Compensation for Contract Worker - applicable under Employee Compensation Act?

I am a contractor who has been awarded a contract for 171 contractual workers deployed at the principal employer's establishment. The workers have completed one year of service with almost impeccable faith, paying all the dues such as monthly wages, PF, ESI, and leave wages as per our agreement.

The principal employer is a reputed organization under the government and has earned a substantial profit after utilizing the services of the contract employees. As per my contract with the principal employer, I receive a very minimal service charge.

Now, at this stage, who will be responsible for paying the bonus to the 171 contract employees? Please suggest and clarify as per the Bonus Act.

From Nirmal Mohapatra
9338401350

Bonus as per the Payment of Bonus Act is based on the allocable/available surplus of the employer. As a contractor, you are the employer, and based on your profit, you have to pay bonus. However, under the Payment of Bonus Act, the employer has to consider payment of bonus to his workmen only after completing the 5-year period. From the sixth year onwards, based on the available surplus, after setting off all the losses made in the earlier five-year period.

It is very common with many contractors. You are providing service against the service charge, and if it includes the company's contribution of PF, ESI, Bonus, Gratuity, etc., then it is your responsibility. If it is not, then in the agreement between the Principal Employer (PE) and contractor, it should mention that all statutory payments are the responsibility of the PE. Moreover, as per your version, you are receiving a small amount of service charge.

Based on your agreement with the PE, you have to make a decision. The healthy agreement between the contractor and PE may be (Monthly gross + Employer portion of PF & ESI) + Service charge of the contractor + GST as the invoice amount. Periodical payments such as Bonus, Gratuity, Leave pay, etc., may be claimed by the contractor with a small service charge from the PE and paid to the contract labor.

It is also essential for the PE to have control over the different statutory payments made by the contractor and to provide necessary support to the contractor for a proper partnership relation.

S K Bandyopadhyay (Howrah, WB)

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