query on lay off & retrenchment compensation for contract workers
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query on lay off & retrenchment compensation for contract workers

Saptarshi Started The Discussion:

Hi All,

Please suggest on the following;

1.Our company has issued a Job Contract to a Contractor ( for a certain volume spreaded over a fixed period of say 1 year). Contractor has engaged labour at our premises for complition of the same.
2.Due to lack of order we (the Principle Employer) asked the contractor to stop work for one month. Contractor restricted labour entrance due to the reason of non availibility of site clearance.
3.In view of that contract workers unions are demanding lay off compensation as they were availlable during the period but contractor failed to provide work.
On the other contractor is rigid not to pay wages for one month siting the reason of No work No pay. IN THIS CASE ISN'T THE CONTRACTOR NEED TO PAY LAY OFF TO HIS WORKERS.?
4. FURTHER (IN A DIFFERENT CASE) WHETHER CONTRACTOR WHO HAS ENGAGED LABOUR FOR SIX MONTHS (LESS THAN 240 DAYS) IS LIABLE TO PAY RETRENCHMENT COMPENSATION TO THE WORKERS AFTER COMPLETION OF THE WORK?


Rgds,
SDG

Madhu.T.K - Member Since: Sep 2007
In this case two issues are involved. First the lay off to contract labour. As far as Principal employer is concerned, his responsibility ends when the notice of stoppage of engagement (of workers) is given to the contractor. It will be a civil litigation between the PE and the Contractor if the agreement between them has no such termination clause and it will not form part of an industrial dispute. When the contractor is asked to stop engaging workmen, he is expected to do that. Retaining his workforce or giving alternative employment to them during this period is purely a matter of the contractor and in that principal employer has no responsibility. Now if the contractor decides to declare lay off he is liable to pay lay off compensation of 50% pay and he can not escape from his liability. At the same time, if he as an employer been employing less than 50 employees then the chapter VA of the Industrial Disputes Act will not apply but following the decision in Workmen Vs Firestone Tyre & Rubber Co [1976(1)LLJ493 SC] he will have to pay full wages during the period in which he could not give work to them. In either case, the Principal employer has no liability to take over the lay off wages of workmen of contractors.

When the work for which the workmen are engaged is completed, the relationship ends automatically. This will not amount to closing down of establishment within section 25FFA of the ID Act. While describing compensation payable in case of closing down of undertaking in section 25FFF, the subclause 2 states that where an undertaking is set up for construction of building, bridges........and is closed down within two years of its setting up due to completion of work, no compensation is payable to the workmen. At the same time if the work for which the undertaking was set up is closed down due to completion of work after two years of its staring the project then the workers will get compensation and notice as provided in section 25F. Therefore, the period within which the work is completed is also relevant in deciding the retrenchment compensation.

Regards,

Madhu.T.K

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