Contractor Deducting Pay from Security Guard: What Actions Can a Principal Employer Take?

If any contractor takes some amount back from the security guard after transferring it to his account, what action should be taken against the contractor as a principal employer?

Dear Rajdeep,

I think that your question needs a little more elaboration. First and foremost, have you received any complaints from anyone, such as the concerned security guard or someone else on his behalf? Is the particular bank account exclusively maintained by the contractor for transactions with your company, or is it his common current account where all his business transactions are pooled together? Does the contractor rotate his security guards among various principal employers? What was the amount initially transferred to the credit of the security guard - his salary, bonus, or any arrears? Was the amount transferred back for the recovery of any overpayment wrongly made before, or was it for any advance? Have you recently given any wage hike to the contract labor through the contractor, and is the amount transferred exactly equal to the hike?

Thank you.

Addressing Unethical Practices in Contract Labor Management

This unhealthy practice is prevalent in many places. On the one hand, statutory compliance is outwardly ensured; on the other hand, the contractor is drawing an undue advantage. Once this has come to your knowledge, it is necessary to call the contractor and ensure that the workman receives back the amount returned by him. Furthermore, make it a regular practice to check with some of the contract laborers on the amount and the timeliness of the wages they receive.

In a very casual manner, I used to check with 5-10 contract laborers in different work areas almost every day I visited the shop floor and took follow-up action. This step produced very good results.

Understanding the Payment of Wages Act

The Payment of Wages Act very clearly states that if there is any case where an employee pays any amount to the employer after receiving their salary, it will amount to a deduction.

Illegal Deductions

There is a list of deductions, and any deduction other than those listed is illegal.

Addressing Contractor Non-compliance

In most cases, the above would be happening if the contractor is paying less than the minimum wages by recovering some of the wages paid at minimum wages to pass scrutiny from an audit. You need to warn the contractor and ensure they pay the money back. However, in the longer term, you need to replace them with a contractor that is compliant with the laws so you do not get in trouble at any stage.

We have served notice to the contractor to furnish clarification. On the other hand, we discussed with our competent authority not to renew their contract further, as the security guard has no proof to pay back to them in cash.

A signed statement from the concerned security guards is adequate proof.

It depends on what your company wants, but you can always take the guards affected by this to the labor commissioner and help them file a complaint.

You should immediately terminate the contract if the contractor can't provide an explanation within a week's time.

Dear Umakanthan M, Additional Commissioner of Labour (RTD),

Sir,

We have received the complaint from the security guard through the labor commissioner for redressal, with intimation to them. We have never received any such complaint directly.

The contractor has provided a current bank account into which their invoice payment has been transferred by us, but it is not certain whether this account has been used for other transactions.

No, they deployed fixed security staff at that site, and we don't allow them to change the staff without informing us.

The security guard was paid Rs. 18,431 for 24 mandays, and there was no recovery against the security guard.

No, the agency was alleged by the security guard to have taken some amount back in cash after transferring the full wages as per the existing minimum wage.

However, we have served notice to the contractor to furnish clarification, and on the other hand, discussed with our competent authority not to renew their contract further as the security guard has no proof of paying back to them in cash.

Please suggest what appropriate action we, being a government department and as a principal employer, should take against the agency when we don't have any documentary evidence in such cases if they occur in the future.

Regards,

I think you can go and meet the labor commissioner in your official capacity and ask him to expedite the investigation and close the matter either way. If he gives the contractor a clean chit, then you can continue to employ him. If not, you need to replace him.