Are We Responsible for Paying Contract Workers on Government Holidays? Seeking Legal Guidance

Dear Team,

We have a certain department at our firm where we hire workers through contractors for a certain number of days. They are paid based on daily wages. Some days we hire fewer workers, while on other days we hire more, depending on the project requirements.

Question on Paid Holidays for Contract Workers

At the end of the month, when the contractor provides us with the invoice, they calculate government holidays as paid holidays (PH). According to the contract terms, we are required to pay them for the number of days worked.

Is it appropriate for us as the employer to pay them for PH?

I believe that the direct employer of these contract laborers is the contractor, who is responsible for paying PH. I seek your guidance on this matter and would like to know if there are any legal provisions related to this issue.

Thank you!

Dear Colleague,

What I understand from your write-up is that you are referring to "National and Festival Holidays" as Government holidays. If this is the case:

National and Festival Holidays

The Contractor is the employer for the Contract Workers. For their establishment, the Contractor must provide National and Festival holidays for eligible employees, and the cost will be charged by the Contractor to the Principal Employer. Many State Governments have enacted laws to extend National Holidays and a number of Festival Holidays.

Conditions for Festival Holidays

Regarding Festival Holidays, there are conditions to consider, such as having worked for 30 days before the occurrence of the festival holiday. It is essential to verify this to prevent payment to those who are not eligible. The Contractor is correct in extending this paid holiday and passing the cost to the Principal Employer on the invoice. It is crucial to ensure that the Contractor provides this to only eligible employees.

All the Best, God Bless,

Dr. P. SIVAKUMAR
Doctor Siva Global HR
Tamil Nadu

Dear Keerthana,

You have stated that in connection with the work of your establishment, contract labor has been engaged in varying numbers on different dates depending on the requirements on a daily wage basis. As per the terms of the contract, the contractor has to be paid only for the actual number of days his workmen worked. The terms used in your post, "firm" and "department," do not indicate the type of establishment in which such contract labor is engaged, such as a factory, shop, or any other establishment. This gives rise to the presumption that you do not pay for the days they do not work, whether due to weekly off, other holidays, or their own absence. In any case, I do hope that the Minimum Wages Act of 1948 would be applicable to your establishment as well as the contract labor, in addition to the establishment-specific labor law.

Therefore, in my opinion, your question can be broken into three parts for academic purposes, though it primarily revolves around the payment of wages for "Public Holidays," which can be national and festival holidays or other holidays declared by the Government on certain occasions in respect of the contract labor engaged in your establishment through a third party, the contractor.

Weekly Off or Holiday Wages

The first part pertains to the weekly off or holiday and the wages for it. Consecutive six days of work entitle the employee to a weekly day of rest with wages under the provisions of Rule 23 of the Minimum Wages (Central) Rules, 1950, or any other applicable State Rules framed therein. As per the proviso to this rule, if daily wages are fixed by dividing the month by 26, then there is no necessity to pay wages for the weekly off.

National or Festival Holiday Wages

The second part concerns the wages for any national or festival holiday in general. On such days, the contract labor can either be required to work on double wages, have a substituted holiday on another day of their choice, or be allowed a holiday with wages, depending on the statutory eligibility conditions.

Other Public Holidays

Regarding the third part, other public holidays during which the establishment is required to be shut down, in my opinion, there is no necessity for payment for that particular holiday as the establishment remains closed.

Two learned members of the forum have explained the subject in detail. I would like to add that any payment, such as weekly off (if applicable), festival holidays/paid holidays of the state/organization where the contract persons are engaged, should be paid by the contractor and reimbursed by the principal employer (PE).

Moreover, in a year, for working a certain number of days/months, the contract employees will earn some annual leave (Factories Act/S&E Act as applicable), which also should be paid by the contractor and reimbursed by the PE.

The best arrangement between the contractor and PE may be reimbursement of the actual cost spent for the contract employees plus some service charge, instead of a lump-sum amount as a contract fee to manage everything without ascertaining the actual reality. No contractor will spend money from their pocket for contract employees if the same is not reimbursed by the PE.

Regards, S K Bandyopadhyay

Dear Keerthan Chandrasekar, as per the CL(R&A) Act, the contractor workmen are eligible for Paid Holidays (PHs), leave at 1 day per 20 days of working, and payment at double the rate for working on PH or at the rate fixed as per the state NH & FH rule.

This is the principle; there is nothing wrong with the invoice raised by the contractor claiming for the Paid Holidays (PH only declared by the principal employer). The contractor cannot claim for the government holidays which are not in the Paid Holiday list of the establishment of the principal employer.

Hope this helps you to understand the matter.