Seniors,
I request your guidance on the below mentioned issue.
The principal employer has outsourced all its business activities like sales, collections etc that apart admn and other back office works to another company, say the contractor.
(a) the directors of the contractor company are the employees of the Principal company
(b) The appointment letter, salary etc are processed and the cheques are signed by the employees of principal company
(c) All the contract employees are controlled and supervised by the employees of the Principal Company.
The Principal and the contractor companies are group companies. There is no employee in the managerial cadre in the contractor company and all the decisions regarding the company is taken by the Board which again comprises of the employees of the principal company.
I need guidance as to how to sort this out and bring out as a clear principal and contractor relationship.
Request all yr help
regards
From India, Madras
5I request your guidance on the below mentioned issue.
The principal employer has outsourced all its business activities like sales, collections etc that apart admn and other back office works to another company, say the contractor.
(a) the directors of the contractor company are the employees of the Principal company
(b) The appointment letter, salary etc are processed and the cheques are signed by the employees of principal company
(c) All the contract employees are controlled and supervised by the employees of the Principal Company.
The Principal and the contractor companies are group companies. There is no employee in the managerial cadre in the contractor company and all the decisions regarding the company is taken by the Board which again comprises of the employees of the principal company.
I need guidance as to how to sort this out and bring out as a clear principal and contractor relationship.
Request all yr help
regards
From India, Madras
1. Is it a case of merging of two companies as it is understood from your mail
2. I would like to know if the employees of contractor company while getting merged with the principal employer were issued appointment letter.
3. If not what are the conditions under which they merged with the principal employer.
4. To clear and make everything streamlined I will suggest to issue new appointment letters to the employees of contract company clearly mentioning therein the reporting structure.
From India, Calcutta
2. I would like to know if the employees of contractor company while getting merged with the principal employer were issued appointment letter.
3. If not what are the conditions under which they merged with the principal employer.
4. To clear and make everything streamlined I will suggest to issue new appointment letters to the employees of contract company clearly mentioning therein the reporting structure.
From India, Calcutta
dear
here contractor does not have any control over the employees.principle employer gives direct instruction to contract workers and principle employer have supervision over the contract workers.in this condition all employee belongs to principle.
contract is eyewash.
tks
j s malik
From India, Delhi
here contractor does not have any control over the employees.principle employer gives direct instruction to contract workers and principle employer have supervision over the contract workers.in this condition all employee belongs to principle.
contract is eyewash.
tks
j s malik
From India, Delhi
Correct Malik. This is why i want to have all yr suggestion as to how to set this right to make it clear contractor employee relationship. regards
From India, Madras
From India, Madras
:huh: Dear HR professional,
1. These issues are governed by the THE CONTRACT LABOUR (REGULATION AND ABOLITION) ACT, 1970. The definition of "contractor", in relation to an establishment, means a person who undertakes to produce a given result for the establishment, other than a mere supply of goods of articles of manufacture to such establishment, through contract labour or who supplies contract labour for any work of the establishment and includes a sub- contractor;
2. "Principal employer" menas-- (i) in relation to any office or department of the Government or a local authority, the head of that office or department or such other officer as the Government or the local authority, as the case may be, may specify in this behalf, (ii) in a factory, the owner or occupier .....where a person has been named as the manager...the person so named, (iii) in a mine....., (iv) in any other establishment, any person responsible for the supervision and control of the establishment.
3. In the instant case, for establishing clear Principal-Contractor relationship, lets browse the positive aspects: The two companies are different legal entities.
4.Now, lets see what's not going well: A common employee with the Principal, is issuing letters of appointment, making payment of salary through cheques, physically controlling and supervising the contract labour. it would be very easy to establish that the contractor and the Principal Employer are one and the same.
5. The aspects which are not clear from your description are: Whether -the Pricipal Employer has obtained Registration under section 7 of the Act?
-the contractor has obtained license under section 13 of the act?
-is the job out sourced the one where deployment of contract labour is abolished?
6. My suggestion is:
a. Both Pricipal and Contracor should establish their exclusivity in all respects of service matters, control of employees and supervision.
b. Principal should enter into a contract for "Producing results"; i.e., define results or jobs to be done and measures / metrics of performance. Also agree on audit, checks by contrtacor should be built in.
c. Employees of Principal should desist from corresponding with, controlling or supervising employees of contracor.
d. Results produced as per metrics shold be measured and contractor paid as per scale agreed. No direct payment should be made to employees of contractor.
e. The contractor shall pay salaries / wages and remit all applicable statutory benefits, such as PF, ESI, insurance etc., under his company's letter head, to concerned authorities. The rep of Principal Employer shall witness wage payments and certify accordingly. Alternatively, payments can be released through bank.
Hope this is helpful to you.
1. These issues are governed by the THE CONTRACT LABOUR (REGULATION AND ABOLITION) ACT, 1970. The definition of "contractor", in relation to an establishment, means a person who undertakes to produce a given result for the establishment, other than a mere supply of goods of articles of manufacture to such establishment, through contract labour or who supplies contract labour for any work of the establishment and includes a sub- contractor;
2. "Principal employer" menas-- (i) in relation to any office or department of the Government or a local authority, the head of that office or department or such other officer as the Government or the local authority, as the case may be, may specify in this behalf, (ii) in a factory, the owner or occupier .....where a person has been named as the manager...the person so named, (iii) in a mine....., (iv) in any other establishment, any person responsible for the supervision and control of the establishment.
3. In the instant case, for establishing clear Principal-Contractor relationship, lets browse the positive aspects: The two companies are different legal entities.
4.Now, lets see what's not going well: A common employee with the Principal, is issuing letters of appointment, making payment of salary through cheques, physically controlling and supervising the contract labour. it would be very easy to establish that the contractor and the Principal Employer are one and the same.
5. The aspects which are not clear from your description are: Whether -the Pricipal Employer has obtained Registration under section 7 of the Act?
-the contractor has obtained license under section 13 of the act?
-is the job out sourced the one where deployment of contract labour is abolished?
6. My suggestion is:
a. Both Pricipal and Contracor should establish their exclusivity in all respects of service matters, control of employees and supervision.
b. Principal should enter into a contract for "Producing results"; i.e., define results or jobs to be done and measures / metrics of performance. Also agree on audit, checks by contrtacor should be built in.
c. Employees of Principal should desist from corresponding with, controlling or supervising employees of contracor.
d. Results produced as per metrics shold be measured and contractor paid as per scale agreed. No direct payment should be made to employees of contractor.
e. The contractor shall pay salaries / wages and remit all applicable statutory benefits, such as PF, ESI, insurance etc., under his company's letter head, to concerned authorities. The rep of Principal Employer shall witness wage payments and certify accordingly. Alternatively, payments can be released through bank.
Hope this is helpful to you.
From India, Changanacheri
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Notification No G.S.R. 1128(E) Contract Labour (Regulation and Abolition) Central Amendment .pdf
LABOUR CONTRACT AGREEMENT.doc
Contract Labour Act.zip