Labour Law & Hr Consultant
PL Kanthan
Private Consultant On Labour Laws

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Dear Sir,
I am working in BSNL on contract basic.BSNL department paying minioum wages to contracter as per State minioum wages Rate.But BSNL demand center labour department labour licence from contracter.BSNL not giving the bouns to contracter.Pls advice us the law of contract labour in BSNL is center goverment unit.

From undefined, undefined
As per the definition clauses of the term "Appropriate Govt" both under the Minimum Wages Act,1948 and the Contract Labour(R&A)Act,1970, the Central Govt is the app.govt for BSNL since it is a Central Govt Undertaking. So, only the Central minimum wages rates are applicable to the contract labour engaged therein. Basically, bonus under the Payment of Bonus Act,1965 is a payment due to the employees based on the annual performance of the industrial establishment concerned. For all practicl purposes under both the enactments, a contractor's establishment is a distinct establishment in respect of the PB Act,1965 and the CLRA Act,1970. Therefore, even Courts have expressed divergent views about the vicarious liability of the Principal Employer under the CLRA Act in respect of payment of bonus to the contract labour engaged by him. However, there is some substance in the argument that since the contractor's charges include all the statutory expenses likely to be incurred by him in respect of the contract labour engaged for the works of the Principal Employer, the bonus payable to such contract labour also falls within the PE's vicarious liability for the payment of statutory dues to the contract labour thus engaged therein.
From India, Salem
Dear Umakanthan ji,
I always read your thread with full attention and interest. I appreciate your in-depth knowledge of the subjects relating to labour laws.I am from Central labour services and has retired from senior position too. As far as applicability of minimum wages to the BSNL contract labour is concerned, the minimum wages either States or Central, whichever are higher shall apply. If it is a case relating to NCT of Delhi, then state govt minimum rates will prevail as those are higher.
As far as PE's vicarious liability for the payment of statutory dues to the contract labour is concerned, such liability, in my opinion, is limited to payment of wages or unpaid dues only. As regards the Payment of Bonus Act, it is certainly applicable to the contractor's establishment but he will have to calculate the same based on the provisions envisaged under the Act and accordingly pay the bonus to the contract labour.
BS Kalsi,
Member since August, 2011

From India, Mumbai
Dear Seniors,
I am an ex-employee of Central Govt., currently doing business.
While I agree on the issue of MW (state or center, whichever is higher), I have slightly different opinion with regards to Bonus to Contract Labours.
Labours engaged in BSNL may be of service oriented or manpower supply as such the contractor is not engaging labours for production. As per CLRA, the contractor might be paying applicable MW asper the contractual agreement, and he may not have provision in his service charges for the payment of Bonus.
For this purpose, either the BSNL should have included applicable bonus also in the contract rate/estimation or compensate the contractor to that extent. No business entity will be paying bonus out of pocket, unless it is derived from that business source.
My view on bonus is, thus, in line with the opinion of respected Shri M Umakanthan Sir.
Correct me if I am wrong.

From India, Thane
Dear Kanthan,
Thanks very much for continuing lovely discussions on the subject. I fully agree with you that much depends upon the contractual agreement between the employer and the contractor. The contractor will not pay from his own pocket unless those labour are on the permanent rolls of his establishment.
I have worked as Labour Law Advisor with Reliance Industries Ltd (Mukesh group) for 5 years after my retirement and found that the Principal Employer used to include the components viz ESI, PF contributions and minimum bonus amount in the annual contractual agreement of the all the contractors and my office used to keep a check and used to ensure that all the dues are correctly paid to the contract labours besides other labour laws compliance by the contractors.
BS Kalsi,
Member since August, 2011

From India, Mumbai
My sincere thanks to M/S Kalsi and Kanthan for their correction which is very vital. Regarding the Bonus payment, I think that all the three of us of the same opinion but for the reasoning behind it.
From India, Salem
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