Are Contractor Workers Eligible for Bonuses and Gratuity? Seeking Your Insights

Does contractor labor is eligible for bonus and gratuity? Please, can anyone give me a reply?

Ramesh Rathore

The term contract labor is a relative term. For the principal employer (for whom he works), he is a contract employee. However, for the contractor with whom the principal employer has contracted, the employee engaged by him at the workplace of the principal employer is his payroll employee. The relationship that exists is between the contractor and the employee, as that of employer and employee. Therefore, the employee is eligible for all benefits, including bonus and gratuity, as if he were an employee under the rolls of the contractor.

It is expected that the principal employer ensures that the contractor's employee working in his plant receives the bonus as per the Bonus Act. If the contractor has not paid it, the principal employer can intervene, make the payment, and recover it from the payments due to the contractor.

Regards, Madhu.T.K

With utmost respect, I respectfully disagree with the view of respected Madhuji, sir. Section 21(4) of the CLRA only permits the recovery of wages from the contractor which the Principal Employer (PE) has paid on behalf of the contractor and not the unpaid bonus.

Best wishes,

Jpratap

Well, I agree with Mr. Pratap. The law states that the principal employer does not need to pay gratuity and bonus since it does not fall under the definition of wages. Seniors, kindly help!

Certainly, I did not say that the Principal Employer should take care of payment of GRATUITY, but I believe that he has to ensure that the Contractor has paid Bonus to his employees ENGAGED in the Principal Employer's place of work. If the Principal Employer comes to know that the Contractor has not paid Bonus to his employees engaged in his establishment, the Principal Employer should intervene, make payment, and recover the amount so paid from the contractor.

Regards, Madhu.T.K