Contract Labour Mgmt

8/13/2019 Contract Labour Mgmt

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(A)

Contract Labour (Regulation &

Abolition) Act, 1970

The main objective of this act is to regulate

the contract labour and abolish it in certain

cases.


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Applicability

Every industry engaging 20 or more workers

on contract basis.

Every contractor engaging 20 or more

workers.


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Obtaining registration & license

Apply in form I for registration in triplicate copyalong with prescribed fees ( Rs.142/- ).

Apply in form IV for license in triplicate copy alongwith license & security fees ( Rs.370/- per workerGenerally in all cases- Refundable) .

For license form V is given by Principal employerto contractor.


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Provisions for temporary registration &

license

For work of immediate nature Principal

employer/ Contractor can apply for temporary

registration/ license which is valid up to 15

days only.


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Obligation of Principal employer

Register of contractors Form XII

Annual return Form XXV (onor before 15thFeb-

consolidated return)

Notice of Commencement/ Form VI B

Completion


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Obligation of Contractor

Renewal of license Form VII

Register of workman Form XIII

Employment Card Form XIV Service Certificate Form XV

Muster Roll Form XVI

Wages register Form XVII Wage slip Form XIX


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Contd

Deduction for damage/loss Form XX

Register of fines Form XXI

Register of advances Form XXII

Register of over-time Form XXIII

Half yearly return Form XXIV

Notice of Commencement Form VI A/Completion


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Welfare Facilities

Canteen Section 16

Rest rooms Section 17

Urinals, LatrinesDrinking Facilities Section 18

First Aid Facilities Section 19

Principal employer will have to providethese facilities if not provided bycontractor.

In annual return these facilities needs to be
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Applicability of other Act

Persons cover under this act will be coveredunder:

I) Factory Act, 1948

II) Employees Provident Fund &Miscellaneous Provisions Act, 1952

III) Employees State Insurance Act, 1948 /Workmen Compensation Act, 1923


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Contd.

IV) Payment of Bonus Act, 1965

V) Minimum Wages Act, 1948

VI) Payment of Wages Act, 1936


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SAP SystemWork order is released by concerned deptt.

in the SAP system

Commercial deptt.release

Work order in system

Concerned deptt. Create the indent

Indent is created for Labour

Supply .

Personnel deptt. marks the entry in

SAP on the basis of their counting.

Overtime of the labour is marked

by the concerned deptt.


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Payment of Wages

Bills of the contractor of Labour Supply ispassed on the basis of the entry in SAP.

Payment to the contract labour is disbursed in

Contractor Yard. Payment to the contract labour is disbursed

before the management representative

Representative stamps the register & signs onit.


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Registers which are maintained

Gate Pass register

Attendance Register of Contract Labour Daily entry of the contractor report

Register having no. of contract Labour


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(B)

The Employee's Provident Fund

Act, 1952

Nothing but Social Security to

Employees


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The Employees Provident Fund Act 1952

The Employees Provident Funds Act 1952

Employer role & responsibility

Employee role & responsibility

The Employees Pension Scheme 1995

The Employees Deposit-Linked Insurance

Scheme (EDLI) 1976

List of Forms


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Introduction

Salary consists of two parts i.e. earnings & deductions

Provident Fund is one of the statutory deduction done by

the employer at the time of salary payment

Provident Fund is governed by the EmployeesProvident

Fund Act 1952


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.Statutory Contribution Rate

TOTAL PF25.61%

EMPLOYER12.5%

A/C 1 3.67% A/C 10 8.33%

A/C 21 0.5%

EMPLOYEE12%

ADM CHARG1.11%

A/C 21 .01%

A/C 1 1.1%


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Account Number

Account Number Contribution Type Contribution Rate

1 Employees PF 12% + 3.67%

2 EPF Admin Charges 1.1%

10 Employees Pension Scheme 8.33% ( Maximum 6500/-)

21 Employees Deposit Linked

Insurance Scheme

0.50% ( Maximum 6500/-)

22 EDLI Admin Charges 0.01%

TOTAL.. 25.61%


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Employer Role & Responsibility

Monthly Returns

Filing monthly PF returns with the EPFO within 15 days of the close

of each month

Provide list of new employees joined in the establishment during the

preceding month & are qualified to become member in fund (Form-5)

Provide list of employees leaving service during the preceding

month (Form-10)

Employer should file 'Nil' returns if there is no new employee or no

employee leaving the service during the preceding month Provide the total no. of members last month, new members joined

and existing members resigned in the preceding month & total no. of

present subscribers to be fund (Form-12A)


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Compliances.

Annual Returns

Employer shall send to the Commissioner within

one month of the close of the year, a

consolidated Annual Contribution Statement(Form-6A) and individual employee sheet

(Form-3A) showing the contributions made by

the employees and employer during the year (

PF Year is March to Feb)


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Employee Role & Responsibility

Provide details of self & nominees (Form-2) for PF &

Pension Scheme at the time of joining the

establishment

In case of already having PF A/c, apply for transfer of

previous A/c to the present A/c

If willing to increase contribution, inform the same to

the employer to deduct the amount from the salary

(Voluntary Provident Fund).

Voluntary PF can be upto 100% of wages

Understand that the employer is not liable to pay any

contribution on voluntary PF


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Employees Pension Scheme 1995

Introduction

To give long term protection / financial security to employee upon retirement

and his family in case of his pre-mature death, family pension scheme has

come into force by diverting 8.33% contribution made by employer towards

PF scheme

Application

Scheme is compulsory for all the existing members who become members

of the Employees Provident Fund Scheme

Eligible Monthly pension to employees on retirement

Widows on death of the member

Children of the member below 25 years age

Monthly pension to members upon permanent total disablement during

service


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The Employees Deposit-Linked Insurance Scheme 1976

(EDLI)

Application

EDLI scheme is compulsory for all the existing members who

become members of the PF Scheme

Life insurance benefit (death coverage) of the employee is available

under this scheme while in service

Calculation

EDLI is calculated on EDLI slabRs. 6500/-

0.50% EDLI calculated on total EDLI slab (Rs. 6500) wages and

transferred to EDLI fund

0.01% EDLI Administration charges calculated on total EDLI wages

EDLI / administration charges are payable by the employer


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The Employees Deposit-Linked Insurance Scheme 1976

(EDLI)

Eligible

Person who is eligible to receive PF dues of

deceased member who died while in service is only

eligible to receive EDLI fund

Exemption

Employer can seek exemption from the Scheme if

similar / better benefits are provided other than theScheme with the consent of majority of employees

List of Forms


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List of Forms

Forms For Claiming Benefits Under PF Scheme

25

Form Purpose

13

(revised)

For transferring the PF A/c of a member from one establishment

to another establishment covered under the Act / Scheme

14 Application for financing a life insurance policy out of PF A/c

19To be submitted by a member to withdraw his PF dues on leaving

service / retirement / termination

20In the event of death of member, this form is to be used by anominee / family member to claim the member's PF

accumulation

31For the use of PF members to avail advances / withdrawals as

provided in the scheme

List of Forms


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List of Forms

Forms For Claiming Benefits Under Pension Scheme

26

Form Purpose

10 C To be submitted by a member to withdraw his EPS fund

10 D

To be submitted by the first claimant i.e.

- member

- widow / widower

- Orphan

- nominee

List of Forms


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List of Forms

Forms For Claiming Benefits Under EDLI Scheme

27

Form Purpose

5 (I.F.)To be submitted by the person eligible to receive the PF A/c

dues of the deceased member who died while in services


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Summary

28

Form Purpose

2 Nomination Form

5Return of Employees qualifying for membership to the Employees' Provident Fund for

the first time during every month. Within 15 Days of the following month.

10 Return of members leaving service during the month.

12AConsolidated Statement of dues and remittance By 25th of the following month to which the

dues relate.

3A Member's annual Contribution card

6A Consolidated annual contribution statement


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Month wise Statutory Deposits & Returns

29

January

Before 15thP.F., P.F. Challan

Before 25thP.F Form 5, 10 & 12A(P.F)

Monthly statutory register daily/end of the month

(Monthly statutory register should be maintained)

February

Same as January month

March

Before 15thP.F., P.F. Challan

Before 25

th

P.F Form 5, 10 & 12A(P.F)P.F, P.F. Annual Returns form 6A & 3A


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Accounting of PF Contribution

Suppose total gross salary payable for the month of January

2010 is Rs. 3,00,000

Out of above, basic salary which is eligible for Provident Fund

contribution is Rs. 2,00,000

Hence, the Employee Provident Fund contribution will be

calculated @12% of basic salary i.e. Rs. 24,000.00

Net salary payable to Employee is Rs. 3,00,000Rs.24,000 =

Rs. 2,76,000.00

The entry for above transaction will be made accordingly


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Employees PF share Entry

Staff salary Expenses Dr. Rs. 3,00,000

(This is the cost which the company has to bear )

Staff Salary payable Account Cr.2,76,000

Employees PF payable Cr. 24,000

(it is your liability to pay to govt.)


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Employers Share of Contri

Now, make one another entry for employers contributions for

the above salary

An employer is also required to pay a sum @12% from the

basic salary before the same is disbursed to employee. Apart

of this, Employer is also require to pay @1.61% (of basic pay)additional amount as per below

@1.10% towards PF administration fees

@0.50% towards Employees Deposit linked insurance scheme

@0.1% towards EDLI administration charges


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Journal Entry

Dr. Employer PF Contribution Rs.24,000

Dr. PF administration Fees Rs. 2200

Dr. Employee EDLI Rs. 1,000

Cr. Employers PF payable Rs. 27,200

Now total PF payable will be Rs. 24,000+ Rs.

27,200 =Rs, 51,200 which you should pay toPF department through its challan


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(C )

Employees State Insurance Corporation

Employees - Benefits

Under ESI Scheme, the comprehensive and need basedpackage of Social Security Benefits in Cash and kind

include the following:

1) Medical Benefit

2) Sickness Benefit

3) Maternity Benefit 4) Disablement Benefit

5) Dependent Benefit

6) Funeral Benefit ( Upto Rs.10000/-)

ESIC R t


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ESIC Rates

TOTAL ESIC 6.50%

EMPLOYER 4.75% EMPLOYEE 1.75%


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Employers - Obligations (ESIC)

Get ESIC code with In 15 days from the date on which

establishment is covered under ESIC ( 15000)

Obtain Insurance Number for Employee

Pay ESI contributions (Employers' share @ 4.75% of the

wages and the employees' share @ 1.75% of the wages)

within 21 days of the month following, in which the wages

fall due.

Maintain an 'Accident Book' as prescribed under the

Factory Act/ESI Act

Submit Accident Report within 24 hrs from the date of

event

Furnish annual information on continued coveragae of

factory/establishment by submitting a return in Form no.

01A on or before 31st January every year


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Employers - Record Maintanance

Register of Employees in Form -6 (under Regulation 32)

Accident Book in Form - 11 (under Regulation 66)

Inspection Book (under Regulation 102A)

File for copies of return of declaration forms File for copies of Return of Contribution, Challans, etc.

File for general correspondence with the Regional Office

regarding coverage, inspection etc. and other important

circulars. File for copies of Accident Reports and correspondence in

connection herewith.


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ESIC Accounting Heads..


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ESIC Accounting Heads..


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MINIMUM WAGES ACT,1948

Section 4 of the Act mentions that Minimum wages are based on basic

wages and cost of living index. The yardsticks on which minimum wage is

revised are:

(a) Three consumption units per earner, (b) Minimum food requirement of

2700 calories per average Indian adult, ( c ) Cloth requirement of 72 yards

per annum per family, (d) Rent corresponding to the minimum area

provided under the Government's Industrial Housing Scheme (e) Fuel,

lighting and other miscellaneous items of expenditure to constitute 20 %

of the total Minimum Wages (f) Children education, medical requirement,

minimum recreation including festivals/ceremonies and provision for old

age, marriage etc. should further constitute 25% of the total MinimumWage.


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MINIMUM WAGES ACT,1948

Minimum Wages rates in Gujarat at

present.Annexure 1

Kerala State Govt. has declared Minimum

Wages for CA office also .. Annexure 2
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The Maternity Benefit Act, 1961

Applicability to every factory or establishment in which 10 or more

persons are or were employed on any day of the preceding twelve

months.

Eligibility for Maternity Benefit: Has to work for 80 days in the preceding

12 months immediately preceding the date of her expected delivery.

Eligible for 12 weeks maternity benefit of which not more than six

weeks shall precede the date of her expected delivery.

Maternity benefit is paid at the rate of the average daily wage for the

period of her actual absence. The average daily wage means the average

of the womans wages payable to her for the days on which she has

worked during the period of three calendar months immediately

preceding the date from which she absents herself.


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The Maternity Benefit Act, 1961

Where a woman has delivered a child and dies during her delivery or

during the period immediately following the date of her delivery for

which she is entitled for the maternity benefit, leaving behind in either

case the child, the employer shall be liable for the maternity benefit for

that entire period but if the child also dies during the said period, then

for the days upto and including the date of the death of the Child.

6 weeks leave with wages for tubectomy and two weks immediately

following the day of an tubectomy.

Nursing breaksTwo times in the course of daily work till the child

attains 15 months.

Prohibition from dismissal for absence during pregnancy. However, for

Misconducts, forfeiting of Maternity Benefit and Medical bonus

permissible.


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PROFESSIONAL TAX..

Employer carrying out any business/Profession

No limit on No. of Employees (Even employer

employing only 1 employee then also he is liable)

Due date of payment is 15thof Next Month forEmployees share

Due date of payment for Employers share is 30th

September ( For F.Y.2011-12 due date was30/09/2011)

Salary Register ,Salary Slip, Appointment Letter to

be maintained


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Rates on which PT is deductible:-

Sr.No. Salary Slab PT Rate

1 0-2999 Nil

2 3000-5999 20

3 6000-8999 80

4 9000-11999 150

5 12000 & Above 200


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Employers Share of PT

Sr.No. Type of Person Rate (Rs.)

1 Registered under VAT & T.O. < 250000 0

2 Registered under VAT & T.O. > 250000 < 500000 500

3 Registered under VAT & T.O. > 500000 < 1000000 1250

4 Registered under VAT & T.O. > 1000000 2400

5 All other Professionals/Businessman 2000


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Annual Return under Labour Acts

The Payment of Wages Act, 1936 and Gujarat Payment of Wages rules 1963

(ii) The Minimum Wages Act, 1948 and Gujarat rule 21(4) 1961, there

under

(iii) The Contract Labour (Regulation and Abolition) Act, 1970 and Gujarat

rules 82 (1), 82 (2), 1972 there under

(iv) The Factories Act, 1948 and Gujarat Factories Rules 1963 (GFR) (v) The Maternity Benefit Act 1961 and Gujarat Maternity Benefit Rules

1964.

(vi) The Payment of Bonus Act, 1965 and Rule 5 there under

(vii) The Payment of Gratuity Act, 1972 and Gujarat rules, 1973 there under

(viii) The Equal Remuneration Act, 1976 and Gujarat rules, 1976 there under (ix) The Industrial Employment (Standing Orders) Act, 1946 and Gujarat

rules there under 1982

(x) The Physically Handicapped persons (Employment in Factories)

Act,1982 and Gujarat Physically Handicapped Persons (Employment in

Factories) Rules, 1982.

(xi) The Indian Boilers Act, 1923.


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Annual Return under Labour Acts

Due date 31stJanuary for Yearly Return

For Half yearly returns it is 31stJuly & 31st

January.

Consolidated return is required to be filed. (

Annexure 3)

January to December Calendar Year

-:SUMMARY OF REGSITERS & RECORDS TO BE MAINTAINED:-
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:SUMMARY OF REGSITERS & RECORDS TO BE MAINTAINED:

Sr.No

.

Act Documents to be maintained

1 Factories Act a. Accident Register with Forms

b. Inspection Book

c. Muster Roll & Wage Register

d. Muster Roll for Exempted workers

e. Register of Adult Workers

f. Register of Compensatory holidays & Overtime

g. Register of Leaves with wages

2 EPF & MP Act, 1952 a. Register of Contribution

b. Inspection book

3 ESI Act a. Accident Register

b. Register of Contribution

c. Inspection Book

4 Payment of Wages Act,1936 a. Register of Fines, Deduction & Advances

5 Minimum Wages Act,1948 a. Wage Slip

6 Payment of bonus Act,1965 a. Register A,B & C

7 Equal Remuneration Act,1976 a. Register in Form D

8 Contract Labour (R&A) Act,1970 a. Register in Form 13


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Accountants Role

Maintain Records in good condition ( As there is no provision for how

many years books should be maintained)

Adhere to Statutory Due dates ( As missing payment due dates will

lead to penalty/interest on unpaid amount & will lead to chances of

disallowance under Income Tax Provisions) Provide data to consultant well before time

Reconcile statutory deductions employee wise & total monthly salary

wise.

Get salary records audited from PF/ESIC Department once every five

years

If company has its own PF trust then get trust accounts audited with

Chartered Accountant & submit it to PF department( Rotation of CA

with every 3 years)


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Accountants Role

Dos if company employing Labour Contractor:-

a. Work Order should be issued to the Contractor (

Before issuing work order copy of all statutory

licenses like PF/ESIC should be kept on record)

b. Take Copy of Labour License before start working

with contract labour


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Accountants Role

c. Ensure Attendance register & Salary Register with

salary slip of Contract labourer available with the

company (Minimum wages to be paid )

d. Take copies of PF/ESIC paid challans from

Contractor & preserve them for future

departmental Audit ( As a principle employer if

contractor does not pay then company will be

liable)e. Maintain Labour License Expiry register of all

contractor working in the company to avoid legal

obligations on organization


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Accountants Role

Dos Before Finalization of Accounts at periodic interval:-

a) Salary as per Financial Statement = salary as per PF/ESIC

records

b) Match all statutory payments made with financial

records

c) Ensure Year end outstanding payment is matching with

contribution paid in April

d) Ensure proper deduction of TDS of employees.


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..THANK YOU..