Dear Rahul,
In a sense, the gap between principle and practice existing everywhere makes its ubiquitous presence in Contract Labour System also. Since a contractor is a separate entity for all legal purpose, it is open to him to rotate the services of contract labour in his roll among various Principal Employers' establishments depending on work requirements and he may charge at different rates for the service rendered to each PE. At times due to unforeseen circumstances, he may incur losses in a particular contract work. Hence, his liability to pay bonus to his contract workmen under the Payment of Bonus Act,1965 stands still at large irrespective of their place of actual engagement during the particular accounting year. This is the principle. But what the practice actually is that the contractor secures the contract first and depending on the rates of service-charges approved, determines the the no of people required and mobilises them accordingly. Unfortunately, the applicability of the Minimum Wages Act,1948 and the Contract Labour Act,1970 come into play and legal compulsion is thrust upon both the contractor and principal employer. Sec.20 and 21 of the CLRA Act creates vicarious liability on the part of the principal employer in case of failure by the contractor in respect of welfare and pecuniary measures. In order to protect the interest of contract labour and ensure the payment of their statutory dues, some High Courts have fixed the ultimate responsibility of bonus and gratuity payments on the PE based on the principles of vicarious liability and social justice. So, my suggestion would be to discourage the practice of monthly bonus payment and make it annually.