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Applicability of bonus payment

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p s raghuraman

Manager-InternalAudit

33 Points Posted on 22 November 2013

Dear All,

Can some one clarify the following?

We have outsourced workers from third party for certain jobs in our Co.We have declared and paid bonus to our workers on roll @ 15%. We are told that we are required to pay bonus to the outsourced workers also @ 15%,as we are the principal employer OR can we pay them bonus @ 8.33%.Is there any related Court Ruling on this?

Please clarify

Replies (1)

Santosh Kumar

Article

29 Points Posted on 13 January 2014

There is no Statutory Obligation to pay bonus to Outsourced workers.

However we have to ensure that the contractor is paying bonus those workers.

As per Sec 21 of Contract labor (Ragulation & Abolition) Act 1970 , "In case the contractor fails to make payment of wages within the prescribed period or makes short payment, then the principal employer shall be liable to make payment of wages in full or the unpaid balance due, as the case may be, to the contract labour employed by the contractor and recover the amount so paid from the contractor either by deduction from any amount payable to the contractor under any contract or as a debt payable by the contractor."

So, we have you have to pay bonus only when when your contractor fails to pay and you can indemnify it from the amount payable to him........