Why is one manpower quote much cheaper than others?

Usually because a statutory cost is missing or calculated on too small a wage. In this composite case, the lowest quote had no bonus or gratuity provision and ran PF on basic pay rather than Code wages, together about 19% of wages. Ask every bidder for a line-by-line build-up before comparing totals.

Does the principal employer pay if the contractor under-quotes statutory costs?

Often, yes. Under the EPF Scheme 2026 the principal employer stays responsible for PF contributions, and under the Code on Wages it pays the minimum bonus if the contractor defaults and workers give written notice. A quote that leaves these out defers the cost to the site. How much can be recovered from the contractor is a question for the site's counsel.

What should a manpower quote template include?

Code wages, then each statutory head on its own line: employer PF with admin and EDLI charges, employer ESI, the minimum bonus provision, gratuity provision and the Labour Welfare Fund contribution. The contractor's service charge goes on a separate line, and GST on the invoice. A fixed template makes quotes comparable and becomes the basis for the monthly check.

When the cheapest quote left costs out

A mid-sized plastics components manufacturer in Tamil Nadu needed about 120 contract workers for a new line and asked three contractors, including us, to quote. The lowest quote was about 15% below the other two. When the site asked every bidder for a line-by-line build-up, the gap turned out to be costs left out, not savings: no bonus or gratuity provision, and PF on basic pay instead of Code wages.

The situation

The quotes arrived as a single all-in monthly rate per worker. Procurement compared the three numbers and the lowest was the obvious pick. Before awarding, the plant's HR head asked a question the process had not asked before: what does each rate contain?

~120contract workers needed for the new line [VERIFY: composite figure]

3contractors asked to quote [VERIFY: composite figure]

~85the lowest quote, indexed to the highest at 100 [VERIFY: composite figure]

~19%of wages missing from the lowest build-up [VERIFY: composite figure]

We show quotes here as an index rather than in rupees. The actual rates depend on the wage, the shift pattern and the engagement, and a published rate would be the wrong number for almost every reader.

What the build-up showed

The site asked all three bidders to break the rate into the statutory heads plus the service charge. Two build-ups had every head. The lowest was missing three:

Head	Two complete quotes	Lowest quote	Roughly, as a share of wages
PF, employer	12% of Code wages	12% of basic only, about half of Code wages	~6% short
Statutory bonus	Minimum 8.33% provided monthly	Not provided	~8.3% short
Gratuity provision	15/26 of a month's wage per year, provided monthly	Not provided	~4.8% short
ESI, Labour Welfare Fund, service charge	Present	Present	Comparable

Together the three gaps came to about 19% of wages. On a build-up of roughly 129% of wages, that is almost exactly the 15% gap between the quotes [VERIFY: composite arithmetic]. The lowest quote was not leaner; it simply left those costs out.

Why the site would have paid the difference

None of the three missing costs goes away because a quote leaves it out. Each falls back on the site. The principal employer stays responsible for PF contributions (EPF Scheme 2026, para 20(4)), and PF is due on Code wages, with allowances above half of pay added back (Code on Wages s.2(y); Code on Social Security s.2(88)). The minimum bonus of 8.33% is owed whether or not the employer makes a profit (Code on Wages s.26(1)), and the site pays it if the contractor defaults and the workers give written notice. Gratuity builds up with service (Code on Social Security s.53), so a contractor that never provided for it may be unable to pay it when it falls due.

So the lowest quote was a deferral, not a saving. Over a year, the PF shortfall alone would have become arrears with interest and damages. The bonus would have fallen due at the year's end with no money set aside for it. How much of that the site could have recovered from the contractor afterwards was a question for its own counsel.

What changed

The site made the build-up part of its process. Every manpower quote now comes on a fixed template: Code wages, each statutory head as a separate line, and the service charge on its own line. Given the template, the lowest bidder resubmitted at close to the other two [VERIFY: composite outcome]. The contract was awarded on a like-for-like comparison, and the same template now drives the site's monthly check that billed heads match what was remitted.

How Velura Services helps

Every Velura quote comes as a line-by-line build-up: Code wages, PF, ESI, bonus, gratuity provision and Labour Welfare Fund, with our service charge as a separate line. If you are comparing manpower quotes now, we can share a blank template your procurement team can send to every bidder, so all the quotes come back in the same format.

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Sources

Figures are a representative composite drawn from our own deployments; no single client is described. Founder to confirm or replace before publish.
Employees' Provident Funds Scheme, 2026, G.S.R. 525(E) dated 29 June 2026, mirrored copy of the Gazette. Paras cited: 18 (12% contribution), 20(4) (principal employer remains responsible). Opened and read [VERIFY: against the e-Gazette original].
The Code on Wages, 2019 (Act 29 of 2019), Gazette text hosted by the Ministry of Labour and Employment. Sections cited: s.2(y) (wages and the 50% rule), s.26(1) (minimum bonus of 8.33%, payable whether or not there is an allocable surplus). Opened and read.
The Code on Social Security, 2020 (Act 36 of 2020), Gazette text hosted by the Ministry of Labour and Employment. Sections cited: s.2(88) (wages), s.53 (gratuity: 15 days' wages per year of service). Opened and read.