Monday, October 12, 2009

Contract Labour

QUESTION------ who will be responsible for remitance of PF of contract labour?

ANSWER---------As per Section 2 (f) of the Employees Provident Funds and Misc. Provisions Act, an employee is defiend as any person employed in any kind of work, and who gets its wages direcly or indirectly from the employer, and includes any person employeed by or through a Contractor, in or in connection with the work of the establishment.

Therefore taking the literal meaning of the section, the Prinicpal employer can also be held responsible for payment of PF contribution.

But there are also ceratin safeguards for the Pricipal Employer.

The liability only arises, when the Contractor, defaults in making the PF contribution. In such a case, it would be always advisable to take a seperate PF Code for the Contractors, and deposit the Contribution in there. All amounts so deposited can be recovered from the contractor, as per the provisions of Section 8 of the Act.

I would secondly suggest that you have a inbuilt clause in the Contractor Agreement, which directs the Contractor to comply with the provisions of all Labour Laws, including minimum wages act, and further an indemnity clause, wherein the contractor should indemnify the Company, against all claims and damages, arising out of non compliances of any labour Laws, and should reimburse all costs and expenses arising out of the same..

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