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Partha Pratim (Asst. Manager)     19 May 2015

What the need of contractor?

we knows that a contractor should pay 10% for the PF & Esi for the labour working under him. again also the pricipal employer should have to pay 10% for those labours under that contractor for the PF and ESI too. my question is that why an outscourching agency(principal employer) cann't use the labours directly without a contractor. is their any guidelines?


 3 Replies

bsrao   20 May 2015

You can use the services of the labour directly by employing them. There is no law that prescribes to use any contractor for such work. 


Companies use contractors to avoid several complexities related to direct labour.

darshana sawant (associate consultant)     20 May 2015

Dear Mr Partho,


If you have appointed a contractor in ancillary activities, then he is responsible for the payment of ESI and PF, you dont have to pay all over again for the employees employed by him.

Usually contractors are appointed in support services for availing floating manpower.


arulprasath (HR & Legal)     20 May 2015



If appointing any contract employees more than 20 need to be get the certificate of registration by the principal employer and cotractor has to be obtained labour license. The contractor liablity is deducted EPF, ESI and same will be contribut respectively, if failing which principal employer liablity to comply these statutory obligations.


EPF - 12 % from employee and 12 % from employer and other admin charges applicable.

ESI - 1.75% from employee and 4.75 % employer (upto 15000)


As per the CLRA, sec 10 refers no contract labour engaged in perennial nature of work.

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