., since you are not engaging them directly, I don't think, as a principal employer you have any liability.
It is for transport contractor to take care of it.
Moreover, his bills to you must be either fixed per trip or per K.M. basis, so it is not your responsibility.
Regards,
Nitin Tadvalkar
From India, Pune
Basically, the drivers are not entering your premises. They are picking up your staff / workers from certain points to your factory & back. As such, I don't think ESI is your liability.
Similarly, for PF., since you are not engaging them directly, I don't think, as a principal employer you have any liability.
It is for transport contractor to take care of it.
Moreover, his bills to you must be either fixed per trip or per K.M. basis, so it is not your responsibility.
Regards,
Nitin Tadvalkar
From India, Pune
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