I had faced the situation in power sector at Jharkhand and seen this issue was existed in most of the power plant (o&M job) . It was Job contract for two years but after completion of three /four re tender process, contractor continued and the contract labour comes under purview of Gratuity. When the contractor changed and the same labour is continuing their job in the said power plant , they raised the issue of Gratuity. Here P.E authority just forward the issue to ALC/ RLC . But when contractor denied , principal employer hold only the security deposit and the last two or three months bills which is not at par with the amount of Gratuity payable. Though the matter is not till resolved and under the jurisdiction of RLC or mutually settled in between ex-contractor and the labourers
Whereas different system is followed in AP and WBPDCL . Each and every contract to be renewed only after clear of full and final settlement. Not only that, the amount of gratuity is kept under co operative of Contract labour unions . Whenever any contractual workman retired , died settlement done along with Gratuity without any dispute . But in AP and Gujrat cost of Gratuity paid on monthly basis in different terms .
Now in power sector start to include the process of exclation charges , in which the cost against gratuity is included at the time of tender valuation or submission.
This is my practical experience - either pay the gratuity or settle the matter amicably with the contract labour reprsentative otherwise the case will be under the juridication of law
2Whereas different system is followed in AP and WBPDCL . Each and every contract to be renewed only after clear of full and final settlement. Not only that, the amount of gratuity is kept under co operative of Contract labour unions . Whenever any contractual workman retired , died settlement done along with Gratuity without any dispute . But in AP and Gujrat cost of Gratuity paid on monthly basis in different terms .
Now in power sector start to include the process of exclation charges , in which the cost against gratuity is included at the time of tender valuation or submission.
This is my practical experience - either pay the gratuity or settle the matter amicably with the contract labour reprsentative otherwise the case will be under the juridication of law
Dear friends,
Though the opinions expressed by the learned members in this thread about the liability of payment of gratuity to contract labor and the difficulties associated therewith are valid and logical, unfortunately, they are from the perspective of either the contractor or the principal employer. But the necessity for the enactment of the CLRA Act,1970 and its enforcement since then are only from the perspective of the contract labor.
Having said so, I don't intend to say that the Act, as it stands today, does not take into account the hardships faced by the contractor and the principal employer in the matter of compliance with the provisions of the Act as well as the provisions of the allied Acts applicable to the establishment of the principal employer. That's the reason for the conspicuous absence of definitions of the terms like 'core activity', 'incidental activity' though the former has been defined u/s 2(1)(p) of the yet to be enforced " The Occupational Safety, Health and Working Conditions Code, 2020 ", of course, with some exceptions. Thus the Contract labor is essentially just another form of indirect employment with migratory nature. But the actual practice is different in labor intensive industries. The ground reality is that in certain manufacturing industries including those of public sector enterprises, there is a permanent mismatch between the total number of regular employees and of the contract labor and in terms of wages and other conditions of employment as well. Therefore, I would not have any hesitation in reiterating that like water though which has a liquid form but not of any shape of its own but taking its container's shape only, contract labor derives its employment rights and benefits from the principal employers' establishment only. Thus arises the need for the vicarious liability enjoined upon the PE u/s 21 of the CLRAA,1970.
Sorry that really I am unable to accept the argument of our friend Mr. Pan Singh on the basis of omission of certain expenses by the PE's into the contractors' charges based on cost optimization. The concept of vicarious liability always revolves around the ultimate beneficiary of an act only. Therefore, such a contract between the contractor and the principal employer omitting certain heads of statutory commitments would be opposed to public policy u/s 23 of the Indian Contract Act,1872 and becomes void.
Whenever a legal provision like sec.21 of the CLRAA,1970 which fastens vicarious liability on one of the two parties to a contract is interpreted, one should bear in mind the spirit of the law which tries to set right the possible mischief. If Mr.Singh carefully reads para 19 of the Madras High Court's original judgment, he would understand certainly how meticulously and convincingly the learned Judge interpreted the definition of the term 'wages' u/s 2(vi) the Payment of Wages Act,1936 with reference to sec.21(4) of the CLRAA,1970.
Therefore, I am sure that he would certainly accept that the literal as well as the beneficial interpretation of the provision of sec.21(4) of the CLRAA,1970 by the honorable Madras High Court in the letter and spirit of the Act puts an end to the controversy on the liability to pay gratuity to the contract labor.
From India, Salem
Though the opinions expressed by the learned members in this thread about the liability of payment of gratuity to contract labor and the difficulties associated therewith are valid and logical, unfortunately, they are from the perspective of either the contractor or the principal employer. But the necessity for the enactment of the CLRA Act,1970 and its enforcement since then are only from the perspective of the contract labor.
Having said so, I don't intend to say that the Act, as it stands today, does not take into account the hardships faced by the contractor and the principal employer in the matter of compliance with the provisions of the Act as well as the provisions of the allied Acts applicable to the establishment of the principal employer. That's the reason for the conspicuous absence of definitions of the terms like 'core activity', 'incidental activity' though the former has been defined u/s 2(1)(p) of the yet to be enforced " The Occupational Safety, Health and Working Conditions Code, 2020 ", of course, with some exceptions. Thus the Contract labor is essentially just another form of indirect employment with migratory nature. But the actual practice is different in labor intensive industries. The ground reality is that in certain manufacturing industries including those of public sector enterprises, there is a permanent mismatch between the total number of regular employees and of the contract labor and in terms of wages and other conditions of employment as well. Therefore, I would not have any hesitation in reiterating that like water though which has a liquid form but not of any shape of its own but taking its container's shape only, contract labor derives its employment rights and benefits from the principal employers' establishment only. Thus arises the need for the vicarious liability enjoined upon the PE u/s 21 of the CLRAA,1970.
Sorry that really I am unable to accept the argument of our friend Mr. Pan Singh on the basis of omission of certain expenses by the PE's into the contractors' charges based on cost optimization. The concept of vicarious liability always revolves around the ultimate beneficiary of an act only. Therefore, such a contract between the contractor and the principal employer omitting certain heads of statutory commitments would be opposed to public policy u/s 23 of the Indian Contract Act,1872 and becomes void.
Whenever a legal provision like sec.21 of the CLRAA,1970 which fastens vicarious liability on one of the two parties to a contract is interpreted, one should bear in mind the spirit of the law which tries to set right the possible mischief. If Mr.Singh carefully reads para 19 of the Madras High Court's original judgment, he would understand certainly how meticulously and convincingly the learned Judge interpreted the definition of the term 'wages' u/s 2(vi) the Payment of Wages Act,1936 with reference to sec.21(4) of the CLRAA,1970.
Therefore, I am sure that he would certainly accept that the literal as well as the beneficial interpretation of the provision of sec.21(4) of the CLRAA,1970 by the honorable Madras High Court in the letter and spirit of the Act puts an end to the controversy on the liability to pay gratuity to the contract labor.
From India, Salem
Community Support and Knowledge-base on business, career and organisational prospects and issues - Register and Log In to CiteHR and post your query, download formats and be part of a fostered community of professionals.
Gratuity notification amendment in definition of employees.pdf