Contract Labour

Dear Sir,

It is the responsibility of the Contractor to deduct the PF and submit a statement to the Principal Employer, in the prescribed format by 7th of every month. The Company becomes the Principal. Employer would be responsible for the PF deduction of the workers employed on contract basis.

Dear Sangram,

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..

Thanks,

Ashish  

 Primarily the contractor is liable to PF deductions and to submit it to the Principle Employer or if he is an individual contractor then to submit himsel directily to the PF Commissioner . In case of Non Deponsit matter situation is different as suggested by sri Ashish ji