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The principal employer has cleared all the bills of the labour contractor. If the labour contractor is not paying salaries to labourers. Then also principal employer is still liable for the payment of salary to labourers? If so then how to recover the amount paid to the labour contractor if no security amount is pending with the principal employer
From India, Chennai
Labour Law & Hr Consultant
Ceo-usd Hr Solutions
Plant Hr Head
Hr Freelancer
Consultant For Social Compliance, Factory


Dear friend,

Had the principal employer carefully gone through the provisions of section 21 of the CLRA Act,1970 and acted accordingly, the occasion for raising this question would not have arisen at all. Particularly, section 21(4) enjoins vicarious liability upon the PE for payment of wages to the contract labour. As per judicial decisions, it equally applies to all dues to contract labour falling under the extended meaning of the definition of the term ' wages' as defined under the Payment of Wages Act,1936.

In the absence of security deposit of any sort, the PE has no option other than instituting a Civil Suit for recovery from the contractor as a debtor default only.

From India, Salem


This is a normal practice of many of the contractors.
Please note that Principal Employer is liable for everything, even though many case laws gives no liability of principle employer.

Call your contractors and make an agreement and specify in one clause to produce all the documents payroll related including their bank transfer or mode of payments by 11th of every month. Please counter check the same. Not paying, as a Principal employer, you are responsible.
Else, Please change the contractor. Fighting cannot help, as the contract employees should get as they are legally entitled.


Ullanat – Labour Laws, Compliance , Property & Management Consultants

From India, Mumbai

I agree with Mr. Pradeep that many contractors are doing the same thing. There are PEs also who are also not paying to contractors on time.

To my opinion PE cannot escape the responsibility even after some case laws are in favor of PE as the contract employees are engaged at PE's premises. Ultimately it is the human factor (contract employees) who will suffer.

Here lies the question of contractors value system and ethics of doing business, There are few organized contractors - Randstad, Genius, Team Lease etc.etc. who are providing reasonable services to big clients. Obviously small or medium business house are relying on other contractors where is actually lying the most of the problem.

To my opinion first thing first is to select ethical contractors considering past credibility and compliance status etc.

USD HR Solutions, our organization is doing same job for last 12 years and not a single month we have failed to pay salary to employees on time and no compliance deviation. We have about 180 employees in our pay roll. There are contractors are available in every location but one has to find out the same before selection.

S K Bandyopadhyay ( WB, Howrah)
CEO-USD HR Solutions
+91 98310 81531

USD HR Solutions – To Strive towards excellence with effort and integrity

From India, New Delhi

I don't understand how such a mistake can happen? There are many ways to fight such problems.
01. Before engaging the contractor in the company, deposit the lump sum amount as security fee.
02. Get the salary paid by the contractor to his concerned workers first and after verifying that payment make the payment.
03. Pay the EPF in the same way and if possible, get a separate ECR made for the people working in your establishment and also get it paid separately so that the contribution of any employee can be paid for the working period of your establishment. Because with this you will be responsible for the duration of the work done for your establishment and not for any other establishment.
04. Check the EPF passbook of contract workers from time to time whether their contribution has been properly deposited in their account or not. Check their KYC etc.
05. Like above, the ESIC should also be paid by the contractor after it is done. With this, all the contractors can see the details of the workers from the ESIC portal.
06. Bonus should also be paid in the same way.
The security fee as per point no. 01 is levied so that the soundness of the financial background of the contractor can be checked and such situations can be settled.

From India, Rudarpur
indu 182

Dear All
I am also working as a contractor . We pay salary by 7th of every month also submit the bill by than. PE reimburse the payment of the bill by the end of the month. No PE is paying advance payment to the contractor. When PE is reimbursing the contractor bill he is already aware that contractor has paid the wages or not. So I don't think this kind of situation arise.

From India, New Delhi

I agree with some of the suggestions. Basically PE should be vigilant and ensure payment of wages and any other payment to contract workers.
I am not sure to what extent the suggestion that contractor to pay first and PE to reimburse later. I believe many contractors can not do so unless the bills are of small amounts. I knew some contractors handle monthly bills running into crores, but their services charges can not meet even a paltry amounts of the bills. In such cases how can we expect contractor to pay first.
Further, as per the new code on wages, PE to pay first.

From India, Hyderabad
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