rachana divyesh
Dear Members,
We are facing some labour issues at our site as follows. Kindly guide me to proceed in this matter:
We are getting some work done at our site under one contractor company. Due to financial situation, we were unable to pay to them. During meet with labour commissioner , we came to know that contractor company has not paid salaries to their workers since last few months (even before starting of our work at site).
Now labour commissioner has sued a notice against us , as principal employer and asked to pay pending amounts.
Please guide me in above matter.

From India, Vadodara
Labour Law & Hr Consultant
Kumaran Praveen
Rachana Divyesh
Hr Professional
+1 Other

Kumaran Praveen

Hi Divyesh,

As i just get into HR field I didn't no how effective my suggestion will be however I spell out my view.

Forget about the non payment of salaries to contract employees when you are not the principal employer but it is the principal employer duty to be present at the time of disbursing the salaries to contract employees when you are principal employer, And from above fact i understood that you failed to do this so it is your responsibility to get the contractor to pay the salaries to contract employees for the period you paid wages to contractor.

In case of notice you accept that it is your failure to supervise or conform the payment to contract employees so take step to make sure the payment is disbursed through contractor for the period you paid salaries.You were liable only for the period in which you come as principal employer.

If there is any financial difficulties make sure you pay at least basic wages to workers to meet their daily expenses and pay the remaining amount once you become financially strong however did not take much time to repay it. Principal employer and contractor may come to an agreement regarding this and it deemed necessary inform IF.

With Regards

Mr.Thumbs Up

From India, Chennai

Dear Rachana Divyesh,
As Principal Employer, you have vicarious liability in so for as your Contractor's illegal omissions and commissions are concerned. Admittedly, you have not paid your contractor his dues for obvious reasons as stated. So, the Labour Commissinor is right in issuing directions to you to pay off the amounts pending, apart from taking you to task. Of course, you are only responsible to clear the payments due to the contract work done for you.

From India, Salem

As rightly said it is the liability to principal employer,because monthly monitoring of contract labour wages register is must from the principal employer side.Convince the contract workers send a legal notice to the contractor for breach of contract.

From India, Chennai
Pan Singh

Dear Rachana Divyesh,

You must have an agreement with the contractor. The agreement must contain clause of Salary distribution, statutory compliances, indemnify etc.

Even if the whole liability retain with the PE, the contractor can't be escaped from his liability. You can issue legal notice to the contractor as well.

You appear to the Labour Commissioner with relevant documents. You can request the commissioner to make "Party" to the contractor as well.

You can ask for more grace period. You are also responsible to non payment, coz you have not release the contractor's payment.

Request your management to arrange adequate fund, so that you can release contractor pymt who in turn make labour payment.

But while the contractor will release the labour payment, pls note carefully the payment should be for the period related to work at your site.

For cost cutting, you can re-negotiate with the contractor after calculating the Labour Salary, statutory liabilities, supplies, job work done at site etc.

Ask the contractor to reduce his margin, so that both of you can come out from the critical situation.

If your management fails to arrange the fund that can be more complicated and can lead to legal action as well (which will attract more financial and mental cost).


From India, Delhi

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