Dear Sir(s),
I am working for a Public Limited Company. We have engaged contractors for the supply of labor. When fixing the contract amount, we have considered minimum wages, employers' contributions to PF and ESI, WC premium, TDS, bonus, etc., for contract labor. We have Principal Employer registration, and the contractor has a Labor license, PF and ESI registrations, PAN, etc. The bills are paid by cheque. In spite of this, if the contractor, having received all statutory payments, defaults on the statutory payments like PF contributions, ESI, etc., what will be the responsibility of the Principal employer? We have proof of payment to the Contractor.
Kindly advise.
Regards,
CVR.
From India, Bellary
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I am working for a Public Limited Company. We have engaged contractors for the supply of labor. When fixing the contract amount, we have considered minimum wages, employers' contributions to PF and ESI, WC premium, TDS, bonus, etc., for contract labor. We have Principal Employer registration, and the contractor has a Labor license, PF and ESI registrations, PAN, etc. The bills are paid by cheque. In spite of this, if the contractor, having received all statutory payments, defaults on the statutory payments like PF contributions, ESI, etc., what will be the responsibility of the Principal employer? We have proof of payment to the Contractor.
Kindly advise.
Regards,
CVR.
From India, Bellary
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Dear CVR,
As the ultimate responsibility lies with the principal employer, you are required to provide proof of statutory remittances by your contractor. We have received notices to settle the outstanding dues for the defaulting contractors, amounting to 10 crores. Proof of payment to the contractor does not matter; you must furnish evidence of the statutory remittances for these contract employees. Before approving the contractors' bills, ensure you obtain copies of essential documents such as attendance records, wage registers, PF challan, PF ECR, ESI Challan, ESI contribution list, bonus register, and half-yearly returns submitted by the contractor.
The issue arises when some contractors complete their work within a year and cease operations. After a few years, we may still be held accountable by the authorities, making it difficult to track down these contractors.
It is advisable to secure the aforementioned documents to protect the company's interests. Feel free to contact us for further clarification.
Please let me know if you need any further assistance.
From India, Madurai
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16As the ultimate responsibility lies with the principal employer, you are required to provide proof of statutory remittances by your contractor. We have received notices to settle the outstanding dues for the defaulting contractors, amounting to 10 crores. Proof of payment to the contractor does not matter; you must furnish evidence of the statutory remittances for these contract employees. Before approving the contractors' bills, ensure you obtain copies of essential documents such as attendance records, wage registers, PF challan, PF ECR, ESI Challan, ESI contribution list, bonus register, and half-yearly returns submitted by the contractor.
The issue arises when some contractors complete their work within a year and cease operations. After a few years, we may still be held accountable by the authorities, making it difficult to track down these contractors.
It is advisable to secure the aforementioned documents to protect the company's interests. Feel free to contact us for further clarification.
Please let me know if you need any further assistance.
From India, Madurai
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Dear Mr. CVR,
Statutory compliance is a very vast subject matter in terms of various labor laws/Acts/Rules prevailing and practiced on a PAN India basis. It's very difficult to give a very logical & convincing reply to the queries raised by you.
However, if you really intend to protect the interest of your organization by being a law-abiding Company, we would appreciate your response to guide you in the best way towards core statutory compliances.
You may reach me at the mail cell number: +91 9004588487.
Anil Kumar
From India, Pune
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Statutory compliance is a very vast subject matter in terms of various labor laws/Acts/Rules prevailing and practiced on a PAN India basis. It's very difficult to give a very logical & convincing reply to the queries raised by you.
However, if you really intend to protect the interest of your organization by being a law-abiding Company, we would appreciate your response to guide you in the best way towards core statutory compliances.
You may reach me at the mail cell number: +91 9004588487.
Anil Kumar
From India, Pune
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Yes, the principal contractor is still liable.
I also agree with Mr. Madangopalswamy in that, before releasing each payment against the bill of the contractor concerned, retain say 30-40% (equivalent to statutory deductions and a bit more). Release such retention only when the contractor shows proof of correct deduction and payment (challans)/returns and other statutory compliances to your satisfaction in the future. For past transactions, seek legal help and see if the contractor's payment can be withheld even now.
A S Bhat
From India, Pune
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I also agree with Mr. Madangopalswamy in that, before releasing each payment against the bill of the contractor concerned, retain say 30-40% (equivalent to statutory deductions and a bit more). Release such retention only when the contractor shows proof of correct deduction and payment (challans)/returns and other statutory compliances to your satisfaction in the future. For past transactions, seek legal help and see if the contractor's payment can be withheld even now.
A S Bhat
From India, Pune
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Contract employee & Principal employer 2017.pdf
NOTE ON PRINCIPAL EMPLOYER TO ENGAGE CONTRACT LABOUR.pptx