Total number of Pages - 05 ENFORCEMENT OF RIGHTS CONFERRED TO LABOUR UNDER VARIOUS ACTS & LAWS : RESPONSIBILITY OF PRINCIPAL EMPLOYER

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1 Total number of Pages - 05 Tele : Policy No 11/2017 E2 Works (PPC) Sub Dte Dte of Works, E-in-C's Branch Integrated HQ of MoD (Army) Kashmir House, Rajaji Marg, New Delhi A/37696/Gen/Pol/E2W (PPC) 027- Jul 17 List 'A' and 'B' ENFORCEMENT OF RIGHTS CONFERRED TO LABOUR UNDER VARIOUS ACTS & LAWS : RESPONSIBILITY OF PRINCIPAL EMPLOYER 1. Introduction. A large number of labour/ workmen are engaged by the contractors through Works Contracts and Outsourcing of Services in MES. Such large work-force forming an important component of the society plays a vital role in creation and maintenance of Defence Infrastructure facilities. There is a need to reiterate and ensure that their right to wages, social security, entitled benefits & amenities are protected. There is a tendency on the part of employers/ firms who are providing services for outsourcing to under-quote the number of employees employed by them in their establishments to avoid becoming a subscriber to the EPFO or ESIC schemes. It is therefore, important to ensure that social security rights like EPFO, ESIC, Personal Insurance (as applicable) etc are duly implemented for all the personnel employed by MES contractors and service providers. One of the ways to ensure that the right to wages are protected and verifiable is by crediting wages in bank account of the employees. 2. Principal Employer. The contract executing authority (Garrison Engineer/ Project Manager/ Assistant Garrison Engineer (Independent)) under whom the work is being carried out through contract is the Principal Employer for workmen engaged by the contractor for execution of works and/ or services. The Principal Employer needs to be adequately informed and made aware of his responsibilities and obligations towards the workmen employed. 3. Statutory Provisions. There are large number of statutory provisions which needs to be followed strictly for works contracts and are equally applicable for outsourcing of services. These includes the following: (a) Contract Labour (Regulation & Abolition) Act (i) The Contract Labour (Regulation & Abolition) Act 1970 is applicable to MES and MES contractors, except that the MES will not have to take a license in respect of labour directly employed by it (Para 21.7 of MES Manual of Contract 2007 (Reprint 2012) refers). Each Garrison Engineer/ Project Manager/ Asst Garrison Engineer (Indep)

2 2 under whom the work is being carried out through contract, has to register himself as Principal Employer under the Act. Contractors carrying out MES works and providing services should be advised to take steps to get their establishment registered under the Act and obtain licence. (ii) Amenities under the Act. The amenities conferred under the Act to workers like wholesome drinking water, toilets, bathing & washing facilities, first aid, labour camps (where required/ permitted), rest-rooms, canteen & dining hall, adequate facilities for women employees, crèche, and/ or any other amenities conferred to workers from time to time, shall be provided by the contractor at the work sites. (b) MES Manual of Contract 2007 (Reprint 2012). (i) As per Para of this manual MES Model Rules for protection of health and sanitary arrangements for workers employed by the contractor have been specified in Annexure 'C' to IAFW As per condition 26 and 58 of IAFW-2249, the contractor during the progress of the work should comply with all the rules and provisions contained in the various Acts, Labour laws and MES Model Rules and should also arrange for safety provisions as per MES Safety Code specified in Annexure 'B' to IAFW (ii) Fair Wages Clause and Contractors Labour Regulations. As per Para of this manual, proper enforcement of fair wages clause and MES contractors Labour Regulations will be done by Assistant Labour Commissioner (Central) and Labour Enforcement Officer (Central) of different regions under the Chief Labour Commissioner (Central) concerned. Copies of work orders (indicating the time limit during which the contractor is supposed to execute the work) should be sent to the Regional Labour Commissioner (Central) and Labour Enforcement Officer/ Assistant Labour Commissioner concerned. (c) Minimum Wages Act 1948 and Fair Wages. The contractor shall pay not less than the 'fair wage' as defined below or the minimum wage fixed under the Minimum Wages Act, whichever is higher to labourers engaged by him on the Work (Condition 58 of IAFW-2249 (General Condition of Contracts) refers). The contractor shall not pay wages lower than minimum wages for labour as fixed by the Government of India/ State Government/ Union Territory, whichever is higher. The contractor shall, notwithstanding the provisions of any contract to the contrary, has to pay 'fair wage' or minimum wage fixed under the Minimum Wages Act, whichever is higher to labourers indirectly engaged on the work, including any labour engaged by his subcontractors in connection with the said work, as if the labourers had been directly employed by him. twl

3 3 " 'Fair Wage' means wage whether for time or piece-work notified at the time of inviting tenders for the Work and where such wages have not been so notified the wages prescribed by the Chief Engineer for the stations at which the Work is done." (d) The Employees Provident Funds & Miscellaneous Provisions (EPF & MP) Act, The implementation of EPF & MP Act, 1952 in MES has been instructed vide E-in-C's Branch letters No 66546/Manual/77/E8 dated 06 Nov 15 and No 66546/Manual/ 677/E8 dated 30 Nov 16, containing the following provision: "Before releasing the work order after finalization of the tender, it should be ensured that the contractor shall have Provident Fund Code Number (PFCN), if applicable and also a condition be included in the NIT that contractor shall also ensure compliance of the EPF & MP Act, 1952 by the sub-contractors, if any engaged by the contractor for the said work". (e) The Building and Other Construction Workers Welfare Cess Act The cess as per 'The Building and Other Construction Workers Welfare Cess Act 1996' shall be deducted, as notified by respective State Government, from payments to contractors. (f) Payment of Wages Act, 1936 (i) The amendment to Payment of Wages Act, 1936 Act, issued in the Gazette Notification dated 15 Feb 17 states "All wages shall be paid in current coin or currency notes or by cheque or by crediting the wages in the bank account of the employee." Crediting of wages directly in bank account of the employee may preferably be adopted over other modes of payment of wages. This provision would make it easy to verify and ensure that minimum/ due wages are paid to the employees and their social security rights are protected, leaving little room for complaints/ litigations at a later date. (ii) Mode of Payment. The payments will be made into AADHAAR linked bank account of the employees by the contractor. Where the employee insists on being paid in coins or currency notes or by cheque, the same will not be denied. An undertaking may be obtained from such employees. However, efforts shall be made to educate the employees on benefits of bank/ digital payments and pursue with the individual(s) to shift towards banking system/ digital modes. 4. The GE/ PM/ AGE (I) being the Principal Employer is responsible to ensure that the contractors fully comply with the provisions contained in the above regulations. The Principal Employer during his visit to the sites should specifically

4 4 check that the contractor is complying with the labour laws and rules and should there be any shortcomings, action is taken to rectify the same. The CsWE also during the inspections of works should examine this aspect and satisfy themselves about the compliance of the Labour Laws by the contractors. GE/ PM/ AGE (I) being the Principal Employer shall ensure payment of minimum fair wages to labourers engaged by contractors by verifying the same from Muster Rolls. 5. Vis-a-vis the Government, the Contractor shall be primarily liable for all payments to be made under, and for observance of the Regulations aforesaid without prejudice to his right to claim indemnity from his sub-contractors. The GE/PM/AGE(I) concerned shall have the right to deduct from the payment due to the Contractor, any sum required or estimated to be required for making good the loss suffered by a worker or workers by reason of non-fulfilment of the Conditions of the Contract for the benefit of the workers, non-payment of wages or of deductions made from his or their wages, which are not justified by the terms of the Contract or non-observance of the Regulations. 6. The GE/ PM/ AGE (I) should co-operate with the Inspecting Officers and keep a constant watch with regard to proper maintenance of registers, records, display of notices by contractors and ensure enforcement of MES contractors Labour Regulations forming part of the contract. 7. The GE/ PM/ AGE (I) should take prompt action in rectifying irregularities notified by the Inspecting officers. In case of non-payment or short payment of fair wages to the workers by the contractors, he shall take prompt action by recovering the amount notified by labour Officer and paying the same to workers. Amount of unpaid wages withheld from Contractor's bills should be paid to the labourers concerned within 60 days from receipt of report from the labour Welfare Officer/ Regional Labour Commissioner. 8. EPFO MoL vide their letter No CAIU/011(33)2015/HQA/o1-11 dated 02 Feb 17 have circulated a letter of Additional CPFC-II containing the undermentioned provisions, which shall be strictly complied with: - (a) The Principal Employer should ensure that the contractor is registered with EPFO before awarding any Contract. After award of the contract, the contractor details should be entered in the EPFO portal. (b) Payments due to the contractor should be made only after verifying that the statutory PF payments have been made to EPFO. This can be verified either directly from the EPFO portal or insisting on a payment receipt obtained by the contractor from the EPFO portal while making payment. 9. Contract Conditions and Compliance. The above measures are aimed towards ensuring that the rights conferred to the workers (engaged through contracts for Government works and outsourcing of services) are duly protected, creating just working conditions for all stakeholders and shall be strictly enforced by

5 5 the ground executives. The contract concluding authorities shall keep themselves abreast of the latest instructions issued by respective Ministry/ Legal bodies/ Legislation authorities and shall ensure that tender/ contract conditions include all relevant provisions. 10. Submission of proof of crediting the wages in the bank account/ payment made to the employees by the contractor, shall be a pre-requisite to enable the contract executing authority to release subsequent payments to contractors. The registered contractor shall also provide the details of individual's EPF and ESI account number to claim the payment and the contract executing authority will ensure verification of the same from time to time. 11. The above instructions are compilation of certain existing orders on the subject. No contractor/ firm shall be permitted to take advantage of ignorance of the above provisions. The above instruction will be strictly implemented and NO payments to the contractors/ firms will be made after 31 Aug 2017 unless proof of payment of wages through Aadhaar linked bank accounts is submitted by the contractors/ firms. Adherence to these instructions will be checked during various inspections as well as vigilance checks. Copy to:- (KK epswal) Brig DDGW (PPC & Est) For E-in-C QMG's Branch I DG LWE IHQ of MoD (Navy) / Dte of Works IHQ of MoD (Air Force) / Dte of AF Works HQ IDS / Works Dte HQ SFC Coast Guard HQ GS Branch / DG FP QMG's Branch / ADGTE HQ CME Pune Faculty of Construction Management, CME Pune Internal All Sub Dtes of Works Dte Automation Cell For uploading on MES website.