Labour Law & Hr Consultant
PL Kanthan

Cite.Co is a repository of information and resources created by industry seniors and experts sharing their real world insights. Join Network
It is purely a manpower contract with NPCIL(central agency) who is a Principal Employer (PE). Specified no.of worker of different skills to be provided to PE, and it is PEs responsibility to allocate and get the work done. Billing is based on attendance of 8 hours or part of it.
NIT/Tender for Contract dated back to 2013 and work awarded in 2013 itself for 2 years period but extended for another 10 months beyond 2 years. The contract was escalable based on revision in M.wages (central or state).
Payment of Bonus (Amendment) Act notified on 1.1.2016 with retrospective effect of 1.4.2014.
Applicability of retrospective effect for FY 14-15 & FY-16 is challenged by various parties at diff. High Courts which is now pending with Hon.Supreme Court.
In detail:
PE in his Tender value estimation includes :
present Min.Wage,
PPE (like uniform, safety shoe, medical test)
min. bonus @ rs.3500/pa (as per bonus act as on 2013) i.e. rs.11.21 per day of 8 hr duty per worker
workmen compensation insurance,
3rd party insurance +
10% profit on Min.Wage to bidder.
During the subsistence of the contract, min. wage was increased substantially and the same was compensated to contractor by PE from time to time.
Based on tender estimate, bidders quote taking into account of above pay-outs including min.bonus as above.
After revision of bonus Act, the contractor is claiming the difference of Bonus amount bet. rs.3500 and 8.33% of actual M.Wage paid. PE is not willing to consider. PE is releasing final Bill of contractor without paying revised bonus wef 1.4.14 or want to withheld the amount equal to revised bonus and release the balance.
Contractor demands that the onus lies on PE since he had included in the tender estimate.
Matter was raised under ID Act, Conciliation Proceedings under Asst.Labour Commr.(C) was held and ended-up in failure.
In this scenario -
- what is the responsibility of PE wrt CLR act, PB Act on the above issue.
- can the PE withhold the amount of bonus when there is no direct employer-employee relationship as per PB Act
- can the contractor(s) approach Industrial Tribunal under Ministry of Labour ?
- can the contractor(s) approach Hon.Courts for a remedy
Will appreciate if you can throw your expert advice on the issue.

From India, Thane
Dear Kanthan,
1) Divergence of opinion prevails among various High Courts regarding the extended vicarious liability of the Principal Employers in respect of the statutory benefits of gratuity and bonus payable to the contract labor engaged by them. But, personally I would like to favor the liberal interpretation of sec.21 of the CLRA Act, 1970 so as to ensure the statutory benefits of gratuity and bonus to the less privileged contract labor as and when they become due.
2) Upward revision of any monetary benefit by operation of any law should go to the actual beneficiary like the contract labor. Since the retrospective operation of the amendment to the PB Act,1965 is sub judice , the PE can withhold such extra benefit till the disposal of the pending case on the disputed issue.
3) Yes. This is a dispute between employer and employer regarding the condition of service of bonus to their contract labor.
4) Yes.Since NPCIL is an authority under article 12 0f the Constitution, it is amenable to Writ Jurisdiction.
My submission is that even though the PE is prepared to pay the dues as per the contract as well as the amended provisions of the PB Act,1965, he has got the right to agitate against the retrospective effect of a monetary benefit as it would involve certain practical difficulties like locating the contractors as well as the contract labor engaged through them in the past apart from accounting difficulties. In case the Supreme Court, in its wisdom, strikes down the retrospective effect of the amendment, the recovery of the amount already paid would be impossible. Therefore, with holding of such extra amount payable by the NPICL as a PE till the disposal of the writ before the SC may be right.

From India, Salem
Respected Umakanthan Sir,
Thank you for your valued input / opinion. There is a small confusion or I did not put it right then i.e.
The PE is not willing to pay the enhanced bonus asper Amended PB Act, while he had included pre-revised bonus amount in his tender estimate.
But he is enforcing to withhold the diff. of bonus amount bet. old & revised bonus amount FROM THE BILL PAYABLE TO CONTRACTOR on work done value. This is the core issue. He is not willing to pay the amended bonus, but forcing the contractor to pay the same.
This is applicable for FY 16-17 also because many of the contracts started in 2013 was running till beginning of 2017 on the tender estimation of pre-revised bonus amount only.
The matter is with Hon'ble Supreme Court for a ruling on application of "retrospective effect".
Kindly give your views on this.
PL Kanthan

From India, Thane
This discussion thread is closed. If you want to continue this discussion or have a follow up question, please post it on the network.
Add the url of this thread if you want to cite this discussion.

About Us Advertise Contact Us
Privacy Policy Disclaimer Terms Of Service

All rights reserved @ 2020 Cite.Co™