It is a known fact that the principal employer is responsible for all contract employees hired through contractors. Liability includes paying minimum wages, paying on-time wages, paying statutory bonuses, paying wages for leave accumulated, paying double overtime, PF & ESIC/WC policy, Maternity Bonus & Maternity Benefit, and deduction of the labor welfare fund. (Please add if anything is missing.)
My Question Is:
A) Can the above liability be avoided if, in certain contracts like gardening, Effluent Treatment Plant, Utility, etc., we provide the total scope of activity as one work (e.g., maintenance of 10,000 sq ft of garden, maintenance of ETP or Utility areas, paying the canteen contractor per plate instead of per manpower, etc.), and convert these contracts into service contracts instead of manpower contracts?
B) Is there any case law supporting or opposing this concept? Experts may please shed some light on this as we can save a lot of the principal employer's liability.
From India, Aurangabad
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14My Question Is:
A) Can the above liability be avoided if, in certain contracts like gardening, Effluent Treatment Plant, Utility, etc., we provide the total scope of activity as one work (e.g., maintenance of 10,000 sq ft of garden, maintenance of ETP or Utility areas, paying the canteen contractor per plate instead of per manpower, etc.), and convert these contracts into service contracts instead of manpower contracts?
B) Is there any case law supporting or opposing this concept? Experts may please shed some light on this as we can save a lot of the principal employer's liability.
From India, Aurangabad
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Since the nature of work requires labor engagement, making it one contract will not make any difference. Upkeep of gardens, treatment plants, etc., shall be taken as non-perennial work, and as such, engagement of contract labor is justifiable. However, you cannot absolve yourself from your liability as the principal employer. Had it been work done somewhere outside the factory and then installed in your factory premises for a price rather than a labor charge, we could have called it a contract for service. But in this case, everything has to be done within the boundaries of the establishment itself.
Regards,
Madhu.T.K
From India, Kannur
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Regards,
Madhu.T.K
From India, Kannur
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