Is bonus liability of principal employer to contract employee?explin with judgement or any rule
From India, New Delhi
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From India, New Delhi
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Principal employer is liable to pay bonus to contract labour if the contractor fails to pay bonus. It is the responsibility of the principal employer to ensure that the workers engaged through the contractor are paid minimum wages, ESI, EPF, and other benefits, which include statutory bonus. Certainly, the principal employer can recover the amount so paid by him from the contractor.
Regards,
Madhu.T.K
From India, Kannur
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4468Regards,
Madhu.T.K
From India, Kannur
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Mr. Madhu is absolutely correct.
If the concerned contractor fails to pay the bonus to their workmen, the ultimate responsibility lies with the Principal Employer (PE). The PE can't escape from such responsibility, as it is a statutory requirement.
AK Sharma
From India, Mumbai
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If the concerned contractor fails to pay the bonus to their workmen, the ultimate responsibility lies with the Principal Employer (PE). The PE can't escape from such responsibility, as it is a statutory requirement.
AK Sharma
From India, Mumbai
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Dear Rajesh,
As per the definition of an employee defined in the Payment of Bonus Act, which is reproduced below, other than apprentices, all other employees, including contract labor, are also covered.
"Employee" means any person (other than an apprentice) employed on a salary or wage not exceeding [Rs.10,000] per month in any industry to do any skilled or unskilled manual, supervisory, managerial, administrative, technical, or clerical work for hire or reward, whether the terms of employment are express or implied.
In case the contractor does not pay the bonus, it is the duty of the employer to pay the bonus to contract labor and recover the same from him.
U.C. Dalai
Chief Executive Officer
Aparajita Compliance Solution Private Limited
From India, Madras
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As per the definition of an employee defined in the Payment of Bonus Act, which is reproduced below, other than apprentices, all other employees, including contract labor, are also covered.
"Employee" means any person (other than an apprentice) employed on a salary or wage not exceeding [Rs.10,000] per month in any industry to do any skilled or unskilled manual, supervisory, managerial, administrative, technical, or clerical work for hire or reward, whether the terms of employment are express or implied.
In case the contractor does not pay the bonus, it is the duty of the employer to pay the bonus to contract labor and recover the same from him.
U.C. Dalai
Chief Executive Officer
Aparajita Compliance Solution Private Limited
From India, Madras
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i also agree that principal employer is liable for payment of bonus on the non-compliance of the contractor
From India, Hyderabad
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From India, Hyderabad
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Dear All,
No doubt, a principal employer is liable to pay wages to the employees of the contractor if the latter fails to make payment of wages to his employees. However, it has been held in one case that the gratuity and bonus will not be payable by the principal employer since these do not come within the definition of 'wages'.
Case Law: Cominco Binani Zinc Ltd. vs. Pappachan, 1989 LLR 123 (Ker. HC).
You can find the judgment from the below link:
(Search On Cite | Search On Google)
All the best
(Search On Cite | Search On Google)
From India, Vijayawada
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No doubt, a principal employer is liable to pay wages to the employees of the contractor if the latter fails to make payment of wages to his employees. However, it has been held in one case that the gratuity and bonus will not be payable by the principal employer since these do not come within the definition of 'wages'.
Case Law: Cominco Binani Zinc Ltd. vs. Pappachan, 1989 LLR 123 (Ker. HC).
You can find the judgment from the below link:
(Search On Cite | Search On Google)
All the best
(Search On Cite | Search On Google)
From India, Vijayawada
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I have maintained that the principal employer is not liable for a bonus in my previous post, and I concur with the interpretation held out in the Cominco Binani case as cited by Mr. KVJ Raghunath.
B. Saikumar
Mumbai
From India, Mumbai
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B. Saikumar
Mumbai
From India, Mumbai
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Every employee is entitled to receive their minimum bonus if they have worked for at least 30 days. So, yes, the principal employer is responsible for paying the bonus.
The question pertains not to the principal employer but to the occupier of the employee's workplace, who occupies the premises. If, in your case, the principal employer is the occupier, then yes, they are liable. Even the agent is accountable if they are the occupier.
I would say the judgment is rather old, but regardless, in any scenario where the individual proves to be an occupier, they will be held responsible for paying the bonus. It does not matter whether they are the owner, employer, agent, or even the government itself. The liability to pay the bonus falls on the occupier, unlike wages.
From India, Bangalore
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The question pertains not to the principal employer but to the occupier of the employee's workplace, who occupies the premises. If, in your case, the principal employer is the occupier, then yes, they are liable. Even the agent is accountable if they are the occupier.
I would say the judgment is rather old, but regardless, in any scenario where the individual proves to be an occupier, they will be held responsible for paying the bonus. It does not matter whether they are the owner, employer, agent, or even the government itself. The liability to pay the bonus falls on the occupier, unlike wages.
From India, Bangalore
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Hi,
The principal employer must ensure that contract employees are paid their dues on time, i.e., wages, bonuses, etc. Since the contract employee segment is very dynamic, the principal employer should ensure that statutory bonuses are given on a monthly basis in payroll. Remember, prevention is better than cure, and yes, the principal employer is liable to pay bonuses.
From India, Hyderabad
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The principal employer must ensure that contract employees are paid their dues on time, i.e., wages, bonuses, etc. Since the contract employee segment is very dynamic, the principal employer should ensure that statutory bonuses are given on a monthly basis in payroll. Remember, prevention is better than cure, and yes, the principal employer is liable to pay bonuses.
From India, Hyderabad
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There are two issues:
1. The quantum or the percentage to be declared.
2. Actual Payment.
Role of Principal Employer:
To ensure that all statutory rights of employees are fulfilled, the principal employer must ensure that wages are paid on time, PF and ESI contributions are made, and bonuses as per the Payment of Bonus Act are complied with.
If we interpret that the Principal Employer is liable, then the percentage the Principal Employer declares to his employees must be extended to the contract employees as well. But the Act does not envisage this. The contractor as an employer must prepare his balance sheet, get the allocable surplus calculated, and then declare the bonus. It is the responsibility of the Principal Employer to ensure that the contract employees are paid bonuses as per the provisions of the Payment of Bonus Act. This implies that he must ensure that the contractor maintains records correctly, checks the allocable surplus, and pays the bonus as arrived at. Payment of a minimum bonus of 8.33% is not sufficient.
Actual payment needs to be made once a year. I have come across many outsourcing organizations making 8.33% as a bonus in the payslip, which is not correct.
Sivasankaran
From India, Chennai
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1. The quantum or the percentage to be declared.
2. Actual Payment.
Role of Principal Employer:
To ensure that all statutory rights of employees are fulfilled, the principal employer must ensure that wages are paid on time, PF and ESI contributions are made, and bonuses as per the Payment of Bonus Act are complied with.
If we interpret that the Principal Employer is liable, then the percentage the Principal Employer declares to his employees must be extended to the contract employees as well. But the Act does not envisage this. The contractor as an employer must prepare his balance sheet, get the allocable surplus calculated, and then declare the bonus. It is the responsibility of the Principal Employer to ensure that the contract employees are paid bonuses as per the provisions of the Payment of Bonus Act. This implies that he must ensure that the contractor maintains records correctly, checks the allocable surplus, and pays the bonus as arrived at. Payment of a minimum bonus of 8.33% is not sufficient.
Actual payment needs to be made once a year. I have come across many outsourcing organizations making 8.33% as a bonus in the payslip, which is not correct.
Sivasankaran
From India, Chennai
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