We have recently started a canteen in a large nursing home on a contract basis. The nursing home is a PF-compliant organization, and they have stated that since we operate under them, we naturally fall under PF/ESIC laws even though the labor strength is only 6. We are okay with this, but our workers are not accepting the deduction. We are yet to complete the PF registration. My question is, should our principal employer (the nursing home) contribute to the PF of our employees? Also, does our principal employer have any responsibility or authority regarding what we pay our workers in terms of PF/ESIC? Kindly advise.
From India, Chennai
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From India, Chennai
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If you have only 6 persons employed, they can be enrolled under the Principal employer. In such cases, both the shares of ESI and PF will be deposited by the principal employer, and the amount so deposited will be recovered from you by deducting the amount payable to you.
Workers cannot say that they do not want ESI or PF, and you should educate them on the benefits of these schemes.
Madhu.T.K
From India, Kannur
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4768Workers cannot say that they do not want ESI or PF, and you should educate them on the benefits of these schemes.
Madhu.T.K
From India, Kannur
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Hello Jganesh,
PF/ESIC payment is to be finally ensured by the principal employer, and they have the right to enforce that the vendor pays it to their employees. It is always advisable that while determining the commercial rates, ESI/PF, and even minimum bonus, are factored into the salary cost. From your employees' point of view, if you have conveyed an 'X' amount as in-hand salary, then they would see any deduction from that amount as a breach of trust.
The nursing home cannot contribute directly to your employees' social security benefits. You have to possibly renegotiate the rates and get the additional quantum towards PF/ESIC. Alternatively, you have to make adjustments from your margins until such time the contract is renegotiated and revised.
Regards,
Rajesh
From India, Mumbai
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PF/ESIC payment is to be finally ensured by the principal employer, and they have the right to enforce that the vendor pays it to their employees. It is always advisable that while determining the commercial rates, ESI/PF, and even minimum bonus, are factored into the salary cost. From your employees' point of view, if you have conveyed an 'X' amount as in-hand salary, then they would see any deduction from that amount as a breach of trust.
The nursing home cannot contribute directly to your employees' social security benefits. You have to possibly renegotiate the rates and get the additional quantum towards PF/ESIC. Alternatively, you have to make adjustments from your margins until such time the contract is renegotiated and revised.
Regards,
Rajesh
From India, Mumbai
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Mr. Ganesh,
Please refer to the verdict of the Honorable High Court of Kerala on the case law Cominco Binani Zinc Ltd. vs Pappachan on 28 December 1988 to gain better insight into the Contract Labour (Regulation and Abolition) Act, 1970.
Link: http://www.indiankanoon.org/doc/1387153/
From India, undefined
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Please refer to the verdict of the Honorable High Court of Kerala on the case law Cominco Binani Zinc Ltd. vs Pappachan on 28 December 1988 to gain better insight into the Contract Labour (Regulation and Abolition) Act, 1970.
Link: http://www.indiankanoon.org/doc/1387153/
From India, undefined
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As per provisions under the Act, all contractual employees working for a covered establishment are also to be covered under the Act, and the Principal Employer is responsible for ensuring compliance regarding all such employees. It depends upon the agreement as to who will deposit the PF contributions, but if the contractor is not covered independently, the responsibility lies with the Principal Employer.
AK CHANDOK
RPFC (Retd.)
www.akchandok.com
From India, Chandigarh
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AK CHANDOK
RPFC (Retd.)
www.akchandok.com
From India, Chandigarh
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Principal employers have to ensure the implementation of applicable laws on employees engaged through contractors. If a principal employer is covered under PF & ESI, employees of the contractor shall also be covered under PF & ESI, irrespective of the strength of employees under the contract.
As your establishment is not registered under PF & ESI, in such a case, the principal employer shall allot PF & ESI numbers under their code to employees in the contract and ensure the payment of both contributions (Employees' and Employers') to the respective authorities. They will deduct both shares from your bill amount and pay.
You need to educate and convince your employees regarding the benefits of PF & ESI. The word "deduction" is negative in itself. The perception of deduction needs to be removed from the minds of employees; it should be seen as a "contribution." They should also be apprised of the fact that the employer is also contributing an equal amount, which is being deposited into their account and will be for their benefit only.
The principal employer has the right to know the amount you are paying to your employees so that they can ensure there is no violation of the Minimum Wages Act, 1948. As long as you are paying wages higher than the minimum wages prescribed by the State Govt, the principal employer should not have any concerns about it.
Hope I have covered your queries.
Thanks & Regards,
Lokender Kumar
Manager - HR
Minda Industries Ltd, Gurgaon
From India, Gurgaon
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As your establishment is not registered under PF & ESI, in such a case, the principal employer shall allot PF & ESI numbers under their code to employees in the contract and ensure the payment of both contributions (Employees' and Employers') to the respective authorities. They will deduct both shares from your bill amount and pay.
You need to educate and convince your employees regarding the benefits of PF & ESI. The word "deduction" is negative in itself. The perception of deduction needs to be removed from the minds of employees; it should be seen as a "contribution." They should also be apprised of the fact that the employer is also contributing an equal amount, which is being deposited into their account and will be for their benefit only.
The principal employer has the right to know the amount you are paying to your employees so that they can ensure there is no violation of the Minimum Wages Act, 1948. As long as you are paying wages higher than the minimum wages prescribed by the State Govt, the principal employer should not have any concerns about it.
Hope I have covered your queries.
Thanks & Regards,
Lokender Kumar
Manager - HR
Minda Industries Ltd, Gurgaon
From India, Gurgaon
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Hi,
Contractor's employees are also included in the definition of the PF Act. Hence, even though the contractor has only 6 employees (a minimum of 20 employees is required for PF Registration), they will still be eligible for PF Contribution. As the principal employer, he has to deduct the PF Contribution under his own code number because the responsibility lies with the principal employer.
From India, Mumbai
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Contractor's employees are also included in the definition of the PF Act. Hence, even though the contractor has only 6 employees (a minimum of 20 employees is required for PF Registration), they will still be eligible for PF Contribution. As the principal employer, he has to deduct the PF Contribution under his own code number because the responsibility lies with the principal employer.
From India, Mumbai
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Dear Friend,
As the principal employer is registered under PF & ESI, the employees engaged in the canteen by the contractor who work inside the establishment of the principal employer will be covered under the PF & ESI code of the principal employer because they are liable to make payment in the event the contractor fails to deposit statutory payments.
Since your organization is not covered under the aforesaid Acts, in such situations, both the shares of PF and ESI will be deposited by the principal employer under their code. The contributions so deposited by the principal on account of employees working in the canteen engaged by the contractor at the premises of the principal employer will be recovered from the bill/invoice to be submitted by the contractor for rendering such service.
You will face a lot of resistance, without a doubt, from employees for deduction of PF & ESI contributions, but you should convince them of the short and long-term benefits in terms of social security.
From India, Calcutta
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As the principal employer is registered under PF & ESI, the employees engaged in the canteen by the contractor who work inside the establishment of the principal employer will be covered under the PF & ESI code of the principal employer because they are liable to make payment in the event the contractor fails to deposit statutory payments.
Since your organization is not covered under the aforesaid Acts, in such situations, both the shares of PF and ESI will be deposited by the principal employer under their code. The contributions so deposited by the principal on account of employees working in the canteen engaged by the contractor at the premises of the principal employer will be recovered from the bill/invoice to be submitted by the contractor for rendering such service.
You will face a lot of resistance, without a doubt, from employees for deduction of PF & ESI contributions, but you should convince them of the short and long-term benefits in terms of social security.
From India, Calcutta
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Dear Ganesh,
Please clarify the following:
1) Are you a contractor providing only the labor and inputs for running the canteen, with the costs being met by the hospital?
2) Or is the canteen being run by you under your own name, covering all costs yourself? In this case, you have only rented the premises and are collecting the money from food bills for your own profit/loss.
3) What are the arrangements between you and the hospital for running the canteen? Is there any mention of how the labor will be treated?
Please take into account these comments based on the status of the arrangement with the hospital.
From India, Bangalore
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Please clarify the following:
1) Are you a contractor providing only the labor and inputs for running the canteen, with the costs being met by the hospital?
2) Or is the canteen being run by you under your own name, covering all costs yourself? In this case, you have only rented the premises and are collecting the money from food bills for your own profit/loss.
3) What are the arrangements between you and the hospital for running the canteen? Is there any mention of how the labor will be treated?
Please take into account these comments based on the status of the arrangement with the hospital.
From India, Bangalore
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In continuation of the discussion, I believe it is pertinent to reference a judgment delivered by the Supreme Court in the Air India case, which pertains to the operation of a canteen by a contractor. While this may not directly address the query, it could shed some light on the subject matter under discussion. The essence of the judgment is attached for your reference.
From India, Bangalore
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From India, Bangalore
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PF ESIC.xls