Bonus To Contract Workers - CiteHR
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We are paying more than 20% Bonus/Exgratia to the permanent workers. We have more than 1200 contract workers working continuously on various jobs. The unions are demanding the management to pay more than the 20% bonus i.e. more than Rs. 8,400/- to the contract workers.
My question is what is the responsibility of the principle employer regarding the payment of bonus to the workers working under a contractor? Kindly any one clarify my doubt in detail.

Hi Giri,
It is responsibility of Principle Employer to comply with the statutory requirement and hence pay the bonus as per the Bonus Act if they are eligible. However paying more than statutory bonus, Ex-Gratia is a matter of negotiations.

Dear Mr. Giri,
The Principle employer is liable to pay the Bonus as per the provision of Payment of Bonus Act and enure the statutory rights are fulfilled, the contractor cannot ask for an abrupt increase in the Bonus unless the contractor prepares balance sheet and ensures proper records & provides it to the PE for payment of statutory bonus to the contractors. The bonus is now reffered to be paid under the contractor's profitability and the allowcable surplus available in the contractor's firm and not the Principal Employer. Therefore, the contract workers themselve donot ask for an increased bonus.

Dear Giri,
Find the answers as follows :
I. For Contract workmen it shall be the primary responsibility of the Contractor to pay off the bonus to its employees latest by 30th November every year for the for the previous year.
II. In case the contractor fails,then it becomes the responsibility of the principal employer to comply with it.
III. Payment of bonus act (amendment) states that the eligibility for bonus is restricted to employees with base pay upto Rs.10000/Month (Basic +DA).For payment of bonus,Rs.3500/month or actual basic which ever lower is to be considered.
Iv. Now,you may club up these points to successfully negotiate the matter with the concerned parties.

Dear Sharmila Das,
Thank you very much and what I have drawn from all the replies is
The Contractor has to pay the Bonus to his workers from the profit he earned. If the contractor is having enough allocable surplus he can 20%. If not he has to pay 8.33% minimum Bonus to his workers. If he fails to pay accordingly then the principle employer is responsible to pay the minimum bonus to the contract workers. But there is no relation to the profits earned by the Principal employer.
What I have under is Correct or Not?

Yes, Mr. Giri. You've rightly got it. Therefore in case if the Principal Employer pays; you may show those allocable surplus paid in percentage to the contract workers and then deduct the same from the amount payable to the Contractor.
Dear Girimaddukuri,
You may kindly go to the thread on "Applicability Of Bonus To Contract Labour" at This question has been discussed in details there. I too have contributed some.

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