Contract Employee compensation in case of fatal/nonfatal accident on the site?

Sir, if the contract period is not extended and work is still ongoing on the site, if any fatal or non-fatal accident occurs on the site during that time, would employee compensation be applicable to the deceased? There are no gate passes for workmen, no running RA bills, and no valid work order.

PLEASE, THIS IS MOST URGENT.

Dear Rupesh,

The Workmen's Compensation Act of 1923 provides compensation to employees or their dependents in the event of disability or death resulting from the nature of work during employment. If an employee sustains any personal injury (whether physical or psychological) due to an accident while working in an establishment, the employer is liable to compensate the employee. The Act does not specifically define personal injury. If you are covered under the Employees' State Insurance Corporation (ESIC) Act, you may also avail ESIC benefits.

Employers are not liable to pay compensation in the following cases:
- An injury that does not result in partial or total disablement of the employee for more than three days.
- Any injury that does not lead to permanent total disability or death due to an accident under the influence of drugs or alcohol.

Dear Alok sir,

Please clarify the following:

If the contract period was not extended and work is still ongoing at the site, and during that time, any fatal or non-fatal accidents occurred on-site.

There are no gate passes for workmen, no running RA Bills, and no valid work order. In that case, is employee compensation applicable to the deceased?

As per the Contract Labour Act, the contractor and principal employer are the parties between whom the contract is established and executed. Now, if the agreement between the parties exists and statutory compliance is being done accordingly, then the employee will receive the benefits or compensation.

If the contract date expires and no extension is granted by the principal employer, then the question arises as to why the contractor continued working. Secondly, why was the contractor allowed to work by the principal employer as well?

Under such circumstances, if any incident occurs, and an employee is injured or death occurs during work at the workplace, the principal employer stands responsible. Even if there was no work order or any other permit, etc., the incident happened on the premises of the principal employer and during work hours. Therefore, the principal employer can be held responsible for compensating the employee.

It is, however, the right of the employee to receive compensation in any case under natural justice.

Dear Rupesh,

Extension of the contract without a valid work order cannot exempt the Principal Employer's vicarious liability under Section 21(4) of the CLRA Act, 1970 in case of any injury or death suffered by any contract labor engaged in such contract work. Moreover, such a situation resulting in an invalid contract for service between the PE and the contractor would render the affected contract labor as the direct workman of the PE for the purpose of compensation under the EC Act, 1923.

Good evening Umakanthan sir.

Central Government Act

Section 21(4) in the Contract Labour (Regulation and Abolition) Act, 1970:

(4) In case the contractor fails to make payment of wages within the prescribed period or makes short payment, then the principal employer shall be liable to make payment of wages in full or the unpaid balance due, as the case may be, to the contract labour employed by the contractor and recover the amount so paid from the contractor either by deduction from any amount payable to the contractor under any contract or as a debt payable by the contractor.

Can you please guide us on what kind of action we can take against the Principal Employer for not extending the work order?

Dear Rupesh, please don't be confused.

My suggestion is: If such a type of accident/mishap has actually occurred and the concerned employer is not responding properly, then you can communicate with the DLC or Labour Enforcement officer. File a written complaint, and they will investigate the matter thoroughly.

Dear All,

It happens when we are working with a government department and the contract period expires without a new contract being finalized. At that time, the government office asks to continue the work with the assurance that they will issue an extension later or when a new contract is awarded. In this situation, the contractor is not in a position to refuse because their payment is still pending, and they may need to work in the future as well. This scenario mostly occurs in state government contracts.

I have faced the same issue, so I can understand.

Indu Garu,

You also face the same situation, then what decisions have you taken against that critical situation? Can you please guide me.

By allowing the contractor to carry on work as before, there is an implied contract running through. The Principal cannot just wash off the hands by raising a technical plea that there is no subsisting contract. There would surely be some correspondence regarding the extension of the contract from both sides, indicative of the subsistence of the contract at the relevant time.

Whether there is a subsisting contract or not, the establishment where the work takes place is liable to pay compensation, and they can deduct the amount from contractor bills. The signed contract agreement takes time in government setup, and many times work starts with LOI or the issuance of a work permit, etc.