Employer's Liability under Provident Fund Act. - pf and esic

Godse Sopan Karbhari Started The Discussion:

To what extent the principal employer is liabile for contractor's when the contractor is having his own PF and ESIC Code.
Example: If the contractor is paying on his own code for his employees and the systems available with the Principle employer to check the same are also full proof and are adhered by the contractors. In the given situation the PF & ESIC authorities inspect the employers premises and sends a report stating that the contractor has failed to produce record or incomplete records. In such case what is the liability of the Principal Employer.

malikjs -  Member Since: Oct 2008
you are not liable for anything in this case.you have to ensure the contract workers those are working in your organisation their PF and ESI are deducted and deposited and you should have challan and returns for the same.
if contractor is not producing their balance sheet you are not responsible for that.
j s malik

irudayamarockiam -  Member Since: Feb 2009
DearMr.Godse Sopan Karbhari,
Under the EPF and ESIC Acts, the Principle Employer is liable for the compliance of the Immediate Employer /Contractor. It is good that the contractors are complying with the provisions of EPF and ESIC Acts under the respective Codes. But what is important is the proof of regular compliance by these contractors.

You may therefore cause to maintain a Register the wage component of the employees in your premises or in connection with your business activity working under the Contractors. In addition to the above, pl. also keep copes of the monthly challans submitted by the contractors to ESI & EPF and also the Half-yearly and annual Returns which bears the names of such employees. This procedure will facilitate you to face the ESI / EPF Inspections easily. Otherwise the Authorities have got powers to unilaterally make adhoc assessment of contributions and even penalty.

A.Irudayam, M.A., M.B.A., LL.B.
Advocate and HR Consultant


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