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CONTRACTORS REGISTERED WITH THE PF DEPARTMENT, HAVING INDEPENDENT CODE NUMBER ARE TO BE TREATED AS ‘INDEPENDENT EMPLOYER’

Other Topics - By: - Mr. M. GOVINDARAJAN - Dated:- 24-7-2015 Last Replied Date:- 2-8-2015 - In the present scenario it is inevitable for a business organization to get the work done by contractors. The Contractor Labor (Regulation and Abolition) Act, 1970 regulates the appointment of contract labor, payment of wages etc., The organization which engages contractors who in turn employed various persons to carry out the work is called the Principal Employer. The wages for that laborers shall be pay .....

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oyer is liable for the same. In this article the case laws which held that the contractor who obtains a separate PF code he will be treated as an independent employer and he is the person to comply with the provisions of PF Act. The Principal Employer will not be liable in such a situation, are discussed in detail. In The Madurai District Central Co-operative Bank Limited V. Employees Provident Fund Organization - 2011 (9) TMI 944 - Madras High Court the Madras High Court held that in case of a .....

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ependent employer . The petitioner therefore cannot be treated to be principal employer of those contractors. In M/s Brakes India Limited V. The Employees Provident Fund Organization, Vellore 2015 (7) TMI 786 - MADRAS HIGH COURT (Madras High Court - WP 391/2014 decided on 06.02.2015) the petitioner, in the course of its business, engaged various contractors to carry out non perennial work. The contractors employed various persons to carry out the work. The petitioner company is a Principal emplo .....

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any never employed the contractor continuously. The contract with the contractor came to an end in October 2004 and was not renewed thereafter. The said contractor applied for a separate PF code number under the Employees Provident Funds and Miscellaneous Provisions Act, 1952, and obtained code with retrospective coverage from 25.9.1995. The contractor had been deducting the employees share from December 2002 onwards and has been remitting it along with employer s share of contribution to the PF .....

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4 of the Act for prosecuting the contractor. The Department granted 15 days time to the contractor to pay the amount. If he defaulted the petitioner was directed to pay the amount. On 31.08.2004 the petitioner company received a letter from the Department directing the petitioner company to pay the dues within three days as against the period of 15 days mentioned in the letter dated 30.08.2004. The petitioner company informed the department that there was no dues payable by the petitioner compan .....

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oner to withhold any amount that may be payable to the contractor and pay over the same to the department. The Department vide letter dated 25.02.2005 informed the petitioner under Section 8A, that the petitioner would also be liable for payment of the amounts as damages and interest and non payment would amount to default and directed the petitioner to pay the amount immediately. The petitioner company challenged the impugned order. The High Court allowed the petitions and set aside the impugne .....

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he contractor. Again on 26.12.2013 the Department issued a levy order against the petitioner. The petitioner has challenged the said order in this writ petition. The Department contended the following: As per the definition of Section 2(f) of the Act, any person employed directly or through a contractor falls within the meaning of employee and both the Principal Employer and the Contractor are jointly and severally legally responsible for non compliance of the scheme provisions; An employee, eve .....

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responsibilities under the Act; It is the responsibility of the principal employer to pay both the contributions payable by himself in respect of the employees directly employed by him and also in respect of the employees employed by or through a contractor and also administrative charges; The proceedings under Section 7(A) is meant for assessment of dues payable in respect of workers. It is a quasi judicial enquiry and the officer, who is conducting such enquiry, is the sole authority to decide .....

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