Struggling to Get a Bonus as Contract Laborers: Who Should We Approach for Help?

Hello everybody, as we are new to the site, we were searching for the bonus topic. We came across this website, so can anyone help us with this problem?

Background Information

We work in an R&D department of the Central Government as contract laborers. Our wages are paid based on a daily attendance system and are paid through a contractor. Our problem is that our working days are based on the organization's workdays, so it may vary around 26 or 27 days depending on the month. We have been working as contract laborers in the same organization for the past 12 years. Our contractors change as per the tender system, so we have not received any bonus from the contractors or the organization. Until now, around 12 contractors have been changed.

Seeking Advice

Whom should we ask now, the organization or the contractors? We have checked the rules, but we can't find proper solutions or a step-by-step procedure to get the proper point. Additionally, we receive a salary of around 8k or 9k after deductions like ESI, PF, and professional tax. It is said that a laborer who earns below 10k is eligible for a bonus. We have categories like skilled, semi-skilled, and unskilled. What should we do as per the rules?

Thank you.

Understanding Bonus Eligibility for Temp Staffing

Bonus is not applicable to you or your colleagues. The situation you are in is called 'Temp staffing' and is used as a measure by firms to control their payroll costs (no bonus, gratuity/ex gratia, etc.).

If the below INR 10,000/- rule is applicable, then your employer (the contractor) is already paying it in some component in your monthly salary.

Regards,
King1984

Eligibility of Temp Staffing for Bonuses

Where is it written that temp staffing is not eligible for a bonus? Some people have been working here for the past 12 years. On what basis do you claim that they are considered temp staffing? Are you referring to any Indian law or foreign law?

Thank you.

Keshav Korgaonkar: It isn't written, but the practice of most temp staffing firms is to show payment of bonus as part of the monthly salary (not the real bonus) and to show the bonus as complied with. You can check salary slips issued by the largest temp staffing employers and validate this (please do leave me a thank-you note then ) and you'll understand why King1984 said salary was paid for 26/27 days—they are being employed as contractual labor and not FTEs—which is why 'Bonus' usually is not paid.

Regarding working for the last 12 years, please read this line carefully by King1984: Quote: "We have been working for the past 12 years as contract laborers in the same organization. And our contractors are changed as per the tender system, so we have not received any bonus from the contractors or from the organization, so far, some 12 contractors have been changed."

This means that King1984 is:

• a contractual laborer

• has had 12 employers in 12 years (1 every year, all as a contractual laborer)

• is 'deputed/deployed' to the 'client' site

• is paid as either unskilled, semi-skilled, or (in very rare cases) as skilled labor.

I am not going to point out the labor law and the ways to circumvent legal compliance—you have been a labor consultant for close to 30 years now, so you will know exactly why the 26/27-day payment of 'wages' is being paid. And please do correct me if I am wrong in any of my assumptions.

Clarification on Bonus Payment Issues

Though it is clearly mentioned by the initiator of this thread that a bonus was not paid to them during the last 12 years of their service, the following aspects have not been clarified:

- Whether any representation was made by them to the employer or the contractor for payment of the bonus as per the provisions of the Payment of Bonus Act, 1965. If so, what was the reply in writing from the employer (CPSU) or contractor?

- Such a tendency for non-payment of bonuses is reported to be continuing for 12 years. Why was the matter not reported to the "Inspector" as appointed under section 27 of the above Act?

- Whether the directly employed persons in the CPSU are doing the same type of work as the contractor employees are doing? If so, are such directly employed persons being paid bonuses by the said CPSU?

- Whether the principal employer, i.e., CPSU, and the contractors have obtained registration and licenses under the Contract Labour (Regulation & Abolition) Act, 1970?

Legal Examination and Supreme Court Judgment

All the above issues require a person with some knowledge of labor laws to examine them. It is, however, also mentioned that the change in the name of the contractor every year will, in no way, in my opinion, disentitle the employees from their dues as per the provisions of the above Act. I may further submit that the Honorable Supreme Court of India, in their judgment in Bhilwara Dughd Utpadak Sangh's case, had termed such practice as "subterfuge." The copy of the judgment is enclosed as an attachment.

Discussion on Industry Practices

Further, one of the contributors, Mr. Talentsorcerer, has tried to explain the practice or trend going on in the industry and has tried to justify that no bonus is actually payable, etc. In this connection, I may submit that in this citeHR, we discuss the problems or issues raised by the initiators of the thread as they are submitted and offer our opinion based on the provisions of labor laws. We are not concerned about what is the trend or practice. Perhaps, only the Supreme Courts or High Courts are entitled to treat such practice or trend as violative of any provisions of labor laws as declared by the Honorable Supreme Court, as mentioned by me above, and the copy of the same is linked herewith.

Regards

Please note the points below:

1. If your monthly salary (Basic + DA) is below 10K, you are entitled to a bonus.

2. Approach your contractor demanding a bonus. If he does not respond, please approach the authorized person or Director of the R&D Department.

3. If the R&D department fails to meet your demand or you are not given justice, you will have to bring this issue to the Labor Officer or DLC (Deputy Labor Commissioner) in the Central Labor Department in your locality.

Regards,
Ganesh.H.N
Bengaluru

My views on this entire thread are as follows:

1. The Payment of Bonus Act is not applicable to employees engaged by a Department of the Central Government. Refer to Section 32 (iv).

2. Central Government employees are eligible to receive a non-productivity-linked bonus every year, depending upon sanction by the President of India.

3. Whether employees engaged through contractors or outsourced agencies by the Central Government are eligible for this non-productivity-linked bonus is a big question for me. I am not aware of it.

4. Whether employees are paid on a daily rate (26/27 days) or a monthly rate (30/31 days) is not a criterion to determine if employees are contractual labor or full-time equivalents (FTE), as stated by our Talentsorcerer. The criteria for the bonus do not depend on whether an employee works 26/27 days or 30/31 days. I am completely confused after reading Talentsorcerer's response.

5. Temporary staffing or permanent staffing is not a criterion for a bonus under the Payment of Bonus Act. It is also not a criterion under the Central Government's non-profit-linked bonus, to the best of my knowledge. The term "temporary staffing" used by our learned Talentsorcerer is very confusing to me. I am unsure why employees working for 12 years would be considered temporary staff.

6. Contracts between the Department of the Central Government and various contractors retaining the same employees under different contractors appear to be sham contracts in my opinion.

7. According to a recent judgment of the Supreme Court (2015 LLR 95), long-term contractual appointments are considered unfair labor practices. Following this logic, employing contract labor for an extended period should also be deemed an unfair labor practice. Where are the regulations and the abolition of contract labor in this scenario?

8. Paragraph 10 of the V Schedule of the Industrial Disputes Act, 1947, prohibits employers from hiring workmen as badlis, casuals, or temporaries and continuing to employ them in that manner for years with the intention of depriving them of the status and privileges of permanent workmen. Engaging the same contract laborers for years should fall under the same category as Paragraph 10 of the V schedule, in my view.

9. Our esteemed member Harsh Kumar rightfully pointed out that the arrangement or practice by the Department of the Central Government, as quoted in this thread by the initiator, is a "subterfuge."

10. Lastly, as mentioned by our esteemed member Harsh Kumar, our focus here should be on discussing the law and not just the practice. I would add that we need to address prevailing practices that do not align with the law.

I extend my sincere thanks to our esteemed member Talentsorcerer. Thanks to his posts, I had the opportunity to write all this, and my knowledge has been refreshed.

Regards

Sorry to say that a contractual employee is not entitled to a bonus, as per the wording of the Contract Labour Act, 1970.

Regards

My dear friend, where is it written? Where are the wordings? Which Contract Labour Act of 1970 are you referring to? The Contract Labour Act of 1970 that I read has no mention of bonuses. If you provide the abstract of the said provision or the verbatim wording, the members of this forum and the entire HR Fraternity will benefit from your knowledge.

The Menace of Contract Labor in India

The practice of contract labor in India is a menace, a sham, and a shame as well. I know this practice is prevalent in most corporates, especially state and central government departments and undertakings. You may not believe it, but it's not just 5 years or 10 years; it's more than 20 years. Individuals are kept in the contract labor category and denied regularization on the pretext of the lack of vacancies. The surprise is these categories are employed in the regular production line, let alone those on sundry jobs like housekeeping, landscaping, loading, and unloading, etc.

Millions of them are still fighting with their managements through dharnas, demonstrations, hunger strikes, etc., with no tangible results. The modus operandi is well known. After the expiry of the initial few years, one contractor's work order is not renewed. Instead, the same job is awarded to the same contractor under a different name, keeping almost everybody on the roll except for a few troublemakers. Where is the job security for these laborers? Where are the statutory benefits? What do all these labor legislations do to protect their interests? Despite numerous court judgments, many governments have not remedied this situation so far. Queries of this nature keep coming in scores.

Sir, please help me with these questions that have arisen:

1. What is the meaning of Contract Labor?
2. What benefits are available, such as bonuses, leaves like Casual Leave, or any others?
3. What medical benefits will be provided through the contractor and the organization if an accident happens at work?
4. Are there any provisions for loans through the contractor?
5. How many leaves are granted to contract laborers for the whole year?
6. Are there provisions for medical leaves or half salary, etc.?

We would be very grateful for the help. Additionally, we are not highly educated, so please use simple English words rather than legal jargon. Thank you all for your valuable opinions.

Responsibility of Principal Employer for Bonus

As per the act, the Principal Employer (P.E.) hires a contractor for a specific job. The P.E. does not hire any employees directly, so there is no responsibility for the P.E. to give a bonus.

Responsibility of Employer (Contractor) for Bonus

A person is eligible for a bonus if they have worked at least 30 working days in a year. However, contractor labor jobs often terminate every month with pay issued for 26 or 25 days. According to Section 12(2) of The Payment of Bonus Rules, 1975, every employee shall be entitled to be paid by their employer in an accounting year, a bonus, in accordance with the provisions of this Act, provided they have worked in the establishment for not less than thirty working days in that year.

If I am not correct, kindly help me to update myself.

Regards,
Anurag

Responsibility of Principal Employer for Bonus

I read King1984's question and the answers from all members. After that, I consulted the Contract Labour Regulation and Abolition Act and the Bonus Act. Based on that, I derived two points. Kindly update me if I am not correct.

As per the act, the Principal Employer (P.E.) hires a contractor for a specific job. The P.E. does not hire any employees directly, so there is no responsibility for the P.E. to give a bonus.

Responsibility of Employer (Contractor) for Bonus

A person is eligible for a bonus if they have worked at least 30 working days in a year. However, contractor labor jobs often terminate every month, with pay issued for 26 or 25 days. According to Section 12(2) of The Payment of Bonus Rules, 1975, every employee shall be entitled to be paid by their employer in an accounting year, a bonus, in accordance with the provisions of this Act, provided they have worked in the establishment for not less than thirty working days in that year.

If I am not correct, kindly help me to update myself.

Regards,
Anurag

If you aren't finding any wording for a bonus related to contractual employees/labor in the Contract Labour Act 1970, you can refer to the applicability clause of the Payment of Bonus Act, 1965. I do hope you'll find your answer.

Regards

Dear Friend, However, there is one contradiction, and that is the working conditions of contract labor (bonus and apart from bonus related) are determined as per segment/industry type-wise. But it's completely at the discretion of Segment/Industry Norms.

Regards

I, or rather this forum, would appreciate it if you could provide the abstract of the said provision verbatim, or the exact wording. Additionally, could you please explain the meaning of your statement: "there is one contradiction. And that is THE WORKING CONDITIONS OF CONTRACT LABOUR (Bonus and Apart from bonus related) is determined as per segment/industry type wise also"?

Thank you.

I think Keshav and Harsh have clarified the points in detail, and I don't find any merit in Abhay's arguments either.

Here in this particular case, unfortunately, the principal employer is the Central Government, and that is why all these things have happened. Had it been any other private organization, the Labor Department would have intervened, and the contract workers would have received their bonus. For deciding the eligibility for a bonus, it is immaterial whether they are daily rated or employed for a fixed period or not. In conciliation, practically (not going by law), even the salary ceiling of Rs 10,000 is not considered nowadays.

Main Issue: Government as Principal Employer

The main issue in the present case is that the government is the principal employer, and the fact that a government body is not covered by the Payment of Bonus Act cannot be taken for granted. The department cannot escape from the liability of being the principal employer. Concerning the payment of ESI and PF contributions, the contractor has been following the respective laws, and there seems to be no failure in making these statutory payments. This means the contractor, as the employer of the engaged workers, should take the initiative and pay the bonus as per the law. Moreover, the government department for whom they are engaged should also take the initiative and ensure that the workers receive their bonus.

Issue of Contractor Changes

Another important issue that I find is that there have been changes in contractors over this 12-year period, but the workers remain the same. If this situation were in a private organization, the labor department would naturally declare the contract as a sham and take action against the principal employer. In this scenario, the workers should file a complaint before the appropriate authority, the Labor Department, and find a solution. Normally, the contract value will include an element of a bonus as well. This should also be verified. There may be a chance that the department makes payment on a CTC basis, and the contractor is only paying the salary, keeping the bonus element with them.

Regards,
Madhu.T.K

Sure, I'll explain my wording. But first, I wish to know what you understand by that. Waiting for your response.

Regards

First of all, I would like to say that Mr. Keshav and Mr. Madhu TK have provided the exact reply. The Payment of Bonus Act does not explain the category of workmen. The only criterion is a salary below Rs. 10,000 and a minimum of 30 days working.

Let us use this information to enhance our knowledge through learning and sharing. A healthy discussion will help us gain knowledge, while a heated argument will only lead to frustration. Let us avoid that and strive to learn the correct procedures. Even though we may have forgotten the ethics in following the correct practices, we must be aware of the appropriate procedures.

If we are wrong, let us correct ourselves. Misguiding others will reflect poorly on us and our organization. The best solution for contract workers is to seek guidance from a knowledgeable labor law attorney in their area and file a complaint with the relevant authority.

Regards.

Eligibility for Bonus under Contract Labour (Regulation and Abolition) Act, 1970

As per the Contract Labour (Regulation and Abolition) Act, 1970, any employee engaged for work in an organization as contract labor is eligible for a bonus. The Payment of Bonus Act, 1965, clearly outlines this provision. Regardless of the number of contractor changes, the principal employer (i.e., the organization for whom you are working) is solely responsible for ensuring you receive your bonus for the period when the closure of the contractor takes place.

Terminal Benefits and Rights

Terminal benefits, as per the Contract Labour (Regulation and Abolition) Act, 1970, are explicit on this subject, and you have every right to approach the labor commissioner on this issue. The Central Government agency must release the contractor's money after ensuring all pay components are paid to the contract labor.

For any queries, please feel free to email me. I can provide you with relevant acts for obtaining the benefits. I have successfully resolved a practical issue related to this matter.

Thank you,

Sathish