If the contractor fails to comply with the provisions of the EPF Act, ESI Act, or the Minimum Wages Act, will the Principal employer be liable for a penalty for such non-compliance? Suppose the Principal employer is registered under the Contract Labour Act, will that provide any immunity to the Principal employer in such cases?
From India, Madras
118From India, Madras
Dear,
The law requires either one of them to comply, and on failure, the penal provisions are attracted.
With Regards,
Advocates & Notaries & Legal Consultants [HR]
E-mail: rajanassociates@eth.net
Mobile: 9025792684.
From India, Bangalore
The law requires either one of them to comply, and on failure, the penal provisions are attracted.
With Regards,
Advocates & Notaries & Legal Consultants [HR]
E-mail: rajanassociates@eth.net
Mobile: 9025792684.
From India, Bangalore
What is the status of liability of an employer if their staff is receiving a salary of Rs. 6,500 or above and wishes to enroll in contributory EPF? Do they also need to contribute their share, or can EPF only be carried by the staff? Kindly clarify, please.
From India, Delhi
From India, Delhi
It is the prime liability of the principal employer to ensure all labor laws compliances of all contractors deployed by him in his establishment. In case of any violation, the principal employer shall be responsible for this. It is a well-settled law.
ESIC & PF Act both cast responsibility to contribute the contribution of their core employees and contractual employees either hired directly or through contractors. Even if contractors do not have their own ESI and PF code, then the principal employer can deduct and deposit the contribution in his code.
From India, Delhi
ESIC & PF Act both cast responsibility to contribute the contribution of their core employees and contractual employees either hired directly or through contractors. Even if contractors do not have their own ESI and PF code, then the principal employer can deduct and deposit the contribution in his code.
From India, Delhi
Hi,
The employees who are drawing the Basic+DA up to Rs. 6500/- are eligible to become a member. They will continue to be a member even when their pay exceeds Rs. 6500/-. However, their contribution fund will be restricted to Rs. 6500/-. The employer is also required to pay their matching contribution up to Rs. 6500/-.
It is the principal employer's duty to check and assure that the contractor is depositing ESI/PF contributions or not. Otherwise, if there is a default in payment of dues, it is to be paid by the principal with damages and interest accordingly. Therefore, prepare the checkpoints for compliance under the ESI/PF Act and other labor laws.
Thank you.
From India, New Delhi
The employees who are drawing the Basic+DA up to Rs. 6500/- are eligible to become a member. They will continue to be a member even when their pay exceeds Rs. 6500/-. However, their contribution fund will be restricted to Rs. 6500/-. The employer is also required to pay their matching contribution up to Rs. 6500/-.
It is the principal employer's duty to check and assure that the contractor is depositing ESI/PF contributions or not. Otherwise, if there is a default in payment of dues, it is to be paid by the principal with damages and interest accordingly. Therefore, prepare the checkpoints for compliance under the ESI/PF Act and other labor laws.
Thank you.
From India, New Delhi
Dear Seniors,
I have a small doubt regarding PF. Our consultant says that if the basic is less than Rs. 6500, then the basic should be 60% of the net take-home as per the PF Act. Could anyone kindly inform me under what provision we need to comply with this?
With Warm Regards, R. Swaminathan
From India, Madras
I have a small doubt regarding PF. Our consultant says that if the basic is less than Rs. 6500, then the basic should be 60% of the net take-home as per the PF Act. Could anyone kindly inform me under what provision we need to comply with this?
With Warm Regards, R. Swaminathan
From India, Madras
Dear Mr. Swaminathan,
My opinion is totally different from your consultant's based on the grounds stated below.
In Section 6 of The Employees' Provident Fund and Miscellaneous Provisions Act, 1952, the contribution to the fund by the employer shall be based on the basic wages, dearness allowance, and retaining allowance. The law is silent on the relevance of the minimum wages act's basic amount and also does not specify that the basic should align with the minimum wages act, as the central act does not reference the state act. Conversely, the state act or rules may refer to the central act.
With Warm Regards,
Ashish K Sharma
Sr. Manager-IR/Admn
From India, Gurgaon
My opinion is totally different from your consultant's based on the grounds stated below.
In Section 6 of The Employees' Provident Fund and Miscellaneous Provisions Act, 1952, the contribution to the fund by the employer shall be based on the basic wages, dearness allowance, and retaining allowance. The law is silent on the relevance of the minimum wages act's basic amount and also does not specify that the basic should align with the minimum wages act, as the central act does not reference the state act. Conversely, the state act or rules may refer to the central act.
With Warm Regards,
Ashish K Sharma
Sr. Manager-IR/Admn
From India, Gurgaon
Dear Seniors,
I have a small doubt in PF. Our consultant says if the basic is less than Rs. 6500/-, then the basic should be 60% of the net take-home pay as per the PF Act. Could anyone kindly inform me under what proviso we need to comply with?
With Warm Regards,
R. Swaminathan
Dear Swaminathan,
I do agree with Ashish Sharma; the percentage doesn't make any difference when the EPF Act itself sheds light by virtue of Sec.2(b) on what constitutes basic wages and what does not include in basic pay. Please refer to the act and its provisions.
Suppose, as per the minimum wages, the basic pay is Rs. 3130 and in addition to that, dearness allowance is Rs. 1394, totaling Rs. 4526/-. By this analogy, a basic pay should be Rs. 2716/-, which is less than the basic specified under the M.W. Act. On the contrary, when D.A. goes up to Rs. 2500/-, then basic pay shall be Rs. 3378/-. So, this is not a criterion method at all.
Regards,
KIRAN KALE
From India, Kolhapur
I have a small doubt in PF. Our consultant says if the basic is less than Rs. 6500/-, then the basic should be 60% of the net take-home pay as per the PF Act. Could anyone kindly inform me under what proviso we need to comply with?
With Warm Regards,
R. Swaminathan
Dear Swaminathan,
I do agree with Ashish Sharma; the percentage doesn't make any difference when the EPF Act itself sheds light by virtue of Sec.2(b) on what constitutes basic wages and what does not include in basic pay. Please refer to the act and its provisions.
Suppose, as per the minimum wages, the basic pay is Rs. 3130 and in addition to that, dearness allowance is Rs. 1394, totaling Rs. 4526/-. By this analogy, a basic pay should be Rs. 2716/-, which is less than the basic specified under the M.W. Act. On the contrary, when D.A. goes up to Rs. 2500/-, then basic pay shall be Rs. 3378/-. So, this is not a criterion method at all.
Regards,
KIRAN KALE
From India, Kolhapur
Dear,
During reference in between Malwa Vanaspati v. R.P.F.C. (1976) 1 LLJ 307 (MP), the Honorable court decided that "The employer has been empowered by the provision (Sec. 8 A) to recover the amount from the contractor either from the moneys payable to the contractor or even as a debt. Therefore, an employer cannot raise any difficulty on the ground that he cannot realize the amount from the contractor and as he does not pay wages directly to the workers, he cannot deduct it from their wages either."
I think it is sufficient to realize that the principal employer is responsible for the unpaid contributions of workers of the contractor.
Regards,
KIRAN KALE
From India, Kolhapur
During reference in between Malwa Vanaspati v. R.P.F.C. (1976) 1 LLJ 307 (MP), the Honorable court decided that "The employer has been empowered by the provision (Sec. 8 A) to recover the amount from the contractor either from the moneys payable to the contractor or even as a debt. Therefore, an employer cannot raise any difficulty on the ground that he cannot realize the amount from the contractor and as he does not pay wages directly to the workers, he cannot deduct it from their wages either."
I think it is sufficient to realize that the principal employer is responsible for the unpaid contributions of workers of the contractor.
Regards,
KIRAN KALE
From India, Kolhapur
Dear Seniors,
Thank you for your input. I totally agree that the Central Act never refers to the Local Act. What my consultant says is that in order to reduce the employer contribution, most employers are resorting to splitting the salary component into a small portion for PF deductibles and a larger portion as non-PF deductibles. He mentions that only the PF office is implementing this 60% basis to avoid such actions.
For example, if a person's salary is ₹12,000, the PF deductible portion is ₹2,500, and the non-PF deductible amount is ₹9,500. Is this the correct way of presenting it?
Please suggest.
Regards,
Swaminathan
From India, Madras
Thank you for your input. I totally agree that the Central Act never refers to the Local Act. What my consultant says is that in order to reduce the employer contribution, most employers are resorting to splitting the salary component into a small portion for PF deductibles and a larger portion as non-PF deductibles. He mentions that only the PF office is implementing this 60% basis to avoid such actions.
For example, if a person's salary is ₹12,000, the PF deductible portion is ₹2,500, and the non-PF deductible amount is ₹9,500. Is this the correct way of presenting it?
Please suggest.
Regards,
Swaminathan
From India, Madras
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