Principle Employer Liable To Pay Bonus

Dear All, I am working in leading Constructions Company, we do many construction projects by giving contract to the contractors. We are the principle employer and we have contract employer also. My question is if contract employer is not paying the bonus to their employee then principle employer is liable to pay the bonus. Waiting for your valuable reply. Regards, SAI

Dear Saikiruba, Your contractor or agency is independant indentity for the purpose of the Payment Of Bonus under Payment of Bonus Act. Hence it is depend on the financial position of the Agency/contractor whether workers enganged by contractor would entitled for such payments i.e allocable surplus & available surplus of contractor's firm. Second criteria could be Terms and condition of contact/agreement your company is having with contractor.Normally principal employer consider such liability while awarding (part of cost) work/contract to agency, hence it is principal employer to ensure such disbursement if is considered as a part of agrrement. Hope this is clear. Regards, ACCHR

Dear Acchr, Thanks for your reply. As you said it is the responsible for the principle employer to ensure before giving the contract. The contractor agrees and signs in the agreement saying he will be liable to pay bonus as per the bonus act, but he doesn’t pay the bonus then in this situation the principle employer is liable to pay. what are the way to sort out the issues. Regards, SAI

In this case, the principle employer can directly debit the bonus amount from the outstanding payments to the contractor and disburse the same to the contract employees. If there are not any outstanding payments to be made to the contractor, the same can legally be recovered from the contractor. It would make it more appropriate to take this up to your legal advisor. -Saravana Rajan