Hiring Contract Laborers: Do They Get Paid for Holidays and Are They Eligible for Leave?

Our's is the defence production unit (under Min. of Defence) and we are hiring contract laborers, approximately 650 members, including all skill levels (unskilled, semi-skilled, skilled, and highly skilled) on various supply orders for different locations inside and outside of the factory through a third party, i.e., a certified/authorized labor contractor/manpower supplier.

Doubts Regarding Contract Laborers

In this regard, we have some doubts about:

1. Whether the contract laborers hired through the third party, i.e., a certified/authorized labor contractor/manpower supplier procured through GEM (Govt. E-Market tendering process), will be paid for national holidays/state holidays, as we are not engaging them on any holidays.

2. Whether the contract laborers hired through a third party, i.e., a licensed labor contractor/manpower supplier procured through GEM (Govt. E-Market tendering process), and engaged in work exclusive of holidays and Sundays only, will be given any leave for the period they worked. If yes, then what is the procedure?

Reply to question no. 1:

The basic method is "no work, no pay." However, at the end of the day, contractual workers are also human beings, and the defense organization, being a strong organized sector, should pay extra remuneration for National Holidays. It would be better if some normal State holidays were paid to those workers as well. This would also help improve employee relations.

Reply to question no. 2:

Yes, they will be eligible for leave with wages. If the workers are engaged in a factory, it is as per the Factories Act, which mandates 1 day of leave for every 20 days of actual work. If they are engaged in any office premises, the leave entitlement will be as per the Shops & Establishment Act of the State.

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CEO-USD HR Solutions
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Principal Employer Responsibilities for Contract Workers

When you engage workers from other entities (contractors/third parties), you become the principal employer. As a principal employer, you must ensure that these workers receive holidays according to the relevant Act, such as the State Industrial Establishments National and Festival Holidays Act. Whether the holiday should be a paid holiday or not is a separate question, but you are obligated to comply with the laws regarding holidays.

Dear Mr. ANONYMOUS, It is learned from your post that yours is the defense production unit (under the Ministry of Defense). Therefore, the Centre is the appropriate authority for issuing a labor license for your unit. You are hiring contract laborers (650, which include unskilled, semi-skilled, skilled, and highly skilled) through various supply orders for various locations inside and outside of the factory. In fact, there is no third party existing at all. The Principal Employer is the First Party, and the contractor so engaged is the Second Party.

Answer to Question 1

The workmen in the role of the contractor and subcontractor are eligible for national holidays (NH) and festival holidays (FH). The workmen are required to be paid NH and FH if not engaged in work on the said date, except for the intervening weekly off day. The workmen are required to be paid twice the rate of wages if engaged on the day of NH or FH. (Check the state rules for NH and FH of the unit exist) because in some states, the rate is thrice the normal wages.

Answer to Question 2

The workmen engaged through a contractor are eligible for weekly off days as well as leave at the end of the calendar year at one day of leave for every 20 days worked. In the beginning month, i.e., January, wages disburse the leave earned by each workman. Do not facilitate leave during the calendar year; mark the day as absent.