Pf Bebefit For Temporary Worker

Dear All
I am working in a Steel Furniture Manufacturing Company, we employed some temporary workers for manufacturing purpose and their gross salary is around Rs.6000/- on an average.
As per the PF rules even temporary workers are also supposed to be covered under pf benefit. As because the attrition rate is very high, it is not conducive for us to bring all the employees under the scheme. Can any one please suggest me what could be the best alternative without violating the rules.
With best regards.
Debasish

Dear Debashish,

Trust this mail of mine finds you in the best of spirit.

Your posting reviles a very practical problem that we have to face in order to comply with the applicable statutory and enactments.

So fer the provision of Pf is concerned,high attrition can not be an acceptable excuse for non adhering to the said enactment tough i am totally agreeable with you in the pain the HR department faces in documentation part when the attrition problem is on the higher side.

My suggestions shall be :

I. Fix up the Basic salary to Rs.6600 (Basic + DA) and make all such workmen to sign Form 11 of EPF to avail the exemption from EPF contribution.For this,please make sure you pay 5% HRA on the basic salary extra and the collective amount shall be the gross pay.One more point is that make sure the gross salary so made becomes at per the nitified rate of Minimum wages applicable for your area and the schedue of employment the workers performs.Other statutory like ESIC,Bonus etc shall had to be paid as per the provisions of the respective acts.

OR

II. Engage such workmen through contractors on contract term wherein you shall make all inclusive payment of Salary as per the applicable MW for your state,cost of statutory contributions like EPF,ESIC,Bonus etc and it shall become the responsibility of the contractor to comply with all the applicable enactments on your behalf.Also,in this case keep a regular check up as the statutory is complied or not by the contractor.

In case you decide to opt for point I,still one problem that shall be lying with you is that for ESIC which is also a compulsory statutory point to be adhered to.Also there shall be other points that becomes tough to adhere completely when the attrition is on the higher side.

In case you opt to go for the second point.you may please avail the expertise of "Pyramids Staffing Solutions Pvt Ltd".We offer effective and cost optimized solutions in Contract Labour on pan india basis.

Please feel free to communicate with the undersigned at the mentioned number or you may write to us at [Login to view].

It is always desirable to bring the temporary workers into EPF and ESI cover. The suggestion that we may make the salary (basic+DA) just above Rs 6500 is not a practical solution because the EPF Organisation can at any time bring a higher salary limit for coverage. Since the discussions are on to make the salary ceiling to Rs 9000 or even more so that more employees could be brought under EPF net, you purpose will not be served if you make the salary Rs 6501 from the present gross of Rs 6000.

Similarly, by engaging such temporary employees through a contractor you (the principal employer) is not going to benefit much. Being the principal employer you have to ensure that employees engaged by the contractor are getting all statutory benefits like PF, ESI, minimum wages etc. This will in turn become your own cost or liability and in addition to this the contractor should also be paid a service charges. Besides this service tax will have to be paid. In your case the employees seems to be employed in regular work and engaging contract labour in work of regular nature in which a regular employee can be engaged is illegal as per Contract Labour (Regulation and Abolition) Act.

Besides all above, in my practical knowledge as an IR person, I have seen that contract labour often resort to strikes for press their demands and when they strike the principal employer is often brought in for negotiations or the principal employer would be forced to call for a negotiation with the contract workers. Finally the contract itself would become sham contract resulting in regularisation claim by the employees. Therefore, I will not advise you to bring the employees under a contractor.

Regards,

Madhu.T.K

Now a days minimum wage it self is more than rs 6500/- , it is better to fix salary consolidated of Rs 6600/- or more exempt from PF provisions and pay the other statutory provisions i.e ESI ,PT etc... because it less financial burden .