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ESIC AND PF LIABILITY

DHRUV (student) (117 Points)

03 May 2023

Mr A(owner) has taken labor services from a company(contractor) under a fixed contract. A fixed amount is being paid to the contractor monthly. Now when it comes to the ESIC and PF liability of the labor, will the responsibility fall on Mr A or the contractor?

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CA Rakesh Ishi (Working at Private Company) (7775 Points)
Replied 04 May 2023

As per the Employees' State Insurance Act, 1948 (ESI Act), the employer is responsible for registering the employees and paying the ESIC contribution for them. In this case, the contractor is the employer of the laborers and is responsible for registering them and paying their ESIC contribution.

Similarly, as per the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (EPF Act), the employer is responsible for registering the employees and paying the Provident Fund (PF) contribution for them. In this case, the contractor is also responsible for registering the laborers and paying their PF contribution.

Therefore, it is the contractor's responsibility to ensure that the laborers are registered with ESIC and PF, and the contributions are paid on time. If the contractor fails to do so, Mr. A may be held liable for any non-compliance issues arising out of the contractor's negligence.