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Contract labour are paid less then minimum wages by contractor, major reason for this exploitation of worker is ,contractors are not getting profit.
Why contractor are not getting profit '?? Bcoz tenders are awarded to lowest bidder L1 bidder,contractor will not get contract if he quotes rates including proper profit. Competition is so tough that he have to quote minimum as low as 1 paisa profit.
Result of this is labourers are paid less then minimum wages.
So to solve this problem can principal employer prepare a minimum basic profit. And award tender to contractor who quoted above that prepared rate and disqualify bidder who quoted below that rate.
Or plz suggest if there is any other solution to this problem.
Waiting for your valuable suggestion.
Thanks .

From India, Mumbai
It is the discretion of each employer to decide whom he will give a labour contract to.
A smart employer will workout and ask the contractor how he will make money after payment of statutory dues. Anyone who can't do that should not be given the work.
In the government also similar rules are available of estimation of the contract value and the tender committee has the discretion to refuse to accept a tender for reason stated in writing.
That said, if a contractor is not paying minimum wages, the principal employer is responsible for paying the same and is required to pay the same. He will then deduct the amount from the next bill due to the vendor.

From India, Mumbai
banarjee sir.

Thankyou sir for ur advice, sir I would like to let you what exactly is going on so that you can figure our the exact issue.

This is a case of ordnance factory.

Here daily minimum wages are Rs 279/-.

tendering is done through e procurement process.

So in price bid what contractor has to quote is there service charges ,

And material cost. Where actual material cost is hardly 1% of total contract value.

Rates of

Minimum wages and statutory liabilities are already fixed by govt so contractor don't need to quote.

there are 35 registered contractors in ordnance factory and few other contractor also participate as it's a open tender. So the contractor has to quote minimum as he is always aware that tender will be awarded to L1 bidder.

There is no space for contractor to earn legally.

Contractor have suggested to PE to make a basic rate and disqualify bidder bidding lower to that rate.

But PE is saying their finance/ accounts are not ready for this. They want some directive or authority of govt , which they don't have .

I want to know is this legal ??

Can PE do this ??

If PE do this ,can any action be taken against them by audit or CVC.

Is there any govt authority or directives regarding this matter ?

Is there any example of such case ???

Sir I need your help , plz advice me what to do.



Farukh ali

From India, Mumbai
The PE can do it, as such
However, the PE being a government, the normal rules of governance needs to be followed.
You need to see if the rules in your organisation regarding tenders.
When the tender is being formulated, put specific clauses in it for payment of all statutory dues (specify them)
Also make it clear that they will need to pay minimum wages, show pf and ESIC returns and proof of payment of statutory dues, without which they will not get their bills passed. Further provide for audit of their documents related to payment and statutory dues.
You can also ask for a Bank Guarantee for a specific amount to ensure that you have a recourse in case of failure to pay proper salary and statutory dues. In addition, specify that salary / wages must be paid by transfer to salary account in a PSU Bank or in a Scheduled Bank (to ensure that salary is being paid properly and can be verified)
I think these will be deterrent enough.

From India, Mumbai
Sir I have two doubts. (i) In Labour contract if any body quotes less than minimum wage is there any rules / order is there to reject (ii)
From India, Ernakulam
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