Understanding Employer Obligations: Direct vs. Third-Party Contract Hiring?

Dear All,

I need some input from my seniors and experts in the industry. I would like some clarification on the difference between hiring people on a direct contract and through a third-party contract. As an employer, what are our direct and indirect obligations for such types of employment?

Thank you.

There is hardly any difference between employing through a direct contractor and a third-party contractor. In both cases, the employer who employs is the Principal Employer, and he has a connection only with the immediate contractor. As such, he has to ensure that wages for the workers employed through the contractor/subcontractor are paid on time and as per the law. Since he will make payments only to the immediate contractor/subcontractor, he need not look into what agreement exists between the immediate contractor and the contractor who appoints him.

I believe that we can gather more ideas on this matter from other friends so that we can have a general picture of it.

Regards,
Madhu.T.K

I was going through some old posts that had no proper thread to revive. Contract labor, being a sensitive topic, I thought of extending it further and putting it to use.

Mr. Madhu, you are right. In both cases, compliance with the labor contract act comes into the picture. The prescribed registers for Contract Labor have to be followed:

i) By the Principal Employer if it directly employs contract staff at its project site

ii) By the Contractor if the contractor is engaged by the principal employer at its site

The following Registers are to be maintained as per the Labor Contract Act:

a) Muster Roll Form XVI

b) Register of Wages Form XVII

c) Wages/Muster Roll Form XVIII

d) Register of deductions Form XX

e) Register of Fines Form XXI

f) Register of Advance Form XXII

g) Register of Overtime Form XXIII

It is also understood that:

i) the contractor shall indemnify the Company against all losses or damages, if any, caused to it on account of acts of the personnel deployed by him.

ii) The contractor shall ensure regular and effective supervision and control of the personnel deployed by him and give suitable direction for undertaking the contractual obligations.

Hope Pawan is clear now.

Regards,

Chandru

I had a compliance dispute and required some suggestions on how to claim or sue in the court of law. Here are the illustrations:

Contractual Dispute Between Companies

Company 'A' had appointed employees to a client company, B. These employees were working for Client company B under a contract for six months. The contract was later extended for another six months. However, the salary was being paid by Client company B to Company 'A', which then credited the salary to the employees.

The contract ended after 12 months, from Jan 13 to Jan 14, but now Company 'A' is not providing a new contract letter for a further 12 months. The old contract letter included clauses stating that an appraisal would be conducted after the completion of twelve months. Company 'A' now claims that it's a client-driven process. However, when approached, Client company B states that this process is controlled by Company 'A', which appointed the employees on a third-party payroll basis.

I am confused about who is responsible for this cycle - Company 'A', the employees, or Client company B.

Thanks & Regards,
Mahendar Marri