Unpaid Bonuses: How Should a Principal Employer Handle a Contractor's Withholding?

What action can be taken by the Principal Employer in the event of the Contractor holding back a major part of the bonus amount paid to the contractor for disbursement to his employees? What is the liability of the Principal Employer, and how can he ensure that the contractor has made the payment to all the eligible employees?

The principal employer is expected to ensure that the contractor has paid wages and statutory contributions like ESI, PF, Bonus, etc., on time. He can collect proof of such payments before the contractor's bill is paid. If it is found that the contractor has not paid the bonus, the principal employer should pay it and then collect it from the contractor, either in cash or by adjusting the payment due to him in the next course.