It is purely a manpower contract with NPCIL (central agency) who is a Principal Employer (PE). Specified number of workers of different skills to be provided to PE, and it is PE's responsibility to allocate and get the work done. Billing is based on attendance of 8 hours or part of it.
NIT/Tender for Contract dated back to 2013 and work awarded in 2013 itself for a 2-year period but extended for another 10 months beyond 2 years. The contract was escalable based on revision in minimum wages (central or state). Payment of Bonus (Amendment) Act notified on 1.1.2016 with retrospective effect of 1.4.2014. Applicability of retrospective effect for FY 14-15 & FY-16 is challenged by various parties at different High Courts which is now pending with Hon. Supreme Court.
In detail: PE in his Tender value estimation includes: present Minimum Wage, Transport, PF, PPE (like uniform, safety shoe, medical test), minimum bonus @ Rs. 3500/pa (as per bonus act as on 2013) i.e. Rs. 11.21 per day of 8-hour duty per worker, workmen compensation insurance, 3rd party insurance + 10% profit on Minimum Wage to bidder. During the subsistence of the contract, the minimum wage was increased substantially and the same was compensated to the contractor by PE from time to time. Based on tender estimate, bidders quote taking into account the above pay-outs including minimum bonus as above.
After the revision of the Bonus Act, the contractor is claiming the difference of Bonus amount between Rs. 3500 and 8.33% of actual Minimum Wage paid. PE is not willing to consider. PE is releasing the final Bill of the contractor without paying revised bonus wef 1.4.14 or wants to withhold the amount equal to revised bonus and release the balance. The contractor demands that the onus lies on PE since he had included it in the tender estimate. The matter was raised under ID Act, Conciliation Proceedings under Asst. Labour Commr. (C) was held and ended up in failure.
In this scenario:
- What is the responsibility of PE with respect to CLR Act, PB Act on the above issue.
- Can the PE withhold the amount of bonus when there is no direct employer-employee relationship as per PB Act?
- Can the contractors approach the Industrial Tribunal under the Ministry of Labour?
- Can the contractors approach Hon. Courts for a remedy?
I will appreciate it if you can provide your expert advice on the issue.
From India, Thane
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23NIT/Tender for Contract dated back to 2013 and work awarded in 2013 itself for a 2-year period but extended for another 10 months beyond 2 years. The contract was escalable based on revision in minimum wages (central or state). Payment of Bonus (Amendment) Act notified on 1.1.2016 with retrospective effect of 1.4.2014. Applicability of retrospective effect for FY 14-15 & FY-16 is challenged by various parties at different High Courts which is now pending with Hon. Supreme Court.
In detail: PE in his Tender value estimation includes: present Minimum Wage, Transport, PF, PPE (like uniform, safety shoe, medical test), minimum bonus @ Rs. 3500/pa (as per bonus act as on 2013) i.e. Rs. 11.21 per day of 8-hour duty per worker, workmen compensation insurance, 3rd party insurance + 10% profit on Minimum Wage to bidder. During the subsistence of the contract, the minimum wage was increased substantially and the same was compensated to the contractor by PE from time to time. Based on tender estimate, bidders quote taking into account the above pay-outs including minimum bonus as above.
After the revision of the Bonus Act, the contractor is claiming the difference of Bonus amount between Rs. 3500 and 8.33% of actual Minimum Wage paid. PE is not willing to consider. PE is releasing the final Bill of the contractor without paying revised bonus wef 1.4.14 or wants to withhold the amount equal to revised bonus and release the balance. The contractor demands that the onus lies on PE since he had included it in the tender estimate. The matter was raised under ID Act, Conciliation Proceedings under Asst. Labour Commr. (C) was held and ended up in failure.
In this scenario:
- What is the responsibility of PE with respect to CLR Act, PB Act on the above issue.
- Can the PE withhold the amount of bonus when there is no direct employer-employee relationship as per PB Act?
- Can the contractors approach the Industrial Tribunal under the Ministry of Labour?
- Can the contractors approach Hon. Courts for a remedy?
I will appreciate it if you can provide your expert advice on the issue.
From India, Thane
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Dear Kanthan,
Divergence of opinion prevails among various High Courts regarding the extended vicarious liability of the Principal Employers in respect of the statutory benefits of gratuity and bonus payable to the contract labor engaged by them. Personally, I would like to favor the liberal interpretation of sec. 21 of the CLRA Act, 1970 so as to ensure the statutory benefits of gratuity and bonus to the less privileged contract labor as and when they become due.
Upward revision of any monetary benefit by operation of any law should go to the actual beneficiary like the contract labor. Since the retrospective operation of the amendment to the PB Act, 1965 is sub judice, the PE can withhold such extra benefit till the disposal of the pending case on the disputed issue.
Yes. This is a dispute between employer and employer regarding the condition of service of bonus to their contract labor.
Yes. Since NPCIL is an authority under Article 12 of the Constitution, it is amenable to Writ Jurisdiction. My submission is that even though the PE is prepared to pay the dues as per the contract as well as the amended provisions of the PB Act, 1965, he has the right to agitate against the retrospective effect of a monetary benefit as it would involve certain practical difficulties like locating the contractors as well as the contract labor engaged through them in the past, apart from accounting difficulties. In case the Supreme Court, in its wisdom, strikes down the retrospective effect of the amendment, the recovery of the amount already paid would be impossible. Therefore, withholding of such extra amount payable by the NPCIL as a PE till the disposal of the writ before the SC may be right.
From India, Salem
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Divergence of opinion prevails among various High Courts regarding the extended vicarious liability of the Principal Employers in respect of the statutory benefits of gratuity and bonus payable to the contract labor engaged by them. Personally, I would like to favor the liberal interpretation of sec. 21 of the CLRA Act, 1970 so as to ensure the statutory benefits of gratuity and bonus to the less privileged contract labor as and when they become due.
Upward revision of any monetary benefit by operation of any law should go to the actual beneficiary like the contract labor. Since the retrospective operation of the amendment to the PB Act, 1965 is sub judice, the PE can withhold such extra benefit till the disposal of the pending case on the disputed issue.
Yes. This is a dispute between employer and employer regarding the condition of service of bonus to their contract labor.
Yes. Since NPCIL is an authority under Article 12 of the Constitution, it is amenable to Writ Jurisdiction. My submission is that even though the PE is prepared to pay the dues as per the contract as well as the amended provisions of the PB Act, 1965, he has the right to agitate against the retrospective effect of a monetary benefit as it would involve certain practical difficulties like locating the contractors as well as the contract labor engaged through them in the past, apart from accounting difficulties. In case the Supreme Court, in its wisdom, strikes down the retrospective effect of the amendment, the recovery of the amount already paid would be impossible. Therefore, withholding of such extra amount payable by the NPCIL as a PE till the disposal of the writ before the SC may be right.
From India, Salem
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Respected Umakanthan Sir,
Thank you for your valued input/opinion. There is a small confusion, or I did not express it correctly, i.e. The PE is not willing to pay the enhanced bonus as per the Amended PB Act, while he had included the pre-revised bonus amount in his tender estimate. However, he is enforcing to withhold the difference of the bonus amount between the old and revised bonus amount from the bill payable to the contractor for the work done value. This is the core issue. He is not willing to pay the amended bonus but is forcing the contractor to pay the same.
This situation is also applicable for FY 16-17 because many of the contracts that started in 2013 were running until the beginning of 2017 based on the tender estimation of the pre-revised bonus amount only. The matter is with the Hon'ble Supreme Court for a ruling on the application of "retrospective effect."
Kindly give your views on this.
Regards, PL Kanthan
From India, Thane
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Thank you for your valued input/opinion. There is a small confusion, or I did not express it correctly, i.e. The PE is not willing to pay the enhanced bonus as per the Amended PB Act, while he had included the pre-revised bonus amount in his tender estimate. However, he is enforcing to withhold the difference of the bonus amount between the old and revised bonus amount from the bill payable to the contractor for the work done value. This is the core issue. He is not willing to pay the amended bonus but is forcing the contractor to pay the same.
This situation is also applicable for FY 16-17 because many of the contracts that started in 2013 were running until the beginning of 2017 based on the tender estimation of the pre-revised bonus amount only. The matter is with the Hon'ble Supreme Court for a ruling on the application of "retrospective effect."
Kindly give your views on this.
Regards, PL Kanthan
From India, Thane
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