A consumer-goods distribution warehouse in Tamil Nadu replaced its contractor seven months into the contract year, and we were the incoming contractor. The site held the outgoing contractor's last invoice until every settlement was evidenced, the crew moved across over one weekend on the PF and ESI numbers they already had, and the gaps the handover checks found were closed from the held bill rather than chased afterwards.
The situation
The warehouse ran two shifts, six days a week, with a contract crew of about 140 on the inbound dock, the pick faces and dispatch [VERIFY: composite figure]. The site had decided to change contractor after repeated late wage intimations, and its contract with the outgoing contractor allowed termination on thirty days' notice. The site's question was how to change the employer of 140 people without a gap in pay, contributions or records, and without inheriting the outgoing contractor's dues.
The law put those dues on the site. Section 55(3) of the OSH Code 2020 makes the principal employer pay wages a contractor fails to pay; section 31(1) of the Code on Social Security 2020 makes it pay ESI contributions for every employee engaged through a contractor; and section 17(1) lets it recover provident fund contributions it has to pay on a contractor's behalf. Each route recovers by deduction from amounts payable under the contract, which is why the outgoing contractor's last invoice was the site's only lever.
What the handover checks found
| Check | What it found | How it was closed |
|---|---|---|
| Last wage period | Paid on day six and the intimation sent to the site | Matched worker by worker against the gate register |
| Workers who left | Twelve leavers; leave wages for four not paid within two working days [VERIFY: composite figures] | Paid by the outgoing contractor once the site named the shortfall against the held bill |
| ESI for the last month | Contributions deducted from wages but not yet deposited [VERIFY: composite] | Deposited before release; the alternative was the site paying and deducting under s.31(1) and (6) |
| Register of employees | Not offered until asked for | Handed over before settlement, as s.31(7) requires |
| UANs | Six workers held a second UAN from an earlier employer [VERIFY: composite figure] | Merged on the worker's existing record; new member IDs linked to the older UAN |
What we did
- Opened before the first shift. Our licence and Labour Identification Number were with the site before the weekend, and the work order was reported on Shram Suvidha inside the fifteen days rule 94 of the OSH (Central) Rules 2026 allows.
- Moved every worker on their own numbers. Each worker's existing UAN and ESIC number were collected and checked before day one, so that no one started with a second record.
- Kept the rate. Every worker who moved across did so on the same or a higher rate, and on the conditions of direct employees doing similar work, as rule 93(2) requires [VERIFY: composite].
- Issued appointment letters on day one, with the wage period and pay date, and displayed the wage disbursement notice and sent a copy to the site, as rule 98(6) requires.
- Agreed the evidence pack with the site before the outgoing contractor's last invoice was due: last-period wage intimation, leavers' settlements, PF and ESI challans and the register of employees.
What changed
| Before the switch | After | |
|---|---|---|
| Final invoice | Payable thirty days after the last shift, whatever was outstanding | Held until a named evidence pack is complete |
| Wage intimation | Often after day seven | By day seven, checked against the gate register |
| PF and ESI | Challans asked for at audit | Challans in the monthly pack |
| Site paperwork | Registration listed the old contractor | Particulars updated within thirty days; both contractors listed for their months in the annual return |
The larger change was in the site's contract template. The exit clause now names the evidence the outgoing contractor must produce before its last invoice is paid, so the next switch, with us or anyone else, starts with the hold already agreed rather than negotiated under notice.
How Velura Services helps
We run contractor changeovers as a planned hand-over: the outgoing contractor's dues reconciled, UAN and ESIC numbers carried across, and the crew moved without a gap in cover. Your team gets a checklist and a closing evidence pack, so the final bill can be released safely.
Sources
- Figures are a representative composite drawn from our own deployments; no single client is described. Founder to confirm or replace before publish.
- Occupational Safety, Health and Working Conditions Code, 2020 (Act 37 of 2020), Gazette text hosted by DGFASLI — s.3(4) (change in registration particulars), s.32(1)(vi) (leave wages within two working days of leaving), s.55(3) (principal employer liable for unpaid wages). Opened and read.
- The Code on Social Security, 2020 (Act 36 of 2020), Gazette text hosted by the Ministry of Labour and Employment — s.17(1) (PF recovery from contractor), s.31(1), (6) and (7) (ESI paid by the employer; recovery; register of employees before settlement). Opened and read.
- Occupational Safety, Health and Working Conditions (Central) Rules, 2026, G.S.R. 345(E) dated 8 May 2026 — r.93(2) (same conditions as direct employees), r.94 (work-order intimation within fifteen days), r.98(6) (wage disbursement notice). Opened and read from a mirrored copy of the Gazette [VERIFY: against the e-Gazette original].
- Industrial Relations Code, 2020 (Act 35 of 2020), Gazette of India Extraordinary, 29 September 2020 — s.2(zh) and s.70 (retrenchment and its conditions). Opened and read.