Labour & Employee Relations - CiteHR
Saswatabanerjee
Partner - Risk Management
Rammi24
Ir, Statutory Compliance, Payroll, Recruitments,
+2 Others

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Dear All,
Our Contractor has deducted overtime amount from the salary of labourers, due to some discrepancy regarding overtime amount company has not released the concerned amount. Now we are facing problem for short of manpower on daily basis. How to sort out this matter as it is creating a IR issue.
Pls advice regarding what to do ?
- Whether we can force contractor to release overtime payment to their Labourers..
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please confirm do your company have any agreement with contractor related to wages & overtime
Yes, as per Saroj patel reply, please refer your agreement with regards to Contractors terms & conditions, if the agreement was made between Company & Contractor. As per the CLRA Act, Company had to release the OT payment, if any discrepancies raised, that had to be taken care by Contractor & Company but the laborers should not suffer.
I would like to know under which section of the act does it say that company has to release payment to the contractor for overtime, in spite of discrepancies
No There is no Agreement with the Contractor related to Wages & Overtime. We are Paying As per Minimun Wages Applicable in the state.
First lets get your facts correct.

You have contract workers who are doing overtime.

But they are not getting paid overtime because you have not released overtime amount to the contractor.

Now contract workers are not willing to work in your factory.

First, I do not know why contract workers have to do overtime.

You should instead ask the contractor to employ more persons for the additional work. Since there is no permanent liability for you, there is no problem in increasing the head count. Further, overtime is at double of gross wages (doing double of basic plus da is illegal) so it does not make sense.

If you do not pay the contractor, where is he going to pay the workers from ? That is a normal business logic you need to understand. The legal aspect is secondary. He is not going to pay out of his pocket for your work.

Under law, you as principal employer, are responsible to ensure that the workers get paid proper wages, leave and statutory dues are deposited. So you are liable for the unpaid wages. They can be recovered from you by the employees thought the labour officer or court action. You can later recover that from the contractor by was of debts through a civil suit. However that really materialises.

Actually under law there is no provision directly to force the contractor to pay. Or more correctly, there is no provision for you to force him to pay. The workers can force him to pay by filing a complaint with the labour commissioner. However, are you being the principal employer and is client, you can definitely use other means of persuasion to get him in line.


You are definitely skating on thin ice.
You should immediately enter into a formal agreement your contract are putting all the relevant terms and conditions. In the current situation, you will have a problem even enforcing any legal action against the contract. Therefore you need to use your economic leverage against him. Even that seemed to be weeks since you have not bothered to pay him the overtime amounts.
Please do not forget that any thing that you do that affects his ability to pay wages of the workers directly affects you, your work, reputation and industrial relations.

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