Contractor Wage Dispute: What Are the Possible Outcomes of This Case?

Dear Friends,

A contractor worked from December 2005 to August 2009. Every month, while receiving the payment, he signed the bill. He submitted the paysheet, attendance, and OT details totaling Rs. 2,581,000. In December 2009, the same labor supply contractor filed a case under the Payment of Wages Act in his own district ALC Office (not at the workplace where he undertook the contract job), which does not have the jurisdiction. He claimed that he and 60 other workers were engaged in construction activities at XXXXXX location. He worked for 90 lakhs but only received 35 lakhs. The balance amount should be paid to him.

In fact, the contractor or any of his workmen never reported any non-payment of wages at the construction site. Every time he received the wages bill, he signed, confirming that he checked and understood the bill was correct and no discrepancies were present.

What will be the consequences of the case? Can anyone shed some light on the issue?

Dear friends,

A contractor worked from December 2005 to August 2009. Every month, while receiving the payment, he signed the bill. Each month, he submitted the paysheet, attendance, and OT details totaling Rs. 2,581,000. In December 2009, the same labor supply contractor filed a case under the Payment of Wages Act in his district ALC office (not at the workplace where he undertook the contract job), which does not have jurisdiction. He claimed that he and 60 other workers were engaged in construction activities at the XXXXXX location. He stated that he worked for 90 lakhs of work but only received 35 lakhs. He is requesting the balance amount to be paid to him.

In reality, neither the contractor nor any of his workers ever reported any non-payment of wages at the construction site. Each time he received his wages bill, he signed, confirming that he checked and understood the bill was correct and had no discrepancies.

Consequences of the Case

What will be the consequences of this case? Can anyone shed some light on the issue?

Usually, such a trick is played by subcontractors from Orissa. If you can prove that you paid all his dues, how can they claim otherwise? In case of non-payment of wages, he should provide his work order, compliance report, ISM registration, etc. Most likely, you will receive another letter to appear before the labor office in Orissa. If you go there, you may fall into a trap. Instead, clearly deny all charges, send a letter, and in the meantime, consult with an advocate.

Regards,
Georgie Daniel

Thank you, Mr. Georgie Daniel, for your reply. This incident occurred in Andhra Pradesh. I received a notice from the Mehboob Nagar ALC Office. I explained to the ALC the total labor strength day-wise from Dec 2009 to Aug 09, the monthly bill he received, the monthly payment he made, his retention amount held in the company, his earlier representation submitted to the Minister in Hyderabad, and last but not least, I dialed my JLC and handed the phone to the ALC. The ALC then wrote that parties had not arrived at a unanimous consensus. Therefore, the papers were forwarded to the JLC in my district. Upon reaching that office, the contractor did not show up. This was likely because the JLC had personally visited my site many times, appreciated my work methods, and control over the workmen and contractors. Therefore, even if the case had come to him, he would have likely summarily disposed of it.

I brought up this case because the JLC knows me personally and is a good friend of mine. That is why I did not face any repercussions. If this had occurred in another area, I am curious to know what the consequences of the case would have been.

Dear Mr. Bhaskar,

Checklist for Addressing a Claim Under the Payment of Wages Act

1. Did the contractor provide the worksheet along with the claim petition filed for the claim made by him? This is essential for a claim under the Payment of Wages Act.

2. If there is a written contract with the contractor, it will show that he is not a worker under the PW Act.

3. Please check whether the workmen are covered by the provisions of the PW Act. There is a wage ceiling for getting covered under the PW Act.

4. Please verify whether the PW Act is applicable to the establishment in question.

5. If the Authority before whom the claim has been filed does not have jurisdiction, you can question the competence of the Authority to entertain the application.

6. Please check whether there is any delay in filing the claim. If there is a delay, the petitioner should file a delay condonation application. If it is not filed, you can contest the application as time-barred.

7. Please ensure you have documentary proof for the payments made.

With regards,

Thank you for your prompt reply, Mr. Harikrishnan. I am providing a response to the questions you asked below your inquiry.

1. Did the contractor provide the worksheet along with the claim petition filed for the claim made by him? This is a must for a claim under the Payment of Wages Act.

No, he has not provided any worksheet, but he made a tabular form stating that 60 workmen × 46 months × Minimum Wages (Per Month) = some amount.

2. If there is a written contract with the contractor, that will show that he is not a worker under the PW Act.

These contractors are not educated people. He, his wife, brother, brother-in-law, sister-in-law, and all his relatives are only working with other relatives and his village people. So, making a contract agreement will not be of any use.

3. Please check whether the workmen are covered by the provisions of the PW Act. For getting covered under the PW Act, there is a wage ceiling.

The subject was discussed with the ALC of Mehboobnagar, but his contention was that as the word "workmen" is added, the Payment of Wages Act will be applicable.

4. Please check whether the PW Act is applicable to the establishment in question.

All construction companies have to adhere to the Payment of Wages Act and the Minimum Wages Act, and there is no exemption for any company.

5. If the Authority before whom the claim has been filed does not have the jurisdiction, then you can question the competence of the Authority to entertain the application.

The contractor and the other 60 workmen's word will make the jurisdiction applicable all over India. If the case is conducted in Assam, we have to respond without any hesitation because, in the eyes of the law, the workmen are underprivileged people, hence their rights need to be protected. Therefore, they can file the case for non-payment of wages even in their own district, and the company has to attend the case. The question of jurisdiction does not arise.

6. Please check whether there is any delay in filing the claim. If there is a delay, the petitioner should file a delay condonation application. If it is not filed, you can contest the application as having been time-barred.

He started the work in December 2005 and closed his work on August 6, 2009. He started claiming from December 2009, while during the contractual period, he or his workmen never had any complaint about non-payment or less payment of wages. The same was discussed with ALC, but he, in turn, replied that, as per the instructions of the District Collector, he has to inquire about the case for its correctness and give an opportunity for settlement. Hence, Limitation does not arise.

7. Please check whether you have documentary proof for the payments made.

I have the Register of Workmen, Paysheet, OT Register, Muster Roll from December 2005 to August 2009 for all the workmen, and the same was also shown to the ALC.

Here, my question is, if at all I have all proof, what will be the consequences if it happened at other places where there is no influence with authorities.

Dear Mr. Bhaskar,

My presumption, based on your reply to Mr. Georgie Daniel, is that the contractor had not filed any claim under the Payment of Wages Act and the ALC had acted on the complaint of the Contractor given to the Collector, which in turn was forwarded to the ALC for action. From your post referred to above, I think that the ALC was conciliating on the complaint, treating this as an industrial dispute. The subject matter of this complaint, being non-payment of wages or lesser payment of wages, cannot be the subject matter of an "industrial dispute" as defined under the Industrial Disputes Act 1947. Therefore, even assuming that the ALC records that there was no consensus on the issue between the parties, he could not have sent a failure report or done anything else. The ALC should be aware of it, and that is why he had sent the file to the JLC. In such circumstances, when you have all the documentary proof of payment of the correct wages to the workers, you could have asked the ALC to advise the workmen to file a claim for the unpaid wages under the Payment of Wages Act and contest the claim based on the documents available with you.

In case the ALC is the Authority under the Payment of Wages Act for the area in which the cause of action arose (i.e., where the workmen worked), then he should not have conciliated/held discussion on the complaint (assuming that the complaint is in the prescribed form) and should have gone ahead to decide whether there was non-payment or lesser payment of wages as alleged by the contractor.

Your response to issue No.5 is not appropriate. Any judicial authority or quasi-judicial authority gets jurisdiction to decide an issue based on the area assigned to him either by the Act itself or by the notifications made under the Act. To make a claim regarding work done in Andhra Pradesh, the worker cannot approach a Forum in Assam. They can approach only a Forum that has jurisdiction under the Act under which the claim is made. The workers are underprivileged people, but that does not entitle them to choose a Forum that has no jurisdiction.

Regarding your response to issue No.4, I was suggesting that you should ascertain whether the establishment in question against which the complaint was made comes within the scope of Section 1(4) or 1(5) of the Payment of Wages Act.

By the way, I have not asked you any question, but have only given a checklist of issues to be taken note of regarding the issue raised.

With regards,

Thank you for posting such an insightful issue. It provides valuable learning for all HR/IR personnel. I would also like to express my gratitude to all the dignitaries who have contributed and shared their opinions on this matter.

Regards,
Manish Joshi