The Hindu : New Delhi News : Outsourcing units cannot be clubbed under EPF Act: Court

Online edition of India's National Newspaper
Sunday, Oct 29, 2006
ePaper

New Delhi

New Delhi

Outsourcing units cannot be clubbed under EPF Act: Court

`Interdependence could not be a ground for clubbing'

NEW DELHI: The Delhi High Court has ruled that outsourcing units cannot be clubbed with each other or the company outsourcing work to them, for the purpose of taking the benefit of Employees Provident Fund (EPF).

Holding that interdependence between them could not be a ground for clubbing under the EPF Act, Justice S N Dhingra said, ``two independent establishments cannot be clubbed together to show a unity of functions only because they are inter-dependent on each other at a particular time''.

Taking into account that outsourcing was one of the mode of doing business where several ancillary units would be exclusively doing work for big companies, the court said such small units perform independent business for big automobiles companies and Engineering companies.

Business entities

``These ancillary units (outsourcing units) are independent business entities despite the fact that they are dependent on automobile company or engineering firm. These units cannot be clubbed with each other or with main company for purpose of EPF Act on the ground of interdependence,'' the court said.

While outlining the condition, in which the two companies could be clubbed together for getting benefits under the EPF Act, the Bench said this could be done under the circumstance when an establishment was bifurcated to deprive the workmen of the benefits of labour law.

``Where two establishments are in fact one, but they have been artificially bifurcated only to deprive the workmen of the benefits of labour laws, then only the two establishments can be clubbed together and their joint employees strength can be counted for purpose of Section 7A of the Act.'' -PTI

Printer friendly page
Send this article to Friends by E-Mail

New Delhi