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Private security company not paying provident fund to its employee

Shivendra Pratap Singh

Advocate (Lucknow)

Online advising since Oct. 2014

Civil Law

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Question: The private security company is not paying provident fund to its employees. I am president of a welfare association of a housing society. My society has contracted with a private security company to provide trained security personnel. We need its services for the better security of our property. Currently, we are paying nine lakh rupees per month to it for the salary of security guards.

In the last general meeting, the manager of the security company raised this issue. He told us to please deduct the amount of provident fund from the company’s monthly payment. Hence, we talk to the company but it has denied any deduction. But we have decided to reduce or hold the payment to the company until it agrees to pay the provident fund to its employee. I want to know whether a welfare society can withhold the payment of a security company? Can society pay a monthly provident fund to the security guards? Please suggest.

Asked from: Maharashtra

Deduction in monthly payment

The welfare society cannot deduct any amount from the monthly payments of the security company without amending the contract. There is a contract between the private security company and the welfare housing society for providing security guards. 

The company receives monthly payment from the society for deployment of its trained security guards. That contract is binding upon both parties. No party can change the terms and conditions of the contract on its one motion. 

You should take consent of the private security company towards the reduction of monthly payment. If the company agrees then you have to replace the existing contract. According to Section 62 of the Contract Act if parties to a contract agree to alter the conditions they have to replace the current contract. Because parties are not bound to perform the original contract after the alteration. 

Society cannot pay provident fund to the security guards

Society is stranger to the contract between the security guards and the security company. Hence, it cannot directly pay the provident funds to the security guards. Security guards are employees of the company. The employer and employee relationship exists between them. Therefore, the company, in the capacity of employer, has to pay provident funds to the security guards. 

The society should refrain itself from the unnecessary dispute between the security guard and private security company. The company provides trained security personnel for the security of premises. It is doing a business of specialised and expert services. Therefore, it has the exclusive right to recruit and train a person as a security guard. All the security guards are working in the control of that company. 

You have no control over security guards and they are also not your employees. The provisions of Employees’ Provident Fund and Miscellaneous Provident Fund 1952 [EPF Act] apply to the private security company. That is bound to comply with the provisions of EPF Act. 

Hence, society should reject the complaints of security guards and not engage itself in unnecessary litigation. Society will breach the agreement if it deducts any amount from the company’s monthly payments. Society can do so only after substitution of a new contract. 

File a complaint before the Assistant Provident Fund Commissioner

The security guards should file a complaint before the Assistant Provident Fund Commissioner (APFC) against non-payment of provident funds. They should seek from the APFC to direct the company to open PF accounts to its employees. The APFC has power to recover the arrears of provident funds from the private security company. 

In your case, the APFC may send a notice to the company under Section 7A of the EPF Act. He can recover the dues under Section 7Q of the EPF Act. This is the proper course of action in your case. Moreover, the security guards are entitled to get benefits of provident funds. It is the responsibility of private security company to open provident funds of its security guards.

shivendra pratap singh advocate

Shivendra Pratap Singh

Advocate (Lucknow)

Consult on Criminal, Civil, Writ, Matrimonial, Service matters, Property, Revenue, SARFAESI related cases

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