Can Our Company Directly Pay Incentives to Contract Employees, or Must It Go Through the Contractor?

We have hired contract employees. All payments were routed through the contractor. The company wants to give some incentives to contract employees directly. Can the company pay directly to the contract employee, or should it be routed through the contractor?

Regards,
A. Jagadish

If the contract is genuine in all respects, it is better to make payments of every kind through the contractor only. Otherwise, it would be a pointer to the fact of the contract being a ruse or sham. Incentives cannot be viewed as an exclusive benefit available to regular workmen; at times, contract workmen may also be given incentives as a measure of motivation to improve their productivity. However, it may send wrong signals of suspicion to both the contract laborers and the contractor if paid directly, thereby avoiding the contractor. It's better to think twice before making a decision.

Regards