The concept of "occupier" is only in the Factories Act and not in other laws like the Shops and Establishments Act or the Plantation Labour Act or the Mines Act or the Beedi and Cigar Workers (Conditions of Employment Act) or any other law which regulates the working conditions of workers. The Contract Labour(Regulation and Abolition) Act also does not use the term "occupier" to describe the relationship of the person(s) employing workmen through a contractor.
A Division Bench of the Madras High Court has held that the Principal Employer is liable to pay gratuity under the Payment of Gratuity Act to workmen employed by him through a contractor and then recover the amount from the contractor. This judgment of the Madras High Court has not yet been differed from by any other Division Bench of the Madras High Court or over ruled by the Supreme Court. This judgment of the Madras High Court is binding on all the authorities under the Payment of Gratuity Act, functioning within the territorial jurisdiction of the Madras High Court.
With regards
From India, Madras
169A Division Bench of the Madras High Court has held that the Principal Employer is liable to pay gratuity under the Payment of Gratuity Act to workmen employed by him through a contractor and then recover the amount from the contractor. This judgment of the Madras High Court has not yet been differed from by any other Division Bench of the Madras High Court or over ruled by the Supreme Court. This judgment of the Madras High Court is binding on all the authorities under the Payment of Gratuity Act, functioning within the territorial jurisdiction of the Madras High Court.
With regards
From India, Madras
dear Friends,
Mr. Madhu and Aparajita have clearly viewd the issue. It is the obligation on the contractor to pay the bonus as applicable to his firm(not on principal employer). If he doesn't pay the bonus, the principal employer has to pay the min. bonus as per act and the same can be deducted from the from the contractor's bills. In many cases the contractors' employees also demanded the bonus in par with the principal employer. However, the SC upheld that the bonus should be paid on contractor's profitability and allowcable surplus available with the contractor's firm and not on par with the principal employers.
G.K.Manjunath,
Sr. Manager-Hr.
From United States, Cambridge
Mr. Madhu and Aparajita have clearly viewd the issue. It is the obligation on the contractor to pay the bonus as applicable to his firm(not on principal employer). If he doesn't pay the bonus, the principal employer has to pay the min. bonus as per act and the same can be deducted from the from the contractor's bills. In many cases the contractors' employees also demanded the bonus in par with the principal employer. However, the SC upheld that the bonus should be paid on contractor's profitability and allowcable surplus available with the contractor's firm and not on par with the principal employers.
G.K.Manjunath,
Sr. Manager-Hr.
From United States, Cambridge
I have gone through various posts on the subject. There should be a legal basis for a right to be enforceable. It cannot rest on conjectures and surmises. When the issue is about the rights of contract labour to their benefits, the issue needs to be decided with reference to the Contract Labour Act 1970 as well as the specific Act that deals with the that particular benefit. For example, if the issue is about the admissibility of P.F to Contract labour, the rights and liabilities need to be decided with reference to the Contract Labour Act as well as the P.F Act. Thus, when it comes to deciding the liability of paying bonus to contract Labour, the issue needs to be determined within the four corners of the Contract Labour Act and the Bonus Act 1961.
The Contract Labour Act nowhere refers to an occupier as Mr.V, Harikrishnan clarified since the Act may not only be applicable to factories but also to establishments other than factories which may not have an 'occupier' as envisaged under the Factories Act who is in charge of the overall administration of the affairs of the establishment. Therefore the issue of liability to pay bonus to contract labour needs to be determined with reference to either the principal employer or the immediate employer.
The Contract Labour Act lists out various obligations of the Principal employer with regard to contract labour and the provison that is relevant to the issue on hand is contained in Sec.21 of the Act and more precisely sub-section (4) of Sec.21 which imposes the obligation on the Principal Employer to pay wages to the contract labour, if the contractor fails to pay the same. Thus the principal Employer is not liable to pay, so far as his liability under the Contract Labour Act is concerned, any other monitory benefit which is not a wage. Thus the Cominico Binanani case clearly excludes bonus from the definition of wage and ruled that the Principal Employer is not liable for payment of bonus to contract labour.
The next question is whether the Payment of Bonus Act fixes any liability on the principal employer to pay bonus. In the first instance the Bonus Act does not refer to any entity called Principal Employer in it’s definitions under Sec.2 of the Act. Thus the concept of principal employer is alien to the Bonus Act. Besides, the definition of ‘employee’ under Sec.2(13) of the Payment of Bonus Act no where refers to an employee as including a person employed through an outside agency like contractor. Therefore the definition of employee under the Bonus Act envisages an employer and employee relationship and thus the persons to be eligible to claim bonus from an employer shall be in employer and employee relationship with him.
It is well settled in law that there is no employer and employee relationship between the Principal employer and the contract labour unless the contract is sham. Thus, in my view, it is the Immediate employer(contractor) who hired the contract labour is liable to pay bonus to them. If he fails, the liability does not fasten to the principal employer for the reasons stated above and the contract labour are free to pursue the remedies available either under the Bonus Act or the Industrial Disputes Act against the Contractor.
B.Saikumar
HR & Labour Law advisor
Mumbai
From India, Mumbai
The Contract Labour Act nowhere refers to an occupier as Mr.V, Harikrishnan clarified since the Act may not only be applicable to factories but also to establishments other than factories which may not have an 'occupier' as envisaged under the Factories Act who is in charge of the overall administration of the affairs of the establishment. Therefore the issue of liability to pay bonus to contract labour needs to be determined with reference to either the principal employer or the immediate employer.
The Contract Labour Act lists out various obligations of the Principal employer with regard to contract labour and the provison that is relevant to the issue on hand is contained in Sec.21 of the Act and more precisely sub-section (4) of Sec.21 which imposes the obligation on the Principal Employer to pay wages to the contract labour, if the contractor fails to pay the same. Thus the principal Employer is not liable to pay, so far as his liability under the Contract Labour Act is concerned, any other monitory benefit which is not a wage. Thus the Cominico Binanani case clearly excludes bonus from the definition of wage and ruled that the Principal Employer is not liable for payment of bonus to contract labour.
The next question is whether the Payment of Bonus Act fixes any liability on the principal employer to pay bonus. In the first instance the Bonus Act does not refer to any entity called Principal Employer in it’s definitions under Sec.2 of the Act. Thus the concept of principal employer is alien to the Bonus Act. Besides, the definition of ‘employee’ under Sec.2(13) of the Payment of Bonus Act no where refers to an employee as including a person employed through an outside agency like contractor. Therefore the definition of employee under the Bonus Act envisages an employer and employee relationship and thus the persons to be eligible to claim bonus from an employer shall be in employer and employee relationship with him.
It is well settled in law that there is no employer and employee relationship between the Principal employer and the contract labour unless the contract is sham. Thus, in my view, it is the Immediate employer(contractor) who hired the contract labour is liable to pay bonus to them. If he fails, the liability does not fasten to the principal employer for the reasons stated above and the contract labour are free to pursue the remedies available either under the Bonus Act or the Industrial Disputes Act against the Contractor.
B.Saikumar
HR & Labour Law advisor
Mumbai
From India, Mumbai
Completely agree with Mr SaiKumar. its all depend on the arrangement and terms agreed between the Principle Employer and Contractors, if Principle Employer want to pay then its ok, otherwise Legallly it can not be enforced against the principle employer.
Gratuity and Bonus are the liabililty of Principle Employer, it has already been decided by the various High Courts. Recent Judgment of Kokatta High Court reported in Oct 2010 LLR wherein the Kolkata High Court had categorically stated that payment of Gratuity is the laibililty of Contractors/immediate employer, it can not be enforced against the Principle Employer.
Regards
Gratuity and Bonus are the liabililty of Principle Employer, it has already been decided by the various High Courts. Recent Judgment of Kokatta High Court reported in Oct 2010 LLR wherein the Kolkata High Court had categorically stated that payment of Gratuity is the laibililty of Contractors/immediate employer, it can not be enforced against the Principle Employer.
Regards
I agree with Mr. Dalai, he is absolutely correct, if contractor is fail any payment of wage, bonus, full & final amount to contract worker than principal employer is liable to pay such amount to contract worker, after that principal employer can adjust these amount from contractor’s bill.
Dalai Sir I want your email id, can you provide me your mail id?
Jignesh Sisodiya
Asst. Manager HR & IR
From India, Ahmadabad
Dalai Sir I want your email id, can you provide me your mail id?
Jignesh Sisodiya
Asst. Manager HR & IR
From India, Ahmadabad
I agree if the Contractor does not pay, the Principal Employer has to pay and can recover from the Contractor.
But the question is what is percentage he needs to pay? How can he ascertain. If he pays 8.33% and if the workers claim the same percentage as the Principal Employer has paid, should he pay and can he recover?
In my opinion, the Principal employer must insist on getting allocable surplus statements for the Contractors duly certified by an Auditor. If the Contractor does not provide, then take a stand that he would pay only the minimum and recover from the contractor.
Sivasankaran
From India, Chennai
But the question is what is percentage he needs to pay? How can he ascertain. If he pays 8.33% and if the workers claim the same percentage as the Principal Employer has paid, should he pay and can he recover?
In my opinion, the Principal employer must insist on getting allocable surplus statements for the Contractors duly certified by an Auditor. If the Contractor does not provide, then take a stand that he would pay only the minimum and recover from the contractor.
Sivasankaran
From India, Chennai
Dear All
The relationship between the principal employer and the contractor necessarily depends on the terms of the contract for supply of manpower entered into between the principal employer and the contractor. This contract is subject to the provisions of the Contract Labour(Regulation and Abolition) Act. Because any contract which is contrary to the provisions of any law is void ab initio.The Contract Labour(Regulation and Abolition) Act does not specifically say that in case the contractor makes default in the payment of bonus, the principal employer is liable to pay the bonus. However, please see section 21 of the Contract Labour (Regulation and Abolition) Act. This section casts a statutory duty on the principal employer to pay wages to the contract workers if the contractor commits default in the payment of wages. Of course the wages so paid by the employer can be recovered from the contractor. The term "wages" used in section 21 is defined in section 2(k) of the Contract Labour(Regulation and Abolition) Act. Section 2(k) of the Contract Labour (Regulation and Abolition) Act while defining the term "wages" says that the term"wages" will have the same meaning assigned to it in clause (vi) of section 2 of the Payment of Wages Act. I request you to see section 2(vi) of the Payment of Wages Act. This section of the Payment of Wages Act excludes "bonus" whether under a scheme of profit-sharing or otherwise which does not form part of the remuneration payable under the terms of employment or which is not payable under any award or settlement between the parties or orders of Court.
The principles to be deduced from the above provisions of law are
1. The principal employer is not liable to pay bonus under the Payment of Bonus Act to the workers engaged through a contractor, whether the contractor makes a default in the payment of bonus or not.
2. If the terms of engagement of the workers by the contractor(that is the appointment orders issued by the contractor to his workers)stipulates that the contractor should pay his employees bonus, then the principal employer becomes liable to pay the bonus if there is default by the contractor.
3.If the bonus is payable to the workers of the contractor as a result of an award or a settlement or orders of court, then the principal employer is liable to pay bonus to the workers of the contractor in case the contractor commits default in the payment of bonus.
Of course in the case of items 2 and 3 the principal employer can recover the payments made by him from the contractor.
With regards
From India, Madras
The relationship between the principal employer and the contractor necessarily depends on the terms of the contract for supply of manpower entered into between the principal employer and the contractor. This contract is subject to the provisions of the Contract Labour(Regulation and Abolition) Act. Because any contract which is contrary to the provisions of any law is void ab initio.The Contract Labour(Regulation and Abolition) Act does not specifically say that in case the contractor makes default in the payment of bonus, the principal employer is liable to pay the bonus. However, please see section 21 of the Contract Labour (Regulation and Abolition) Act. This section casts a statutory duty on the principal employer to pay wages to the contract workers if the contractor commits default in the payment of wages. Of course the wages so paid by the employer can be recovered from the contractor. The term "wages" used in section 21 is defined in section 2(k) of the Contract Labour(Regulation and Abolition) Act. Section 2(k) of the Contract Labour (Regulation and Abolition) Act while defining the term "wages" says that the term"wages" will have the same meaning assigned to it in clause (vi) of section 2 of the Payment of Wages Act. I request you to see section 2(vi) of the Payment of Wages Act. This section of the Payment of Wages Act excludes "bonus" whether under a scheme of profit-sharing or otherwise which does not form part of the remuneration payable under the terms of employment or which is not payable under any award or settlement between the parties or orders of Court.
The principles to be deduced from the above provisions of law are
1. The principal employer is not liable to pay bonus under the Payment of Bonus Act to the workers engaged through a contractor, whether the contractor makes a default in the payment of bonus or not.
2. If the terms of engagement of the workers by the contractor(that is the appointment orders issued by the contractor to his workers)stipulates that the contractor should pay his employees bonus, then the principal employer becomes liable to pay the bonus if there is default by the contractor.
3.If the bonus is payable to the workers of the contractor as a result of an award or a settlement or orders of court, then the principal employer is liable to pay bonus to the workers of the contractor in case the contractor commits default in the payment of bonus.
Of course in the case of items 2 and 3 the principal employer can recover the payments made by him from the contractor.
With regards
From India, Madras
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