Dear Friends, Could you please let me know the Prinicial Employer Liability on Gratuity to his contract workers.
From India, Bangalore
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From India, Bangalore
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It's purely based on the type of agreement they had with you. For example, if the agreement is an SLA (Service Level Agreement), then the Principal Employer is responsible for all statutory requirements, including Gratuity, Bonus, and Leave encashments, among others. For all other aspects, it's determined by the clauses in the agreement.
Cheers,
Karthik Nayudu
From India, Vijayawada
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80Cheers,
Karthik Nayudu
From India, Vijayawada
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Objective of the Contract Labour Act (Regulation & Prohibition)
The objective of the Contract Labour Act (Regulation & Prohibition) is:
• To prohibit the Contract Labour System where the work is of a continuous and perennial nature.
• This means there is intermittent work (less than 240 days) as per the Industrial Dispute Act under section 25F for the provision of Retrenchment Compensation.
• This means you do not require Contract Labour for more than 240 days in an organization.
• If you are employing contract labour for regular/perennial activity, then it is illegal to do so as per the Contract Labour Act.
• Therefore, for illegal activity (i.e., more than 5 years of continuous service of contract labourers), the principal employer should be punished first by regularizing the contract labourers.
I apologize if I have offended the feelings/sentiments of anyone on this site with this post.
From India, Pune
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The objective of the Contract Labour Act (Regulation & Prohibition) is:
• To prohibit the Contract Labour System where the work is of a continuous and perennial nature.
• This means there is intermittent work (less than 240 days) as per the Industrial Dispute Act under section 25F for the provision of Retrenchment Compensation.
• This means you do not require Contract Labour for more than 240 days in an organization.
• If you are employing contract labour for regular/perennial activity, then it is illegal to do so as per the Contract Labour Act.
• Therefore, for illegal activity (i.e., more than 5 years of continuous service of contract labourers), the principal employer should be punished first by regularizing the contract labourers.
I apologize if I have offended the feelings/sentiments of anyone on this site with this post.
From India, Pune
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Gratuity Payment for Contract Labour
Please note that contract labour is entitled to gratuity as per the decision of the High Court of Judicature at Madras dated 20.11.2006 by The Honourable Mr. Justice P.D. Dinakaran and The Honourable Mr. Justice P.P.S. Janarthana Raja. In the case of The Management of Cruickshank & Company Ltd. vs The Appellate Authority under the Payment of Gratuity Act, 1992, and Regional Labour Commissioner (Central), Shastri Bhavan, Chennai, the Court held:
"The entitlement of contract laborers for gratuity cannot be dislodged or denied on account of tussle between the principal employer, who engaged the service of the contract laborers, and the contractor, who employed the contract laborers."
The Court further stated:
...the gratuity claimed by the claimants herein being a welfare benefit created and payable by operation of law under the provisions of the Payment of Gratuity Act, which are included under clause (d) of Section 2(vi) of the Payment of Wages Act within the meaning of wages payable to the contract laborers, it would be the basic responsibility of the petitioner (i.e., the Principal Employer) to make payment of gratuity to the claimants in full or in part as per Section 21(4) of the Contract Labour Act, of course, without prejudice to the right of the petitioner (i.e., the Principal Employer) to recover the same from the third respondent, contractor, even though the initial responsibility to make such payment of gratuity lies with the third respondent, contractor, as the welfare legislations such as:
(i) Payment of Wages Act, 1936;
(ii) Contract Labour (Regulation and Abolition) Act, 1970; and
(iii) Payment of Gratuity Act, 1972,
are to be interpreted liberally and in the widest possible construction in favor of the laborers, the claimants herein. Therefore, for deciding whether the wages payable to the claimants include gratuity within the meaning of Contract Labour Act, 1970, whereunder the definition of wages is traceable to the definition of wages in the Payment of Wages Act, 1936, and the centrifugal issue whether the gratuity payable under the Payment of Gratuity Act is protected under Section 2(vi)(d) of the Payment of Wages Act, 1936, in spite of exclusion under sub-clause (6) of Section 2(vi) of the Payment of Wages Act, 1936, we are constrained, as a rule of interpretation, to refer to the object and reasons of the legislative intention of all the three statutes referred to above and the scope and ambit of the provisions contained thereunder and are satisfied that the gratuity being a benefit created and payable by operation of law under the provisions of the Payment of Gratuity Act, 1972, is protected within the definition of wages for having included under clause (d) of Section 2(vi) of the Payment of Wages Act, 1936. Therefore, the Court has to give full effect to the legal/statutory fiction and such fiction has to be carried to its logical conclusions, as any other view would only frustrate the legislative intention of all the enactments."
*Added by us for explanation
By virtue of this judgment, employees of the contractor deployed at the place of the principal employer who become entitled to gratuity as per the Payment of Gratuity Act are to be settled gratuity on their severance. In case the contractor fails to settle it, the employees can make a claim on the principal employer who needs to settle it and becomes liable and thereafter recover it from the contractor.
Regards,
Rajan Law Firm
From India, Madras
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Please note that contract labour is entitled to gratuity as per the decision of the High Court of Judicature at Madras dated 20.11.2006 by The Honourable Mr. Justice P.D. Dinakaran and The Honourable Mr. Justice P.P.S. Janarthana Raja. In the case of The Management of Cruickshank & Company Ltd. vs The Appellate Authority under the Payment of Gratuity Act, 1992, and Regional Labour Commissioner (Central), Shastri Bhavan, Chennai, the Court held:
"The entitlement of contract laborers for gratuity cannot be dislodged or denied on account of tussle between the principal employer, who engaged the service of the contract laborers, and the contractor, who employed the contract laborers."
The Court further stated:
...the gratuity claimed by the claimants herein being a welfare benefit created and payable by operation of law under the provisions of the Payment of Gratuity Act, which are included under clause (d) of Section 2(vi) of the Payment of Wages Act within the meaning of wages payable to the contract laborers, it would be the basic responsibility of the petitioner (i.e., the Principal Employer) to make payment of gratuity to the claimants in full or in part as per Section 21(4) of the Contract Labour Act, of course, without prejudice to the right of the petitioner (i.e., the Principal Employer) to recover the same from the third respondent, contractor, even though the initial responsibility to make such payment of gratuity lies with the third respondent, contractor, as the welfare legislations such as:
(i) Payment of Wages Act, 1936;
(ii) Contract Labour (Regulation and Abolition) Act, 1970; and
(iii) Payment of Gratuity Act, 1972,
are to be interpreted liberally and in the widest possible construction in favor of the laborers, the claimants herein. Therefore, for deciding whether the wages payable to the claimants include gratuity within the meaning of Contract Labour Act, 1970, whereunder the definition of wages is traceable to the definition of wages in the Payment of Wages Act, 1936, and the centrifugal issue whether the gratuity payable under the Payment of Gratuity Act is protected under Section 2(vi)(d) of the Payment of Wages Act, 1936, in spite of exclusion under sub-clause (6) of Section 2(vi) of the Payment of Wages Act, 1936, we are constrained, as a rule of interpretation, to refer to the object and reasons of the legislative intention of all the three statutes referred to above and the scope and ambit of the provisions contained thereunder and are satisfied that the gratuity being a benefit created and payable by operation of law under the provisions of the Payment of Gratuity Act, 1972, is protected within the definition of wages for having included under clause (d) of Section 2(vi) of the Payment of Wages Act, 1936. Therefore, the Court has to give full effect to the legal/statutory fiction and such fiction has to be carried to its logical conclusions, as any other view would only frustrate the legislative intention of all the enactments."
*Added by us for explanation
By virtue of this judgment, employees of the contractor deployed at the place of the principal employer who become entitled to gratuity as per the Payment of Gratuity Act are to be settled gratuity on their severance. In case the contractor fails to settle it, the employees can make a claim on the principal employer who needs to settle it and becomes liable and thereafter recover it from the contractor.
Regards,
Rajan Law Firm
From India, Madras
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