A monthly contractor audit is four comparisons, made in order against your own gate register: the wage intimation, the contractor's Form XI, the PF Electronic Challan-cum-Return (ECR), and the ESIC challan. Every document arrives between the 7th and the 15th of the following month. A site that runs the checks before filing its own Form XII on the 20th finds a missing worker in the month it happens, not at inspection.
The monthly calendar the audit follows
The deadlines are set by the rules, so the audit can follow a fixed calendar. For a calendar-month wage period:
| By | What arrives or is due | Instrument |
|---|---|---|
| 7th | Wages paid by bank transfer; the contractor's payment intimation to the site | OSH Central r.98(2), (4), (6) |
| 10th | Form XI from the contractor: name, UAN, wages and contributions for each contract worker | EPF Scheme 2026, para 27(3) |
| 15th | PF ECR filed and paid; joiners and leavers uploaded on the EPFO portal | EPF Scheme 2026, paras 24(2), 28(3) |
| 15th | ESI contribution paid for the month | ESIC contribution rules (within 15 days of month-end) |
| 20th | The site's Form XII: total deducted from contract workers and total employer contribution | EPF Scheme 2026, para 27(4) |
| Day 22 | If wages were not paid by the 7th, the site must have paid them (15 days after the missed payday) | OSH Central r.98(8) |
Every six months the contractor also files a half-yearly return in Form XVIII within 30 days of the half-year's end (r.98(7)). It is a useful cross-check on the headcount the monthly records add up to.
Four reconciliations, in order
Start from the record the site controls, the gate or attendance register, and work outward. Each step compares one document with the one before it, so a gap shows up at the step where it first appears.
| Compare | What should match | A mismatch usually means |
|---|---|---|
| 1. Gate register → wage intimation | Same people, and days worked consistent with days paid | Workers on the floor but off the payroll; days under-recorded; a sub-contractor's crew paid by someone else |
| 2. Wage intimation → Form XI | Same names; wages in Form XI consistent with wages paid | PF calculated on basic rather than Code wages; workers paid but left out of the PF return |
| 3. Form XI → PF ECR | Same UANs, wages and contribution amounts | A worker without an Aadhaar-seeded UAN dropped from the ECR; a contractor reporting to the site one set of figures and to EPFO another |
| 4. Wage list → ESIC challan | Every worker on Code wages up to ₹21,000 a month covered | New joiners not yet registered; ESI worked out on the wrong wage; workers wrongly treated as above the ceiling |
Most mismatches are small and have a reason the contractor can show in writing: a joiner registered on the 14th, a leaver whose last wages fell in the next period. The ones that matter repeat month after month, or follow a pattern such as the same names missing each time, PF on a wage that never changes, or an ESIC count well below the payroll.
What to check on the wage line
Check that PF and ESI are worked out on Code wages, not on a basic figure. Under the Code on Wages 2019, s.2(y), allowances above half of total pay count back into wages, and the Code on Social Security uses the same definition (s.2(88)). A contractor that splits pay into a low basic and large allowances, then remits PF on the basic alone, produces an ECR that reconciles neatly to Form XI and still underpays. Sample three or four workers a month and recompute their Code wages from the payslip.
Check the rate against the notified minimum for your industry, zone and skill category too. Tamil Nadu resets the dearness allowance every April, and a payroll that was correct in March can be short from April.
When the records do not match
Ask for a written explanation, and hold the bill only where the contract allows it. The law already gives the site its levers. It can recover PF it pays for a contractor's workers from the contractor's bill or as a debt (Code on Social Security s.17(1)), and the same for ESI (s.31(6)). It can require the contractor's register before settling an account (s.31(7)). If wages are unpaid, the site pays them within fifteen days and recovers from the bill or the security deposit (r.98(8)).
- Write it down. Record the month, the documents compared and the gap, by name or UAN.
- Ask the contractor to explain or correct before the next bill, with the corrected ECR or challan as proof.
- Use the contract. Apply the set-off or hold the contract provides for, and no more.
- Escalate a repeat. Two months with the same gap is a pattern, and a reason to review the engagement.
Whether a particular gap creates liability for the site, and how much, depends on the facts and the contract terms, and is a question for the site's own counsel.
How Velura Services helps
We send each site its evidence pack on the statutory calendar: payment intimation by the 7th, Form XI by the 10th, the ECR and ESIC challans by the 15th. We reconcile them to your gate register before you see them, and flag any gap by name with the reason and the fix. That leaves your Form XII on the 20th a check rather than a chase.
Sources
- Employees' Provident Funds Scheme, 2026, G.S.R. 525(E) dated 29 June 2026, mirrored copy of the Gazette. Paras cited: 24(2) (joiners and leavers uploaded within 15 days of month-end), 27(3)–(4) (Form XI by the 10th; Form XII by the 20th), 28(3) (remittance within 15 days). Opened and read [VERIFY: against the e-Gazette original].
- Occupational Safety, Health and Working Conditions (Central) Rules, 2026, G.S.R. 345(E) dated 8 May 2026. Rules cited: r.98(2), (4), (6), (7), (8) (payday, bank transfer, wage notice to the site, half-yearly return, principal employer pays within 15 days). Opened and read from a mirrored copy of the Gazette [VERIFY: against the e-Gazette original].
- Employees' State Insurance Corporation, Contribution. Payment within 15 days of the last day of the month; the ₹21,000 coverage ceiling is confirmed in the Ministry's FAQ of 16 March 2026. Opened and read for earlier articles in this cluster.
- 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.17(1) (recovery of PF from the contractor), s.31(6)–(7) (recovery of ESI; register before settlement). Opened and read.
- The Code on Wages, 2019 (Act 29 of 2019), Gazette text hosted by the Ministry of Labour and Employment. Section cited: s.2(y) (wages and the 50% rule). Opened and read.