Can Contract Employees Receive Annual Bonuses Without a Labor Contractor?

Whether an annual bonus can be paid directly to contract employees in the absence of a labor contractor?

Dear Anonymous,

To the extent possible, get the payment done through the contractor. In case the contractor has absconded or declared financial incapability to pay, subject to creating adequate paper/evidence that this payment is being made on behalf of the contractor and will be recovered from the contractor.

Shailesh Parikh
99 98 97 10 65
Vadodara

Dear Colleague,

The Contract Labour Act places clear responsibility on the principal employer for payments due to the contract worker in case of failure by the contractor to pay, and the same can be recovered from payments due to him.

Although Prashant's concern is valid, with proper documentation, this payment can be made without exposure.

Regards,
Vinayak Nagarkar
HR Consultant

In our opinion, according to Section 21(4) of the Contract Labour (R&A) Act, 1970, in case the contractor fails to make payment of wages within the prescribed period or makes a short payment, then the principal employer shall be liable to make payment of wages in full or the unpaid balance due, as the case may be, to the contract labour employed by the contractor. In our opinion, it is nowhere written that the principal employer is also required to pay the bonus amount if it is not paid by the contractor to its labour.

R N KHOLA