Dear all, as a contractor, we did not include a bonus in the initial quote. Now, the employees are demanding a bonus, but the principal employer is refusing to pay, stating that it was not part of the original quote.
Contractor's Obligation Regarding Bonus Payment
My question is whether the contractor is obligated to pay the bonus if the principal employer is unwilling to pay or remember? What are the notifications under the Bonus Act? Please suggest with the necessary notifications.
Regards,
Shashikant N
From India, Mumbai
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Contractor's Obligation Regarding Bonus Payment
My question is whether the contractor is obligated to pay the bonus if the principal employer is unwilling to pay or remember? What are the notifications under the Bonus Act? Please suggest with the necessary notifications.
Regards,
Shashikant N
From India, Mumbai
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I understand your predicament. The basics on the subject are:
1. The bonus is a "share in the profits" of the establishment.
2. A "contractor" (whether a sole proprietor, a partnership, or an incorporated company) is an establishment. It will be assessed for the applicability of the Payment of Bonus Act 1956 under that act.
3. The "principal employer" to whom the contractor provides "contract labour" is NOT obliged under the law to pay "bonus" to the contractor's employees unless the contract is proved to be a sham and the employer-employee relationship is decided in favor of the workmen provided by the employer.
That is the position at law. Now, if you include an element of "bonus" in your quote and if it is approved by the principal employer, it will still NOT be a bonus under the act. Assuming the amount is 8.33% quoted by you and approved by the principal employer, you may feel that you are discharging obligations of paying a bonus to your employees, but determining the bonus under the act (assuming the act is applicable) may be a totally different amount.
As a contractor, you will continue to remain vulnerable under the Payment of Bonus Act 1965.
If you would like more insights into this subject, kindly provide more details like the form of your organization, your Shops Act registration, ESI & PF code, and whether you are compliant with the Minimum Wages Act and these legislations, as well as the number of workers you provide to various principal employers. This will help determine the applicability of the Payment of Bonus Act 1965 to your establishment, and we may proceed thereafter!
Regards,
Samvedan
November 19, 2010
From India, Pune
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3211. The bonus is a "share in the profits" of the establishment.
2. A "contractor" (whether a sole proprietor, a partnership, or an incorporated company) is an establishment. It will be assessed for the applicability of the Payment of Bonus Act 1956 under that act.
3. The "principal employer" to whom the contractor provides "contract labour" is NOT obliged under the law to pay "bonus" to the contractor's employees unless the contract is proved to be a sham and the employer-employee relationship is decided in favor of the workmen provided by the employer.
That is the position at law. Now, if you include an element of "bonus" in your quote and if it is approved by the principal employer, it will still NOT be a bonus under the act. Assuming the amount is 8.33% quoted by you and approved by the principal employer, you may feel that you are discharging obligations of paying a bonus to your employees, but determining the bonus under the act (assuming the act is applicable) may be a totally different amount.
As a contractor, you will continue to remain vulnerable under the Payment of Bonus Act 1965.
If you would like more insights into this subject, kindly provide more details like the form of your organization, your Shops Act registration, ESI & PF code, and whether you are compliant with the Minimum Wages Act and these legislations, as well as the number of workers you provide to various principal employers. This will help determine the applicability of the Payment of Bonus Act 1965 to your establishment, and we may proceed thereafter!
Regards,
Samvedan
November 19, 2010
From India, Pune
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Principal employer liable if contractor fails to pay wages to workers Delhi High Court Judgement.pdf
Amendment to Payment of Bonus Act 2015.jpg