Contractor Not Helping In PF Withdrawal Of Labours Recruited From Him

Dear Seniors,

One of our contractors is not assisting us with the PF withdrawal for the laborers recruited from him. He has stopped responding to our calls. How can we facilitate the laborers' PF withdrawal without their intervention?

Please suggest.

Regards,
Saunee

Yes
it is a serious foolish activity committed by ur company contractor.
Solutions two..
1. You can complaint against the contractor to the company head. Usually if any contractor fails or done any mistake company will be responsible .….as....principal employer as per contract labour act 1970. He can sign and cooperate to release the pf amou
nts. Violation leads to labour court
2in recent amended p.f laws..of modi govt. No signatures of employer are necessary to draw workers p.f amounts.
Pls check p.f website feedback all ur doubts.. All the best..

Dear Saunee,

This is a common problem faced by small contractors. You have not mentioned whether the contract has ended, and if so, whether you have released all the payments. If any amount is due for payment, please apply pressure to first resolve the matter. Legally, you cannot stop a contractor's payment on such issues unless it is not provided for in the agreement.

However, as per the latest PF Office notification, if the contractor has a separate PF Code than the PE, the PE is not liable to be involved in PF-related issues. But as a labor welfare PE, on ethical grounds, we always delve deep to resolve all issues related to contract labor.

Please clarify the following points:
- Period of Contract
- Whether the contract has ended
- Full payment made to the contractor
- Whether you had previously asked the contractor to submit PF challans and ECR
- Whether you have any details related to UAN and PF numbers of contractual labor

Based on the above information, we can advise on how to overcome the situation.

Thank you, Mr. PAN Singh,

We had to terminate their contract when they did not provide enough support in resolving this issue. We have sent several letters and emails asking them to fulfill their responsibilities. As the issue started 5-6 months ago, we have kept their payment on hold. However, it seems that they don't bother about this now, as their MD has also switched off his phone. When we sent our people to their locations, we found out that they have closed the offices and did not share new location details. Even all the speed posts sent to them have come back to us undelivered.

I have spoken to the PF office in Kanpur regarding the same, and they have asked us to send the withdrawal forms along with an application explaining why we terminated the contract. We will be doing so. According to them, they will first call the contractor and ask him to attest the forms.

I hope the laborers get their money soon.

Could you please help by sharing the notification for PF where it is mentioned that if the contractor has a separate code, PE will not be responsible for PF? I need to know that in its entirety.

Thank you so much.

Saunee

Dear Saunee,

If the contract has not terminated yet, please don't release the payment. I hope the contractor is making labor payments.

You can deduct the PF contribution amounts from their bill along with some administrative charges. The PF of contractual labor can be deposited into the PE PF Code.

If the speed post is returned undelivered, I will advise you to send your queries, letters, reminders through email IDs of the respective person.

You can seek advice from a consultant to close the matter as soon as possible. Prolonging it will create more trouble for you because the matter can lead to more legal implications as well (outstanding payment to the contractor, other statutory payments to labor like EL, gratuity, etc.).

However, regarding the PF notification, I was a little confused. There was no notification issued by the EPFO, but there were some judgments by the honorable courts.

Please find attached one case law shared by Mr. H L Kumar (I downloaded it from Labour Law Reporter | A Practical Journal on Labour Laws & HR Management).

I hope this will fulfill your requirements.

Thank you, Mr. Pan Singh, for your help! We have not paid the contractor. Where wages were concerned, we have paid laborers directly and debited the contractor for the same. For PF withdrawal, we have assisted most of the employees in getting their withdrawals done. For the remaining few, we are trying to facilitate direct processing.

Regards,
Saunee

Dear Saunee,

Thank you for your appreciation. I hope the related case law will help you strengthen your case in front of your management. However, I tried to upload a Word format file, which I was unable to do, so I have shared the link instead.

Please note that paying wages directly to labor and reimbursing the amount to the contractor for an extended period is not advisable. If you encounter any issues, please consider changing the contractor promptly, providing the necessary notice period as per the agreement and mutual understanding. Your company must be registered with PF-ESI, and therefore, you are expected to offer those benefits to contractual labor as well.

If the contractor possesses a Labor License for your contract, you can also notify the Labor Office about this.

Currently, you are only disbursing wages without depositing PF-ESI for the laborers. In case the laborers are working in high-risk areas and an incident occurs, the entire liability will fall on you.

To prevent such a situation, please engage a new contractor who is registered with PF-ESI and complies with other regulations.

I need Tamil Nadu Engineering and Fabrication Industries minimum wages for the period 2016. This is an urgent requirement.

Dear Mr. Devan,

Please find attached copies of the TN Govt's Gazette notification on Minimum Wages for General Engineering and Fabrication and a circular from the TN Labour Commissioner on Dearness Allowance payable from April '16 for your reference. If you require additional details or documents, please feel free to contact us.

Regards,
N. Nataraajhan
Sakthi Management Services
Hp: +91 94835 17402
Email: naraj@sakthimanagement.com

Hi Saunee,

First, understand an important technical point.

The Principal Employer or even the contractor is not responsible or required to get the PF amounts withdrawn or released to the worker. That responsibility remains with the PF authorities to release the amount, provided the workers fill in the forms and submit the required supporting documents. The responsibility of the employer is limited to compliance with the PF scheme, which is to deduct the relevant amount from the wages/salary and deposit it along with the employer's contribution to the PF authorities.

You need to ensure that the contractor has paid the PF and filed the returns on time (and of course, filed them correctly). If you have not paid him his contract amount for some months, it is unlikely he would have done that or even paid wages for the remaining period. That would be a more important issue.

As regards the release of the PF, to prevent industrial relation issues, you can hire a consultant to help the workers fill in the forms and submit them to the authorities. Go to the PF portal, and you will see the procedure for the same given very clearly. The signature of the contractor is no longer critical to this matter.