Sir,
This time, the MAHARASHTRA GOVT has increased wages by 100% on the basic plus VDA as well. However, when contracting with government departments, they require three quotations every six months, taking VDA into account. Initially, the increase was going perfectly at 7-10% VDA yearly. But now, who will bear this burden? It can't be assumed or predicted while quoting. If one tries to do so, they may not get the contract. Even if they do, the department might not award the tender as they find the rates too high compared to their estimate.
Kindly advise on who will cover this additional payment.
From India, Nagpur
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This time, the MAHARASHTRA GOVT has increased wages by 100% on the basic plus VDA as well. However, when contracting with government departments, they require three quotations every six months, taking VDA into account. Initially, the increase was going perfectly at 7-10% VDA yearly. But now, who will bear this burden? It can't be assumed or predicted while quoting. If one tries to do so, they may not get the contract. Even if they do, the department might not award the tender as they find the rates too high compared to their estimate.
Kindly advise on who will cover this additional payment.
From India, Nagpur
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Dear Suresh,
Section 21(4) of the CLRA Act, 1970 imposes vicarious liability on the Principal Employer for payment of wages to contract labor engaged by him. It includes the obligation of payment of wages not less than the statutory minimum wages as well. Therefore, the reasons cited in your post as a defense are quite untenable. The Principal Employer, particularly being a Government department, cannot approve of any tender quoting a lesser amount comprising wages falling short of the statutory minimum rates of wages during the currency of such a contract.
From India, Salem
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6185Section 21(4) of the CLRA Act, 1970 imposes vicarious liability on the Principal Employer for payment of wages to contract labor engaged by him. It includes the obligation of payment of wages not less than the statutory minimum wages as well. Therefore, the reasons cited in your post as a defense are quite untenable. The Principal Employer, particularly being a Government department, cannot approve of any tender quoting a lesser amount comprising wages falling short of the statutory minimum rates of wages during the currency of such a contract.
From India, Salem
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To put in short, The govt department has to pay minimum wages and not stick to contract rates if they are lower than government stipulated rates.
From India, Pune
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From India, Pune
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I may like to add that if there is a steep hike in the minimum wages during the currency of any contract, it is certainly a situation of cost escalation necessitated by the operation of law. Therefore, the contractor can legally demand enhancement of his charges under the escalation clause in the original contract. No government agency or department would simply turn down such a fresh demand by any existing contractor because the contractor can stop his work forthwith and a change of contractor would not be possible at this juncture on the pre-revised rates.
From India, Salem
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From India, Salem
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This is a common problem in Govt dept. Most of the departments are now mentioning a line that "Whenever there is a change in Basic/VDA, the contractor will first pay the difference to the workers and then claim reimbursement from the Principal employer by showing proof of payment. Delhi High Court in its judgment dated 20th September 2012 in the case of Peoples Union for Democratic Rights & Ors vs. Union of India has suggested on page no. 61 that if any establishment floats a tender and where the minimum wage rate is less than the one which is to be amended or even the current one, then the tender shall be rejected with a penalty.
From India, Pune
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From India, Pune
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Dear Suresh,
This problem exists everywhere but mostly for those who have closed contracts. In cases where the contract is signed for a longer period with an escalation clause to address such issues, you need to include a separate clause in the Letter of Intent (LOI) or Work Order issued to the contractor.
In every contract, there is a clause for reimbursing costs if they significantly exceed the quoted rate, or if there are new taxes and duties imposed. Therefore, you should discuss the matter with the principal employer to either amend the contract or include the necessary clause.
Please let me know if you need further clarification or assistance.
Thank you.
From India, Mumbai
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This problem exists everywhere but mostly for those who have closed contracts. In cases where the contract is signed for a longer period with an escalation clause to address such issues, you need to include a separate clause in the Letter of Intent (LOI) or Work Order issued to the contractor.
In every contract, there is a clause for reimbursing costs if they significantly exceed the quoted rate, or if there are new taxes and duties imposed. Therefore, you should discuss the matter with the principal employer to either amend the contract or include the necessary clause.
Please let me know if you need further clarification or assistance.
Thank you.
From India, Mumbai
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Wage Ceiling Under The Payment Of Wages Act Increased From 18,000 To 24,000.pdf