Hi,
During one of the training programmes on Contract labour, their coverage under different labour enactments, I was surprised, when one of the participants stated that some of the contractors maintain a separate list of persons for coverage under the EPF Act. This list contains names which are entirely different than those who are actually working in the company. These persons are generally the family members of the contractor and his other kith and kin.
The contractor deducts the provident fund contribution from the actual employees but the same is credited along with the matching contribution of the contractor, in the different accounts. This way the contractor, manages to keep the provident fund within the family and the benefeciaries get the amount without making any contribution.
I was surprised to hear this and thought I will share it with others, just in case they have heard of such a malpractice.
This calls for a thorough scrutiny of the records and checking it with those who are actually deployed on work.
I will be happy to receive your comments on this
Cyril
From India, Nagpur
25During one of the training programmes on Contract labour, their coverage under different labour enactments, I was surprised, when one of the participants stated that some of the contractors maintain a separate list of persons for coverage under the EPF Act. This list contains names which are entirely different than those who are actually working in the company. These persons are generally the family members of the contractor and his other kith and kin.
The contractor deducts the provident fund contribution from the actual employees but the same is credited along with the matching contribution of the contractor, in the different accounts. This way the contractor, manages to keep the provident fund within the family and the benefeciaries get the amount without making any contribution.
I was surprised to hear this and thought I will share it with others, just in case they have heard of such a malpractice.
This calls for a thorough scrutiny of the records and checking it with those who are actually deployed on work.
I will be happy to receive your comments on this
Cyril
From India, Nagpur
Hi Cyril,
These things are happening in every organization where there are more no. of Contract employees.
Only way to Cut on this is getting the Muster roll right, annual statements of individual contribution & Accumilation from PF office to every employee, form 3A, certain precautions while withdrawal such as acccount No., Crossed cheque etc...
when such things surface it is better to change the vendor / contactor. as a diciplinary measure...
Rgds
Deepak. M :D
From India, Mumbai
These things are happening in every organization where there are more no. of Contract employees.
Only way to Cut on this is getting the Muster roll right, annual statements of individual contribution & Accumilation from PF office to every employee, form 3A, certain precautions while withdrawal such as acccount No., Crossed cheque etc...
when such things surface it is better to change the vendor / contactor. as a diciplinary measure...
Rgds
Deepak. M :D
From India, Mumbai
Hi Deepak,
Thanks for your response. When I heard this, initially, I didnt believe such things can happen. I was not directly involved in the implementation of the Act, and hence did not come across any such cases. Now a check list has been made to deal with such cases. The contractors workers have to personally appear before the Management's nominee and the information submitted to EPF is cross checked. The reasons for such cases coming up are lack of supervision, ignorance of workers, and even connivance of management with the contractor.
The HR people dealing with contract labour have to be more vigilant.
Cyril
From India, Nagpur
Thanks for your response. When I heard this, initially, I didnt believe such things can happen. I was not directly involved in the implementation of the Act, and hence did not come across any such cases. Now a check list has been made to deal with such cases. The contractors workers have to personally appear before the Management's nominee and the information submitted to EPF is cross checked. The reasons for such cases coming up are lack of supervision, ignorance of workers, and even connivance of management with the contractor.
The HR people dealing with contract labour have to be more vigilant.
Cyril
From India, Nagpur
Dear Balaji,
It is very sad that low paid contractor workers lose the benefit to which they are legally entitled. I am thinking of writing to the EPF Trust in Delhi, flagging this problem. I think under the Right to information Act a lot of material on this subject can be collected.
It is time this problem gets addressed with all seriousness.
Thanks for your response.
Cyril
From India, Nagpur
It is very sad that low paid contractor workers lose the benefit to which they are legally entitled. I am thinking of writing to the EPF Trust in Delhi, flagging this problem. I think under the Right to information Act a lot of material on this subject can be collected.
It is time this problem gets addressed with all seriousness.
Thanks for your response.
Cyril
From India, Nagpur
Cyril,
am a compliance manager for a renowned US retail chain.
let me share how this comes into being: A contractor has been hired who doesnt fulfll basic norms of being a contractor. he doesn't even have a ration card/ PAN number. this person is hired to get/ maintain workers in the factory and may be paid a small sum of Rs 5 per worker per day as commision. it is his duty to get more workers if some of them leave.
now the question comes why do workers leave so often. well if there are no benefits eg PF/ ESI & majority of workers work on piece rate then you have a right to move ahead.
Most exporters believe in cutting corners and labour benefits is a major area.
also when you a hire a contractor wherein the number of workers is small say 2-5 people in lean times and 20-30 in peak time eg "Kaj Button" then how would you get a registartion for the contractor done for the very first time.
at that point, his family members are shhown on roll and this is a common practise.
Cyril, learn to relax, dont be hasty in pushing any labour reforms in your company as the production/ finishing managers and even owners may not be happy.
all they want is work done @ lowest cost.
suryavrat
From India, Delhi
am a compliance manager for a renowned US retail chain.
let me share how this comes into being: A contractor has been hired who doesnt fulfll basic norms of being a contractor. he doesn't even have a ration card/ PAN number. this person is hired to get/ maintain workers in the factory and may be paid a small sum of Rs 5 per worker per day as commision. it is his duty to get more workers if some of them leave.
now the question comes why do workers leave so often. well if there are no benefits eg PF/ ESI & majority of workers work on piece rate then you have a right to move ahead.
Most exporters believe in cutting corners and labour benefits is a major area.
also when you a hire a contractor wherein the number of workers is small say 2-5 people in lean times and 20-30 in peak time eg "Kaj Button" then how would you get a registartion for the contractor done for the very first time.
at that point, his family members are shhown on roll and this is a common practise.
Cyril, learn to relax, dont be hasty in pushing any labour reforms in your company as the production/ finishing managers and even owners may not be happy.
all they want is work done @ lowest cost.
suryavrat
From India, Delhi
Suryavrat,
Thank you for your advise. I am aware of the practical problems and difficulties in regard to implementation of various Acts. However, we are all expected to be productive and effective, by implementing the laws and not by adopting fraudulent practices such as the one under discussion.
If we develop our experise in the negative way, surely one day, we will put our Principal employer under great risk. Once the principal employer is in trouble, I am sure he will put the whole blame on his advisors and that will have more serious implications.
I am not advocating any reforms. I am only concerned about the faithful implementation of the legislations.
All the same thanks for your advise and views in the matter.
Cyril
From India, Nagpur
Thank you for your advise. I am aware of the practical problems and difficulties in regard to implementation of various Acts. However, we are all expected to be productive and effective, by implementing the laws and not by adopting fraudulent practices such as the one under discussion.
If we develop our experise in the negative way, surely one day, we will put our Principal employer under great risk. Once the principal employer is in trouble, I am sure he will put the whole blame on his advisors and that will have more serious implications.
I am not advocating any reforms. I am only concerned about the faithful implementation of the legislations.
All the same thanks for your advise and views in the matter.
Cyril
From India, Nagpur
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Provident fund.zip
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Coverage-nonimp areas_457.pdf