Is the Payment of Bonus Act Relevant for Contract Labor in PSU Office Services?

Dear Sir,

Please clarify whether the Payment of Bonus Act is applicable to contract labor hired by PSU departments through contracts for office upkeep/cleaning services. As per Section 32 of the Act, establishments under the control of the Central Govt/State Govt are exempted from this Act. If applicable, who will pay the bonus to contract labor? Rates quoted by the contractor are lump sum rates for office upkeep jobs.

Thank you.

Applicability of the Payment of Bonus Act to Contract Labor

The relevant clause of Section 32 of the Payment of Bonus Act, 1965, is extracted below for ready reference:

"(iv) employees employed by an establishment engaged in any industry carried on by or under the authority of any department of the Central Government or a State Government or a local authority;"

Generally, Public Sector Undertakings (PSUs) of the State or Central Governments are not run by any department of the Government. One should not confuse an automobile maintenance workshop run by the Public Works Department (PWD) or a Government Press run by the Printing and Stationery Department, as the personnel employed therein are Government servants.

Responsibility for Bonus Payment to Contract Labor

The bonus to contract labor is to be paid by the contractor; however, the principal employer is vicariously liable.

Regards