How Should I Handle Bonus Payments for Contract Workers Who Recently Resigned?

Dear Friends, I'm working in a company in Hyderabad. I have three manpower suppliers who supply manpower according to the minimum wages and also pay PF and ESI in compliance.

Now, my question is regarding a few employees who resigned last month, i.e., August 2017. I am preparing a list of bonuses for the current employees, and one of the manpower suppliers is insisting that I pay the ex-employees who left the job.

Since we pay them daily wages without any appointment orders, and the same employees are performing duties in another company as per the supplier's requirements, I am unsure how to proceed.

Please help me sort out this issue.

Thank you.

Dear Anand, I think that the Financial Year comprising the period from April 1 to March 31 is the Accounting Year being followed in your establishment for the purpose of bonus under the Payment of Bonus Act, 1965. Therefore, the employees who left their jobs in August 2017 had actually worked in your establishment as contract labor in two Accounting Years, 2016-17 and 2017-18 respectively.

From your post, it is not discernible how long they worked in the year 2016-17, i.e., from 01-04-2016 to 31-03-2017. However, one can conveniently infer that they had been in your service in the Accounting Year 2017-18 until the relinquishment of their jobs, i.e., from 01-04-2017 to 31-08-2017. As of now, you are burdened with the liability of payment of bonus only for the Accounting Year 2016-17 before 30-11-2017.

Notwithstanding the mode of their payment, they actually worked in your establishment as contract labor in the aforementioned two Accounting Years. It is needless to emphasize that contract laborers are also entitled to bonus (of course from the contractor) if they worked for a minimum of 30 days in an Accounting Year in an establishment, and the Principal Employer has to reimburse the contractor in this regard and thus ensure his vicarious liability.

I think that considering the indirect commitments of the contractor like EPF, ESI, or insurance premiums for EC under the EC Act, 1923, as the case may be, bonus, gratuity, etc., you would have computed the contractor's charges. As far as I know, no Principal Employer issues appointment orders to his contract labor. So, the claim of the contractor for bonus for the ex-contract laborers who worked in your establishment during both years is legally correct, and after verifying his records in this regard, you have to pay the bonus due to such contract laborers through the particular contractor but ensure the payment without fail.