Type:Preventive Compliance Frequency: Monthly

Action to be taken:
Ensure that all contributions and administrative charges for all schemes under the PF Act is paid for all employees employed through a contractor. These dues may be recovered from the contractor.
(EPF Scheme Para 30, EDLIS Scheme Para 8 , Pension Scheme Para 4)

Audit Requirement:
Are PF dues of employees hired through a contractor being paid into the fund by the employer on time ?

Supporting Documents:
Written Confirmation of Compliance

Related Triggers:
Deduction or Fine From Wages
Employment Of Contract Labour
Payment of Wages

Related Keywords:
Contract Labour
Contractors
Provident Fund
Remuneration/Wages/Compensation

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Related Sections:
Employees Provident Fund and Miscellaneous Provisions Act, 1952
8-A:Recovery of moneys by employers and contractors:
(1) The amount of contribution (that is to say the employer's contribution as well as the employee's contribution in pursuance of any Scheme and the employer's contribution in pursuance of the Insurance Scheme) and any charges for meeting the cost of administering the Fund paid or payable by an employer in respect of an employee employed by or through a contractor may be recovered by such employer from the contractor, either by deduction from any amount payable to the contractor under any contract or as a debt payable by the contractor.
(2) A contractor from whom the amounts mentioned in sub-section (1) may be recovered in respect of any employee employed by or through him, may recover from such employee the employee's contribution under any Scheme by deduction from the basic wages, dearness allowance and retaining allowance (if any), payable to such employee.
(3) Notwithstanding any contract to the contrary, no contractor shall been titled to deduct the employer's contribution or the charges referred to in sub-section (1) from the basis wages, dearness allowance, and retaining allowance (if any), payable to an employee employed by or through him or otherwise to recover such contribution or charges from such employee.
Explanation.- In this section, the expression, "dearness allowance", and "retaining allowance" shall have the same meaning as in Section 6. Employees Deposit Linked Insurance Scheme, 1976
8:Mode of payment of contribution:
(1) The contribution by the employer shall be remitted by him together with administrative charges at such rate as the Central Government may fix from time to time under sub-section (4) of Section 6-C of the Act, to the Insurance Fund within fifteen days of the close of every month by a separate bank draft or cheque or by remittance in case in such manner as may be specified in this behalf by the Commissioner. The cost of remittance, if any, shall be borne by the employer.

(2) It shall be the responsibility of the employer to pay the contribution 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.

(3) The Central Government shall credit its contribution to the Insurance Fund as soon as possible after the close of every financial year.

(4) The Commissioner shall deposit the bank draft or cheque received from the employers in the State Bank of India or any Bank specified in the First Schedule to the Banking Companies (Acquisition and Transfer of Undertaking ) Act, 1970 (5 of 1970). Employees Deposit Linked Insurance Scheme, 1976
8-A:Recovery of damages for default in payment of any contribution:
(1) Where an employer makes default in the payment of any contribution to the Insurance Fund, or in the payment of any charges payable under any other provisions of the act or of the Scheme, the Central Provident Fund Commissioner or such officer as may be authorised by the Central Government, by notification in the Official Gazette, in this behalf, may recover from the employer by way of penalty, damages at the rates given below:-

Period of Default - Rate of damages (Percentages of arrears per annum)
________________________________________________________
(a) Less than two months - Five

(b) Two months and above but less than four months - Ten

(c) Four months and above but less than six months - Fifteen

(d) Six months and above - Twenty five
________________________________________________________

2) The damages shall be calculated to the nearest rupees, 50 paise or more to be counted as the next higher rupee and fraction of a rupees less than 50 paise to be ignored. Employees Pension Scheme, 1995
4:Payment of contribution:
(1) The employer shall pay the contribution payable to the Employees Pension Fund in respect of each member of the Employees Pension Fund employed by him directly or by or through a contractor.
(2) It shall be the responsibility of the principal employer to pay the contributions payable to the Employees Pension Fund by himself in respect of the employees directly employed by him and also in respect of the employees employed by or through a contractor.
Provided that the Central Government shall pay the contribution payable to the Employees Pension Fund in respect of an employee who is a person with disability under the Persons with Disabilities(Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (1 of 1996) and under the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1994 (44 of 1999) respectively, up to a maximum period of three years from the date of commencement of membership of the Fund.
Employees Provident Fund Scheme, 1952
Chapter:Contributions| 30:Payment of contribution:
(1) The employer shall, in the first instance, pay both the contribution payable by himself (in this Scheme referred to as the employer's contribution) and, also on behalf of the member employed by him directly or by or through a contractor, the contribution payable by such member (in the Scheme referred to as the member's contribution).

(2) In respect of employees employed by or through a contractor, the contractor shall recover the contribution payable by such employee (in the Scheme referred to as the member's contribution ) and shall pay to the principal employer the amount of member's contribution so deducted together with an equal amount of contribution (in the Scheme referred to as the employer's contribution) and also administrative charges.

(3) It shall be the responsibility of the principal employer to pay both the contribution 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 .
Explanation.-For the purposes of this paragraph the expression "administrative charges" means such percentage of the pay (basic wages, dearness allowances, retaining allowance, if any, and cash value of food concessions admissible thereon) for the time being payable to the employees other than an excluded employee and in respect of which provident fund contributions are payable as the Central Government may, in consultation with the Central Board and having regard to the resources of the Fund for meeting its normal administrative expenses fix.
Employees Provident Fund Scheme, 1952
Chapter:Declaration, Contribution Cards and Returns| 38:Mode of payment of contributions:
(1) The employer shall, before paying the member his wages in respect of any period or part of period for which contribution are payable, deduct the employees contribution from his wages which together with his own contribution as well as an administrative charge of such percentage of the pay (basic wages, dearness allowance, retaining allowance, if any, and cash value of food concessions admissible thereon) for the time being payable to the employees other than an excluded employee and in respect of which provident fund contribution are payable, as the Central Government may fix, he shall within fifteen days of the close of every month pay the same to the Fund by separate bank drafts or cheques on account of contributions and administrative charge :

Provided that if the payment is made by a cheque, it should be drawn only on the local bank of the place in which deposits are, made:

Provided further that where there is no branch of the Reserve Bank or the State Bank of India at the station where the factory or other establishment is situated, the employer shall pay to the Fund the amount mentioned above by means of Reserve Bank of India Governmental drafts at par separately on account of contributions and administrative charge.

(2) The employer shall forward to the Commissioner within twenty-five days of close of the month, a monthly abstract in such form as the Commissioner may specify showing the aggregate amount of recoveries made from the wages of all the members and the aggregate amount contributed by the employer in respect of all such members for the month :

Provided that an employer shall send a Nil return, if no such recoveries have been made from the employees:

Provided further that in the case of any such employee who has become a member of the Pension fund under the Employees Pension Scheme, 1995, the aforesaid Form shall also contain such particulars as are necessary to comply with the requirements of that scheme.

(3) The employer shall send to the Commissioner within one month of the close of the period of currency, a consolidated Annual Contribution Statement in Form 6-A,showing the total amount of recoveries made during the period of currency from the wages of each member and the total amount contributed by the employer in respect of each such member for the said period. The employer shall maintain on his record duplicate copies of the aforesaid monthly abstract and consolidated annual contribution statement for production at the time of inspection by the Inspector.

Provided that the employer shall send to the Commissioner returns or details as required under sub paragraphs
(2) and (3) above, in electronic format also, in such form and manner as may be specified by the Commissioner.