Dear Mr. Ajay,
As regards to the bonus, you have to pay an employee (other than an Apprentice) who is employed on a salary or wage not exceeding Rs. 10,000 per month, as per section 2(13) of The Payment of Bonus Act, 1965, provided he has worked for 30 days in the organization for that accounting year, as per section 8 of the said act. Every employer is bound to pay his employee a minimum bonus of 8.33% of his earned wages or Rs. 100, whichever is higher, whether the company has any allocable surplus or not as per section 10 of the act. The allocable surplus provision, as told by Mr. Manjunath, comes into play only when paying the maximum bonus of 20%.
From the above, it is evident that a contract laborer is eligible for getting the bonus on fulfilling the above terms with the Contractor. As rightly suggested by Mr. Manjunath, the onus of paying the bonus to contract laborers rests with the Contractor, and the Principal Employer will only interfere when the contractor fails to pay the bonus to his employees.
As regards to the retrenchment benefits of a workman who completes one year of service with the contractor, the following is to be given:
(a) His leftover salary/wage as of the date of relieving.
(b) 15 days' wage/salary for every completed year of service as per section 25F of the Industrial Disputes Act, 1947, provided he has completed 240 days of continuous service in that year.
(c) One month's notice to be given before his retrenchment or one month's notice pay in lieu as per section 25F of the said act.
(d) A minimum bonus of 8.33% of his wage for the leftover period, if any, as per the Payment of Bonus Act, 1965.
(e) Since contract laborers, in general, are not given leave during their employment, they may be given leave salary as per their eligibility. In the construction field, generally, they are given leave pay at the rate of 1 day's wage for every completed 20 days of service (As per the Factories Act, 1947).
(f) Their PF accumulations to be paid in Form 19 and Form 10(C) as per clause (d) or (e) of sub-para 1 of paragraph 69 of the EPF Scheme, 1952.
For Migrant workmen, you need to give displacement allowance, outward/inward journey allowances, wage for the period of the journey from his place of residence to the workplace and vice versa, in addition to other retrenchment benefits as narrated above, as per the Inter-State Migrant Workmen Act, 1979.
Hope your doubts will be cleared to an extent.
P. Vathiraj
+91 9585 333 344
From India
51As regards to the bonus, you have to pay an employee (other than an Apprentice) who is employed on a salary or wage not exceeding Rs. 10,000 per month, as per section 2(13) of The Payment of Bonus Act, 1965, provided he has worked for 30 days in the organization for that accounting year, as per section 8 of the said act. Every employer is bound to pay his employee a minimum bonus of 8.33% of his earned wages or Rs. 100, whichever is higher, whether the company has any allocable surplus or not as per section 10 of the act. The allocable surplus provision, as told by Mr. Manjunath, comes into play only when paying the maximum bonus of 20%.
From the above, it is evident that a contract laborer is eligible for getting the bonus on fulfilling the above terms with the Contractor. As rightly suggested by Mr. Manjunath, the onus of paying the bonus to contract laborers rests with the Contractor, and the Principal Employer will only interfere when the contractor fails to pay the bonus to his employees.
As regards to the retrenchment benefits of a workman who completes one year of service with the contractor, the following is to be given:
(a) His leftover salary/wage as of the date of relieving.
(b) 15 days' wage/salary for every completed year of service as per section 25F of the Industrial Disputes Act, 1947, provided he has completed 240 days of continuous service in that year.
(c) One month's notice to be given before his retrenchment or one month's notice pay in lieu as per section 25F of the said act.
(d) A minimum bonus of 8.33% of his wage for the leftover period, if any, as per the Payment of Bonus Act, 1965.
(e) Since contract laborers, in general, are not given leave during their employment, they may be given leave salary as per their eligibility. In the construction field, generally, they are given leave pay at the rate of 1 day's wage for every completed 20 days of service (As per the Factories Act, 1947).
(f) Their PF accumulations to be paid in Form 19 and Form 10(C) as per clause (d) or (e) of sub-para 1 of paragraph 69 of the EPF Scheme, 1952.
For Migrant workmen, you need to give displacement allowance, outward/inward journey allowances, wage for the period of the journey from his place of residence to the workplace and vice versa, in addition to other retrenchment benefits as narrated above, as per the Inter-State Migrant Workmen Act, 1979.
Hope your doubts will be cleared to an extent.
P. Vathiraj
+91 9585 333 344
From India
Dear G.K. Manjyunath,
I am talking about retrenchment compensation and not about gratuity. I know that if a person works for 5 years, then only he is eligible for gratuity. However, in this case, the contractor has removed the workmen, and nowhere is it mentioned that he was on a 1-year contract. Therefore, in this situation, the contractor will have to pay retrenchment compensation to that workman.
Thank you and regards.
Retrenchment compensation falls under the Industrial Disputes Act and not under the Contract Labour Act or Payment of Wages Act. For the termination of individual labor (or even for the closure of the contractor's business), retrenchment compensation does not apply.
From India, Mumbai
I am talking about retrenchment compensation and not about gratuity. I know that if a person works for 5 years, then only he is eligible for gratuity. However, in this case, the contractor has removed the workmen, and nowhere is it mentioned that he was on a 1-year contract. Therefore, in this situation, the contractor will have to pay retrenchment compensation to that workman.
Thank you and regards.
Retrenchment compensation falls under the Industrial Disputes Act and not under the Contract Labour Act or Payment of Wages Act. For the termination of individual labor (or even for the closure of the contractor's business), retrenchment compensation does not apply.
From India, Mumbai
Dear Mr. Saswata Banerjee,
You are absolutely right that the retrenchment compensation comes under the Industrial Dispute Act and nowhere is it argued to be covered in the Contract Labour Act. Every employee, whether it is express or implied, whether they are permanent, temporary, or on contract employment, is entitled to retrenchment benefits.
While the Contract Labour Act, Migrant Workman Act, BOCW Act, Shops and Establishment Act, and Mines Act address the terms and conditions of their respective fields, the Industrial Dispute Act discusses industrial disputes between parties, as clearly stated in clause 'k' of section 2 of the Industrial Dispute Act, 1947. It is important to note that the Industrial Dispute Act refers to "workman" rather than "employee," with the definition provided in clause 's' of section 2 of the said act.
For the benefit of all readers, I am enclosing important updates on labor law judgments of Feb 12. Case Study No. 9 will clarify any doubts regarding the applicability of retrenchment benefits, even to casual labor, in the case of BSNL in 2012.
P. Vathiraj
From India
You are absolutely right that the retrenchment compensation comes under the Industrial Dispute Act and nowhere is it argued to be covered in the Contract Labour Act. Every employee, whether it is express or implied, whether they are permanent, temporary, or on contract employment, is entitled to retrenchment benefits.
While the Contract Labour Act, Migrant Workman Act, BOCW Act, Shops and Establishment Act, and Mines Act address the terms and conditions of their respective fields, the Industrial Dispute Act discusses industrial disputes between parties, as clearly stated in clause 'k' of section 2 of the Industrial Dispute Act, 1947. It is important to note that the Industrial Dispute Act refers to "workman" rather than "employee," with the definition provided in clause 's' of section 2 of the said act.
For the benefit of all readers, I am enclosing important updates on labor law judgments of Feb 12. Case Study No. 9 will clarify any doubts regarding the applicability of retrenchment benefits, even to casual labor, in the case of BSNL in 2012.
P. Vathiraj
From India
I read the judgement. It is for casual workers not contract workers. It does not give anything to show that contract workers have to be given retrenchment compensation
From India, Mumbai
From India, Mumbai
A contract worker is normally appointed for a fixed tenure or for the duration of the project. If so, they are not entitled to any retrenchment compensation upon termination or when the project comes to an end.
B. Saikumar
Mumbai
From India, Mumbai
B. Saikumar
Mumbai
From India, Mumbai
Dear Saswata,
I am enclosing one more judgment copy which will clarify the issue on retrenchment benefits for contract labor. As mentioned by Mr. Saikumar, the termination of a workman's service due to the non-renewal of the employment contract between the employer and the workman upon its expiration will not fall under the definition of 'retrenchment' as per section 2(oo)(bb) of the Industrial Disputes Act, 1947.
However, if an undertaking or project is shut down leading to the non-renewal of the workmen's contracts, then the retrenchment benefits must be provided in accordance with section 25(FFF) of the Industrial Disputes Act, 1947, provided the workman was employed for a continuous period of one year.
Regards,
P. Vathiraj
From India
I am enclosing one more judgment copy which will clarify the issue on retrenchment benefits for contract labor. As mentioned by Mr. Saikumar, the termination of a workman's service due to the non-renewal of the employment contract between the employer and the workman upon its expiration will not fall under the definition of 'retrenchment' as per section 2(oo)(bb) of the Industrial Disputes Act, 1947.
However, if an undertaking or project is shut down leading to the non-renewal of the workmen's contracts, then the retrenchment benefits must be provided in accordance with section 25(FFF) of the Industrial Disputes Act, 1947, provided the workman was employed for a continuous period of one year.
Regards,
P. Vathiraj
From India
Ok, I do not know why you wish to make me read 20 pages of judicial wording when it has nothing really related to our topic at hand. After reading through the 20 pages, I find:
A. The case is not about contract labor. It is about temporary workers. We are clearly talking of contract labor. I specified that they will not get retrenchment benefit as it is not provided in the contract labor act. Nothing in the judgment is about contract labor. The only time the word "contract" has come up in that judgment is where they have talked about the contract of employment between the temporary workers and the company; it's not about the engagement of contract workers.
Please review what you send instead of wasting our time or misleading members.
B. The court says that the refusal of work to such temporary workers on account of the closure of the concerned unit is not retrenchment. In any case, the original post does not talk about the closure of the factory. It talks about the termination of a contract. What does that have to do with this?
I hope you are not going to put another such judgment copy in response.
From India, Mumbai
A. The case is not about contract labor. It is about temporary workers. We are clearly talking of contract labor. I specified that they will not get retrenchment benefit as it is not provided in the contract labor act. Nothing in the judgment is about contract labor. The only time the word "contract" has come up in that judgment is where they have talked about the contract of employment between the temporary workers and the company; it's not about the engagement of contract workers.
Please review what you send instead of wasting our time or misleading members.
B. The court says that the refusal of work to such temporary workers on account of the closure of the concerned unit is not retrenchment. In any case, the original post does not talk about the closure of the factory. It talks about the termination of a contract. What does that have to do with this?
I hope you are not going to put another such judgment copy in response.
From India, Mumbai
Dear All,
First, read the query raised. Everyone is giving their comments, and now this thread is off track. The question that was asked is, "If a contractor removes his workmen from the job after one year of service, what type of benefits is he liable to get from the contractor/employer?"
Nowhere is it mentioned that the contract is for one year or that a workman is employed for any specific service period. It is only the case that the workman has been removed, so it is presumed that the contract is still ongoing. For any reasons the contractor has removed him from the work, if the case is like this, the workman is eligible for RC.
Regards,
Nilesh Soni.
From India, Mumbai
First, read the query raised. Everyone is giving their comments, and now this thread is off track. The question that was asked is, "If a contractor removes his workmen from the job after one year of service, what type of benefits is he liable to get from the contractor/employer?"
Nowhere is it mentioned that the contract is for one year or that a workman is employed for any specific service period. It is only the case that the workman has been removed, so it is presumed that the contract is still ongoing. For any reasons the contractor has removed him from the work, if the case is like this, the workman is eligible for RC.
Regards,
Nilesh Soni.
From India, Mumbai
Dear All,
First, please read the query raised. Everyone is giving their comments, and now this thread is off track. The original question was, "If a contractor removes his workmen from the job after one year of service, what type of benefits is he liable to provide?" Nowhere is it mentioned that the contract is for one year or that a workman is employed for any specific service period. It is only the case that the workman has been removed, so it is presumed that the contract is still active. For any reasons the contractor has removed him from the work, if this is the case, the workman is eligible for retrenchment compensation.
Regards,
Nilesh Soni
The matter at hand is: Does the Industrial Disputes Act cover contract labour? I believe it doesn't. If it doesn't, then there is no provision for retrenchment compensation elsewhere. What is your opinion on this? I would appreciate more feedback as this is a critical matter.
From India, Mumbai
First, please read the query raised. Everyone is giving their comments, and now this thread is off track. The original question was, "If a contractor removes his workmen from the job after one year of service, what type of benefits is he liable to provide?" Nowhere is it mentioned that the contract is for one year or that a workman is employed for any specific service period. It is only the case that the workman has been removed, so it is presumed that the contract is still active. For any reasons the contractor has removed him from the work, if this is the case, the workman is eligible for retrenchment compensation.
Regards,
Nilesh Soni
The matter at hand is: Does the Industrial Disputes Act cover contract labour? I believe it doesn't. If it doesn't, then there is no provision for retrenchment compensation elsewhere. What is your opinion on this? I would appreciate more feedback as this is a critical matter.
From India, Mumbai
The contention that the contract labor is not entitled to retrenchment compensation because he is not covered by the Industrial Disputes Act is not based on sound law. The Industrial Disputes Act is very well applicable to the contract labor since he is very much a workman within the meaning of Sec. 2(s) of the I.D Act and is entitled to retrenchment compensation if his termination does not fall within any of the exceptions to retrenchment specified under Sec. 2(oo) of the I.D Act. The only ground on which a contract worker is not eligible for retrenchment compensation is when he is recruited for a fixed tenure or for the duration of the project, which is the common method in the employment of contract labor.
B. Saikumar
HR & Labour Law Advisor
Mumbai
From India, Mumbai
B. Saikumar
HR & Labour Law Advisor
Mumbai
From India, Mumbai
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