Comprehensive Guide to PF & ESIC Compliance for Temporary Staff and Contract Labor

hipant
Dear Colleagues,

Is it necessary to deduct the PF & ESIC of the temp staff? For example, we have some laborers at our warehouse, and monthly we are paying them Rs 4000/- (as per the minimum wages act) and overtime charges. Is it necessary to deduct their PF & ESIC from their salary in Delhi?

Regards,
Himanshu
siddhesh1995
Dear PL, go through it.

Siddhesh

CONTRACT LABOUR

(REGULATION & ABOLITION) ACT, 1970

OBJECT

• To regulate employment of contract labour
• To provide for its abolition in certain cases

CONTRACT LABOR

(REGULATION & ABOLITION) ACT, 1970

Applicability - Sec 1

• Every Establishment in which 20 or more workmen are employed or were employed on any day of the preceding 12 months as contract labour.
• To every contractor who employs or who employed on any day of the preceding 12 months 20 or more workmen.
• Does not apply to Establishments where work only of an intermittent or casual nature is performed.
&bull; <120 days in preceding 12 months or if it is of a seasonal character i.e. < 60 days in a year.

CONTRACT LABOUR

(REGULATION & ABOLITION) ACT, 1970

Establishment

Means &ndash;

&bull; Any office or department of the Government or a local authority; or
&bull; Any place where any industry, trade, business, manufacture, or occupation is carried on.

CONTRACT LABOR

(REGULATION & ABOLITION) ACT, 1970

Registration of Establishment - Sec 7

&bull; Principal employer employing 20 or more workmen through the contractor.
&bull; Rule 17 Form I
&bull; Certificate of Registration in Form II
&bull; Change in particulars of Regn to be notified within 15 days with reasons for change.
&bull; Incomplete form &ndash; amendment to be carried within 15 days from receipt of intimation.

CONTRACT LABOUR

(REGULATION & ABOLITION) ACT, 1970

LICENSING OF CONTRACTORS

&bull; No contractors to undertake or execute work through CL except under and in accordance with a license issued under the Act.
&bull; Form IV &ndash; Rules 21 to 23
&bull; Certificate from Principal employer-Form V
&bull; Conditions &ndash; hours of work, wages, and other essential amenities.

CONTRACT LABOR

(REGULATION & ABOLITION) ACT, 1970

Terms and conditions of license

&bull; License shall be in Form VI
&bull; Non-transferable
&bull; Contract labour should not exceed, on any day, the maximum specified in the license.
&bull; Wages, hours of work, and other conditions of service.
&bull; Notify any change in the number of workmen or conditions of service.

CONTRACT LABOUR

(REGULATION & ABOLITION) ACT, 1970

Terms and conditions of license

&bull; Number of employees not to exceed the maximum specified in the license.
&bull; Wages and conditions of service as per Rule 25 IV and V.
&bull; Room for use of children under six years where 20 or more women are ordinarily employed.
&bull; Intimation in Form VI-A the date of commencement and completion of each contract within 7 days of commencement and completion.

CONTRACT LABOUR

(REGULATION & ABOLITION) ACT, 1970

Validity of license

&bull; Every license shall remain in force up to 31st December of the year for which the license is granted or renewed.
&bull; Application for renewal to be made in Form VII not less than 60 days before expiry.
&bull; Deemed to have been renewed until the date when renewal is granted or refused.

CONTRACT LABOUR (REGULATION & ABOLITION) ACT, 1970

Liability of Principal Employer - Sec &ndash; 20

&bull; If the contractor does not provide amenities under S 16 to 19 within the time prescribed, such amenities shall be provided by the principal employer.
&bull; Expenses incurred by the principal employer in providing these amenities may be recovered from the contractor by deductions or as a debt payable.

CONTRACT LABOUR (REGULATION & ABOLITION) ACT, 1970

Liability of Principal Employer - Sec &ndash; 20

&bull; Where the contractor fails to pay wages within the time prescribed or makes short payment, then the principal employer to pay wages in full or unpaid balance due.
&bull; Principal employer can recover the amount from the contractor by deductions or as a debt payable.

CONTRACT LABOUR

(REGULATION & ABOLITION) ACT, 1970

Welfare and health measures

&bull; S.16 r/w Rule 40
&bull; Where 100 or more CL are employed.
&bull; Work likely to continue for 6 months.
&bull; Contractor shall provide a canteen within 60 days.

CONTRACT LABOUR

(REGULATION & ABOLITION) ACT, 1970

Canteen

&bull; Where PE has a canteen u/s 46 of Factories Act, arrangements made with PE by the Contractor will be considered as due compliance.
&bull; Where the contractor fails to provide a canteen, the PE shall provide within 60 days of the expiry of the time provided to the contractor.

CONTRACT LABOUR

(REGULATION & ABOLITION) ACT, 1970

Rest Rooms S.17

&bull; Rule 39
&bull; Where CL is required to halt at night.
&bull; Work to continue for 3 months or more
&bull; Contractor to provide and maintain rest rooms within 30 days.
&bull; As specified by Commissioner of Labour.
&bull; Sufficiently lighted and ventilated and maintained in a clean and comfortable condition.

CONTRACT LABOUR

(REGULATION & ABOLITION) ACT, 1970

Rest Rooms

&bull; Where PE is required to provide rest rooms under the Factories Act, any arrangements made by Contractor with PE for the use of rest rooms by CL will be due compliance.
&bull; If Contractor fails, the PE to provide such an amenity within 30 days of the expiry of the period laid down in the Rule.

CONTRACT LABOUR

(REGULATION & ABOLITION) ACT, 1970

Latrines and Urinals

&bull; Contractor shall provide &ndash;
&bull; In every establishment coming within the scope of the Act
&bull; 1 latrine for every 20 persons up to the first 100 and 1 for every 30 thereafter.
&bull; Partitioned to secure privacy.
&bull; Proper identification &ndash; Men &ndash; Women

CONTRACT LABOUR

(REGULATION & ABOLITION) ACT, 1970

Latrines and Urinals

&bull; 1 urinal for male workers up to 50
&bull; 1 urinal for female workers up to 50
&bull; Adequately lighted and maintained in good sanitary condition at all times.
&bull; Comply with requirements of public health authorities.

CONTRACT LABOUR

(REGULATION & ABOLITION) ACT, 1970

Latrines and Urinals

&bull; Where PE under Factories Act has provided latrines and urinals arrangements by contractor with PE for the use of the same by his workmen shall due compliance.
&bull; If the contractor fails to provide within 60 days, the PE to comply within 30 days of the expiry of 60 days given to the contractor.

CONTRACT LABOUR

(REGULATION & ABOLITION) ACT, 1970

Washing Facilities

&bull; S. 18 r/w Rule 42
&bull; Contractor to provide &ndash;
&bull; Adequate and suitable facilities for washing
&bull; Adequate number of buckets and tumblers or mugs and water supply @ 20 liters a day for each workman employed.
&bull; Within 30 days &ndash; on failure by PE within 60 days from the expiry of 30 days.

CONTRACT LABOUR

(REGULATION & ABOLITION) ACT, 1970

First Aid Facilities

&bull; S. 19 r/w Rule 44
&bull; Not less than 1 box for every 150-contract labor or part thereof.
&bull; Different provisions for contents for establishments employing <50 and > 50.
&bull; Nothing except the prescribed contents shall be kept in the First Aid Box.

CONTRACT LABOUR

(REGULATION & ABOLITION) ACT, 1970

First Aid Facilities

&bull; Box to be kept in charge of a responsible person.
&bull; Who shall be readily available during working hours.
&bull; Where the No of CL is 150 or more the person in charge shall be a trained person in First Aid treatment.

CONTRACT LABOUR

(REGULATION & ABOLITION) ACT, 1970

Wages S.21 Rule 45-54 Ch VI

&bull; Rules 45 to 51 will not apply where Payment of Wages or Minimum Wages Act applies.
&bull; Contractor to fix the wage period.
&bull; Not to exceed one month.
&bull; To be paid within 3 days from the end of the wage period where the wage period is 1 week or a fortnight.
&bull; In other cases before 7th or 10th day depending on No of workers (1000).

CONTRACT LABOUR

(REGULATION & ABOLITION) ACT, 1970

Wages

&bull; In case of termination earned wages to be paid before the expiry of the day succeeding the one on which employment is terminated.
&bull; Payment of wages to be made on a working day, at the work site, and during working hours.
&bull; Where work is completed before the wage period, payment to be made within 48 hours of the last working day.

CONTRACT LABOUR

(REGULATION & ABOLITION) ACT, 1970

Wages

&bull; To be paid directly to the worker or to another person authorized by him in this behalf.
&bull; Wages to be paid in coin or currency or both.
&bull; To be paid without any deductions except those permissible under the Payment of Wages Act.

Notice showing the wage period, place, and time of disbursement shall be displayed at the place of work and a copy to be sent to PE under acknowledgment.

CONTRACT LABOUR

(REGULATION & ABOLITION) ACT, 1970

Wages

&bull; Duty of the contractor to disburse wages in the presence of the authorized representative of the Principal Employer.
&bull; PE to nominate a rep to be present at the time of disbursement of wages by the contractor.
&bull; Rep shall certify the amounts pd as wages.

CONTRACT
swetasawant
Dear,

It is mandatory to become a member of the PF & ESI scheme for an employee from the 1st day of his joining, irrespective of whether he is a permanent, temporary, contract, or fixed-term employee.

Non-deduction of PF will make your organization pay a huge penalty, and if deducted but not paid, it will be a criminal offense. Kindly ensure that we do not allow non-compliance under the PF & Miscellaneous Provisions Act 1962.

Bosses may resist paying PF & ESI for temporary staff. However, it is the responsibility of the HR department to help them understand the future complications and consequences.

Regards,

Abhijeet Sawant
S. Krishnamoorthy
There is no concept of permanent, regular, temporary, or casual employees as far as ESIC is concerned. Only trainees under the standing orders of the company are excluded. Even these trainees will be brought into the ESIC net as soon as the bill to amend the ESIC Act, which is pending in Parliament, is passed during the winter session of the parliament.

S. Krishnamoorthy
ramnathmsw1976
Dear Mr. Himanshu,

Well explained by Krishnamoorthy & Abhijeet, and detailed explanation by Mr. Siddhesh regarding contract labor. Please clarify regarding the creche to be provided as you have mentioned 20 women employees, whereas it is actually 30 women employees.

Himanshu, the activity you are performing is against the rules. For that, you or your employer may be held for prosecution. Please discuss this matter with your boss and rectify it. I think the trainees are also applicable for ESI, PF, and other statutory benefits, but apprentices are not covered.

Regards,
Ramnath
sandeepgkulkarni
Dear Himanshu,

Please clarify whether those employees are on your payroll or on a contractor's payroll. In both cases, they are entitled to the benefits of ESIC and PF.

1) If they are on the payroll of your company, then you have to deduct the PF & ESIC amounts and deposit them into the respective accounts under your codes.

2) If they are on a contractor's payroll, then you cannot deduct the PF and ESIC amounts. Instead, instruct the contractor to deduct them and ensure that they are paid into the respective accounts under their code.

Regards,
Sandeep Kulkarni
K.Veeramani
Dear Mr. Himanshu,

The temp staff should be paid PF & ESI as per the acts given below:

(a) In accordance with The Employees' Provident Funds and Miscellaneous Provisions Act, 1952, Section 6, the contribution which shall be paid by the employer to the Fund shall be 12% of the basic wages, dearness allowance, and retaining allowance (if any) for the time being payable to each of the employees (whether employed by him directly or through a contractor), and the employee&rsquo;s contribution shall be equal to the contribution payable by the employer in respect of him and may be 12% of his basic wages, dearness allowance, and retaining allowance (if any), subject to the condition that the employer shall not be under an obligation to pay any contribution over and above his contribution payable under this section.

(b) In accordance with Employee's State Insurance (Central) Rules, 1950, Chapter VI, Section 51, the amount of contribution for a wage period shall be in respect of (a) employer's contribution, a sum (rounded to the next higher multiple of five paise) equal to 4.75% of the wages payable to an employee; and (b) employee's contribution, a sum (rounded to the next higher multiple of five paise) equal to 1.75% of the wages payable to an employee.

If the salary is more than Rs. 6500, then PF is not compulsory, and if the salary is more than Rs. 10000, then ESI is not required.

Hope the details will be useful to you.

Thanks,
K. Veeramani
B. RAVI MURUGAN
Dear Hipant,

Nowadays, the authorities are insisting on us to pay PF/ESIC for the painters and construction workers who have worked for 2 days. So, it is essential for you to ensure PF contributions for your temporary employees, i.e., casual employees.
krmrao
Hi all,

Any monetary payments made towards the services rendered by any person in an industry that is covered by ESIC & EPF Acts, even for an HR, the said payment attracts the deduction of EPF and ESIC contributions. This is what the Act states.

Mohan Rao
Manager HR
ashwaini2005@gmail.com
Dear Ramnath,

Temporary employees come under ESIC & PF if they help in the profit of the organization. Please update your knowledge about trainees and apprentices; both are not covered under the ESIC & PF.

Regards,
Ashwini Kumar
abhishek_mehta123
Hello,

Deduct the PF & ESIC of the temporary staff according to the rules in Gujarat. The company states that your job is permanent, but after 6 months, only ESIC should be deducted. You will work as a temporary staff for 6 months, and after that period, your ESIC will be deducted. Is this correct or incorrect?

My salary is 12000 per month. I also inquired with the company staff, and they mentioned that for salaries of 4000 and 9000, the same staff does not have ESIC & PF deductions.

Please provide the rules for PF & ESIC for both temporary and permanent staff.

Thank you.
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