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PF ESI Applicability to Contract employees

CRR RR (36 Points)

23 January 2025

Hello sir

A company is paying ESI and PF to regular workers who are working in a Plant

Is it require to deduct PF and ESI on Contract workers also

Please advise

Thanks

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Rama chary Rachakonda (Master in Accounts & Lawyer email ID:ramachary64@gmail.com voice no:9989324294) (6086 Points)
Replied 23 January 2025

In India, the Employees' Provident Fund (EPF) and Employees' State Insurance (ESI) laws mandate employers to provide social security benefits to their employees.

While these laws primarily cover regular workers, contract workers may also be eligible under certain conditions.

EPF (PF) Coverage for Contract Workers The EPF Act, 1952, applies to establishments with 20 or more employees.

Contract workers may be covered under the EPF scheme if:

1. _Contract workers are employed directly_: If contract workers are employed directly by the principal employer, they are eligible for EPF benefits.

2. _Contract workers are employed through a contractor_: If contract workers are employed through a contractor, the principal employer must ensure the contractor provides EPF benefits to the workers.

ESI Coverage for Contract Workers The ESI Act, 1948, applies to establishments with 10 or more employees.

Contract workers may be covered under the ESI scheme if:

1. _Contract workers are employed in the premises_: If contract workers are employed in the premises of the principal employer, they are eligible for ESI benefits.

2. _Contract workers are employed through a contractor_: If contract workers are employed through a contractor, the principal employer must ensure the contractor provides ESI benefits to the workers.

Key Considerations To determine whether PF and ESI need to be deducted for contract workers:

1. _Check the contract agreement_: Review the contract agreement to see if it specifies the contractor's responsibility for providing EPF and ESI benefits.

2. _Verify the contractor's compliance_: Ensure the contractor is registered under the EPF and ESI Acts and is providing benefits to the contract workers.

3. _Consult with the principal employer_: If you are the contractor, consult with the principal employer to clarify their expectations regarding EPF and ESI compliance.

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