The Principal Employer's Liability

In one line

The principal employer provides the welfare facilities himself, is in contravention of the Code if he uses an unlicensed contractor, and must pay the wages if the contractor does not.

In exam wording: section 53 of the Occupational Safety, Health and Working Conditions Code 2020 places the welfare facilities under sections 23 and 24 on the principal employer in respect of contract labour employed in his establishment; section 54 deems the employment of contract labour through a contractor who has not obtained the required licence to be a contravention of the Code; section 55 makes the contractor responsible for wages, to be paid through bank transfer or electronic mode, and makes the principal employer liable on the contractor's default with a right of recovery, and requires the appropriate Government to order payment out of the contractor's security deposit; and section 56 requires the contractor to issue an experience certificate on demand.

Why the law has this at all

The whole difficulty of contract labour is that the person who benefits from the work is not the person the worker can sue.

An establishment that engages five hundred workers through a contractor has the labour of five hundred people and, on paper, no workers at all. If the contractor absconds, the workers have a judgment against an empty shell. If the latrines are filthy, the establishment says the contractor should have cleaned them. Every scheme of contract labour law has therefore had to decide how far up the chain a liability travels, and these four sections are this Code's answer.

The answer is not the same for every obligation, and that is the thing to get right.

Welfare travels all the way up, at once. Section 53 does not say that the principal employer must provide facilities if the contractor fails. It says the facilities shall be provided by the principal employer. He is the primary obligor.

Wages travel up only on default. Section 55(1) puts wages on the contractor. The principal employer becomes liable under section 55(3) only where the contractor fails to pay or pays short, and he may then recover what he paid.

Licensing travels up as a deemed contravention. Section 54 does not fine the principal employer directly; it provides that his employment of contract labour through an unlicensed contractor shall be deemed to be in contravention of the provisions of the Code, which puts him inside the penalty sections.

Some words this chapter uses

Principal employer, section 2(1)(zz), is the head of the office or Department for a Government office or local authority, the owner or occupier of a factory or its named manager, the owner or agent of a mine, and for any other establishment the person responsible for its supervision and control.