There are two things. One whether the work is done at the premises of PE or outside. Another is engagement of people through contractor or direct by PE. If the work is done at the premises of the PE for any job, the concerned person engaged for the job will be considered as employee. The person may be engaged through contractor or directly paid by PE as casual or temporary employee.
As per PF and ESIC act the person is covered if the salary within the coverage limit. For casual nature of job one/two days PF authority is not creating any issue in general. But ESIC authority is always demanding the contribution.
Moreover, there is risk for PE for certain casual nature of job. If any electrician injured/die due to electric shock , in absence of ESIC or EC coverage the entire responsibility will be on PE. Similarly one painter while painting if falls from height and injured /die -same thing will happen.
As through out my carrier I have worked in factory most of the time and observed many such incident, to my opinion we may ignore PF for one /two days job but must be covered under ESIC if engaged inside the PE's premises to avoid any future complications.
Example has been cited for CA, HR Experts etc. where to my opinion their earning per month is more than the coverage limit of PF & ESIC. In my office there is one person who is engaged for liaison with PF & ESIC authority and paid 6000/- per month who is also engaged another at least 10 organizations for similar nature of jobs but not covered under PF and ESIC as the total earning per month is more than 50 K.
S K Bandyopadhyay ( WB, Howrah)
CEO-USD HR Solutions
+91 98310 81531
USD HR Solutions – To Strive towards excellence with effort and integrity
From India, New Delhi
336As per PF and ESIC act the person is covered if the salary within the coverage limit. For casual nature of job one/two days PF authority is not creating any issue in general. But ESIC authority is always demanding the contribution.
Moreover, there is risk for PE for certain casual nature of job. If any electrician injured/die due to electric shock , in absence of ESIC or EC coverage the entire responsibility will be on PE. Similarly one painter while painting if falls from height and injured /die -same thing will happen.
As through out my carrier I have worked in factory most of the time and observed many such incident, to my opinion we may ignore PF for one /two days job but must be covered under ESIC if engaged inside the PE's premises to avoid any future complications.
Example has been cited for CA, HR Experts etc. where to my opinion their earning per month is more than the coverage limit of PF & ESIC. In my office there is one person who is engaged for liaison with PF & ESIC authority and paid 6000/- per month who is also engaged another at least 10 organizations for similar nature of jobs but not covered under PF and ESIC as the total earning per month is more than 50 K.
S K Bandyopadhyay ( WB, Howrah)
CEO-USD HR Solutions
+91 98310 81531
USD HR Solutions – To Strive towards excellence with effort and integrity
From India, New Delhi
True. But the definition of employee under section 2(9) of the ESI Act says that employee means a person employed in connection with the work of a factory or establishment. This section also describes that such employment shall be either directly or indirectly but it should be "any work of, or incidental or preliminary to or connected with the work of, the factory or establishment". This will include the work done outside the premises of an establishment. It also extends the scope to work related to administration, purchase of raw materials and sales and distribution. Similar definition is available under the Employees Provident Fund and Misc Provisions Act also.
From India, Kannur
From India, Kannur
Dear S K Bandyopadhyay
With reference to your point on the risk of employees who are not covered by ESIC, I suggest that you take a public liability insurance for your office / factory and ensure that it covers the visitors or casual employees who are not employees. This is done by most factories as a matter of policy because you will not be able to cover every person in your factory all the time.
For employees who are above the specified limit of ESIC, of course, the employer should take Workman Compensation Insurance Policy.
From India, Mumbai
With reference to your point on the risk of employees who are not covered by ESIC, I suggest that you take a public liability insurance for your office / factory and ensure that it covers the visitors or casual employees who are not employees. This is done by most factories as a matter of policy because you will not be able to cover every person in your factory all the time.
For employees who are above the specified limit of ESIC, of course, the employer should take Workman Compensation Insurance Policy.
From India, Mumbai
We need to write to the EPF Deptt to clearly remove from PF electricians, plumbers etc who come for a few days work to repair and go, and they are in no way connected with any business activity of the PE
Some points
1. If someone employs a plumber or electrician for 3 days and pays Rs 2,500 for work done then if one has to deduct PF for him then one should open a PF account for him, deposit PF for Rs 2,500 salary
2. An electrician has worked for 2 days. He comes for 2 days, works and goes. How is it possible to open an account for him with all documentation etc to deposit the amount.
3. Since that electrician will not come again, what happens to the PF in that account. To which account is it to be transferred ? The electrician is not again contactable.
4. By the time an account is opened, the person would have worked in 10 more places, which means that if all ten Employers strictly followed the law, there would be 10 more PF accounts of the person.
5. An electrician / plumber / carpenter normally works in over say 40 companies in a year. So are 40 PF accounts expected to be opened for him every year and how would these 40 accounts transfer money within each other.
6. With 40 accounts per year, the electrician will NEVER get his money. So while the Employer will deduct from his payment, he will be the looser since he will never get the money from 400 PF accounts opened in his name in 10 years.
If these questions are put to the PF Deptt and Secretary, Labour Ministry the epf deptt will be forced to bring out an unambigous rule regarding non deduction of pf to self contractors who come for a few days for repairs etc and are no way connected with the business (either office or factory) of the company.
Since every office needs electricians every year, finally it ends up as one method for EPF Inspectors to get greased. In the current scenario where the Govt has been very successful in reducing Income Tax harassement (& payment) by over 95%, if industry bodies take this matter up with the Govt, I am sure this matter will be solved once and for all times.
Either putting expense elsewhere or greasing is not a long term solution
Regards
Karthik
Bangalore
From India, Delhi
Some points
1. If someone employs a plumber or electrician for 3 days and pays Rs 2,500 for work done then if one has to deduct PF for him then one should open a PF account for him, deposit PF for Rs 2,500 salary
2. An electrician has worked for 2 days. He comes for 2 days, works and goes. How is it possible to open an account for him with all documentation etc to deposit the amount.
3. Since that electrician will not come again, what happens to the PF in that account. To which account is it to be transferred ? The electrician is not again contactable.
4. By the time an account is opened, the person would have worked in 10 more places, which means that if all ten Employers strictly followed the law, there would be 10 more PF accounts of the person.
5. An electrician / plumber / carpenter normally works in over say 40 companies in a year. So are 40 PF accounts expected to be opened for him every year and how would these 40 accounts transfer money within each other.
6. With 40 accounts per year, the electrician will NEVER get his money. So while the Employer will deduct from his payment, he will be the looser since he will never get the money from 400 PF accounts opened in his name in 10 years.
If these questions are put to the PF Deptt and Secretary, Labour Ministry the epf deptt will be forced to bring out an unambigous rule regarding non deduction of pf to self contractors who come for a few days for repairs etc and are no way connected with the business (either office or factory) of the company.
Since every office needs electricians every year, finally it ends up as one method for EPF Inspectors to get greased. In the current scenario where the Govt has been very successful in reducing Income Tax harassement (& payment) by over 95%, if industry bodies take this matter up with the Govt, I am sure this matter will be solved once and for all times.
Either putting expense elsewhere or greasing is not a long term solution
Regards
Karthik
Bangalore
From India, Delhi
It is worth reading the verdict by the Supreme Court of India in Regional PF Commissioner AP Vs T S Hariharan (1971 AIR 1519, 1971 SCR 305) wherein the Court observed that engagement of workers for work not related to the routine operations was not 'employment' and since they are engaged for a short period they would not be covered and the payment made to them would not attract PF contributions. Therefore, electricians and plumbers hired to do any electrical or plumbing work need not be covered. They will also fall under 'independent contractor' who are exempted from the coverage.
From India, Kannur
From India, Kannur
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