Section 64: Liability of employer in certain cases

Overview

Section 64 of the Code on Wages, 2019 deals with the payment of wages to workers employed through contractors. It clarifies who is responsible for ensuring these workers receive their due wages, even when they aren't directly employed by the main company. This section focuses on ensuring wage security for contract labourers.

Scope and Coverage

• This section applies to all establishments covered under the Code on Wages, 2019, and to all workers employed through a contractor to perform work for that establishment.
• There are no specific thresholds based on the number of employees or the size of the establishment for this section to apply. It applies broadly to any situation where work is outsourced via a contract.

Key Obligations and Rights

• Employer’s Duty: The principal employer (the main company) and the contractor are jointly and severally liable for paying the wages to the workers employed by the contractor. This means either the principal employer or the contractor can be held responsible for the full wage amount.
• Employee’s Right: Workers employed through a contractor have the right to receive their wages in full and on time. They can approach either the principal employer or the contractor to ensure this right is fulfilled.

Compliance and Penalties

If wages are not paid to workers employed through a contractor, both the principal employer and the contractor can face legal consequences. This can include inspections by labour authorities, demands for wage payment, and potential penalties or prosecution under the Code. The specific penalties will depend on the nature and severity of the violation.

Practical Examples

• Example 1: A construction company (principal employer) hires a labour contractor to supply workers for a building project. If the contractor fails to pay the workers their wages, the workers can legally demand payment from the construction company as well.
• Example 2: A manufacturing company outsources its cleaning services to a cleaning agency (contractor). The cleaning agency doesn't pay its employees for overtime work. The employees can approach the manufacturing company, as the principal employer, to recover their overtime wages, alongside pursuing the cleaning agency.