Dear Nayak,
I think that the complementary comment of your very post is indicative of the impropriety of the said practice of deduction of wages for the weekly holiday of out-sourced employees. In the case of out-sourced employees, if it is based on the wrong premise of the presumption of "No work - No wages", it requires an elaborate discussion. "Wage" being the pecuniary or other kind of consideration for the work done by the labour, the periodicity of its payment is called as "wage period" that can be daily, weekly, bi-monthly or at the maximum monthly depending upon the duration and nature of the work extracted. Therefore, it becomes just a mode of payment. Normally, when labour is engaged for some occasional or casual nature of work the output of which can be measured then and there, the arrangement partakes the nature of "contract for service" and payment is made on completion of the work basis or daily basis as agreed. On the contrary, if the work, whether it be a core activity or an incidental one, assumes the features of regularity and close supervision of the employer seeking its execution and entrusted to another agency or contractor to be executed by his people, then such labour is called out-sourced or indirect labour who is bound by "the contract of service" existing with their immediate employer. A "contract of service" which creates a substantial relationship of employer-employee has wider scope than a "contract for service" that is purely ad-hoc and temporary. The creation of employer-employee relationship keeps the employee always at the disposal of the employer thereby ensuring payment for occasions of no work like off-days and holidays. When labour is outsourced, the entire cost of labour is included in the contractor's charges. That's why Governments ask the employers to multiply the daily rate of minimum wages by 30 and divide the monthly rate by 26 to arrive at the exact minimum wages for a month or a day as the case be. In other words, minimum wages include holiday wages also. Therefore, deduction of wages for weekly holiday in respect of outsourced employees is certainly illegal.