Total number of Pages - 05

Policy No 11/2017
Tele : 23019646 E2 Works (PPC) Sub Dte
Dte of Works, E-in-C's Branch
Integrated HQ of MoD (Army)
Kashmir House, Rajaji Marg,
New Delhi — 110011.

A/37696/Gen/Pol/E2W (PPC) d/.7. Jul 17

List 'A' and S'

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 1970.

(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)
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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),
r..Qt-rnnmc, k dining hn!!, r1 =11 Int fr,r wom..n
employees, creche, 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 21.6.5 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-2249.
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-2249.

(ii) Fair Wages Clause and Contractors Labour Regulations.

As per Para 21.6.1 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 sub-
contractors in connection with the said work, as if the labourers had been
directly employed by him.
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" '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, 1952. 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/MAnliAli 677/FR dated 10 Nnv 1R, 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
1996. 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

'26rw


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
prp_judiee to his right to claim indemnity from his silh-nontractnrs ThP nE/PM/AP,F0)
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/HQ/Vol-II 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
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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
nr‘r'r11 Int ni imhcr to r'!nirn tha pnyrnant nnri t h A rvIntrnrq iting nu ithrlrity~Aiill ='ncl irc
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.

(KK epswal)
Brig
DDGW (PPC & Est)
For E-in-C
Copy to:-
FIF
QMG's Branch / 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.