Contractor's 1 Paisa Bid Leads to Labor Exploitation: Can We Take Action?

Dear sir, the contractor is quoting 1 paisa as a service charge in the financial bid, and after obtaining the contract, he begins exploiting contract labor by recovering Rs 50 to 100 per day. Moreover, he threatens those laborers who do not return the desired money to the contractor. In addition to this, the contractor fulfills all statutory compliance while submitting the monthly bills, i.e., EPF/ESI/Wages sheet statement shows that minimum wages have been paid to the labor.

Can we take any action against the contractor in the above scenario?

Dear Mr. Tiwari, this is a classic case of exploitation of contract labor by the contractor. If there are no other issues (political, rules, etc.), please remove the contractor immediately. Set some proper norms as follows:

1. Find out the actual cost of the contractor - Minimum wage + Employer's portion of PF & ESI + some reasonable service charge + GST as applicable.
2. Reimburse the above, and when Bonus, Gratuity, Leave pay, etc., are payable - please also reimburse the same in actual.
3. Every month cross-check with the contract labor to see if there is any exploitation or not.

As a PE, it is your responsibility to protect the contract labor - forget about legality but think socially.

Thanks & Regards,

S K Bandyopadhyay (Howrah, WB) USD HR Solutions

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