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Yes, the Principal Employer must compensate the contractor worker when the Contractor fails to do so.
In respect of certain statutory employment rights of contract labor engaged within the zone of work of the establishment for which their services are hired, the Principal Employer is charged with vicarious liability u/s 21 of the CLRA Act,1970.
Compensation under the Employees Compensation Act,1923 for any injury sustained due to any employment accident including death is one such liability fastened on the PE.
However, it is not obligatory on the PE to take up insurance for the contract labor for such a contingency in view of no employer-employee relationship between the PE and the CL. Hence it is suffice that the PE ensures insurance cover by making it an essential condition of the contract for service between the contractor and himself compelling the contractor to take up a suitable insurance policy under the EC Act for the respective project undertaken by him.
From India, Salem
Compensation under the Employees Compensation Act,1923 for any injury sustained due to any employment accident including death is one such liability fastened on the PE.
However, it is not obligatory on the PE to take up insurance for the contract labor for such a contingency in view of no employer-employee relationship between the PE and the CL. Hence it is suffice that the PE ensures insurance cover by making it an essential condition of the contract for service between the contractor and himself compelling the contractor to take up a suitable insurance policy under the EC Act for the respective project undertaken by him.
From India, Salem
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Workmen Compensation Notification.pd f
Workmen Compensation Return.doc