Navigating Wage Compliance: Should We Follow Central or State Government Rates?

Dear all,

We are a construction company and have obtained a labor license under the CLA-1970. We are the main contractor, but our principal employer (registered under the Companies Act 1956 and Factories Act 1948) has stated that since our construction job has been completed, we must now adhere to the Factory Act 1948 and pay rates according to the state government.

Questions Regarding Wage Compliance

My questions are:

1. We have obtained a labor license under CLA 1970 and are currently paying rates as per the central government. However, now we are being instructed by our principal employer to pay rates as per the state government. Is this legally correct?

2. As a construction company, which government rate, i.e., central government or state government, would be appropriate for determining the minimum wage for our workers?

Please advise accordingly.

Thank you.

I will answer your question No. 2 first. You mentioned that you are a construction company. This implies that you are a construction contracting company that undertakes construction projects.

In the case of undertaking construction projects for PSU, you fall under central jurisdiction and must adhere to the Minimum Wage Rates of the Central or State, whichever is higher. For projects in the private sector, you are subject to the respective State Laws and must follow the applicable State Minimum Wage rates for the construction industry.

Regarding your question No. 1, you should have received the answer from the information provided above.

Now, your construction contract work is considered part of the factory as defined under the Factory Act of 1948. Consequently, you are required to follow the Minimum Wage rates applicable to that factory, depending on the industry schedule it falls under.

These are the fundamental aspects of HR compliance, and it appears that you may benefit from retaining the services of a professional like myself.

Kind regards