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Delay in wage payments: Why contractual workers are always at the other end

by | Jul 28, 2021 | Blogs | 0 comments

Even after an extensive discourse around labour reforms what is still holding industries to rectify the issues. The Azim Premji University’s 2019 State of Working in India report says, “Contract workers are employed in almost every aspect of the production operation now.” ETHRWorld interacted with several recruitment agencies to get the pulse of the situation.

The pandemic has hit hard the full-time workforce, let alone the people working on contractual terms. Recently, Tamil Nadu state labour welfare and skill development minister C V Ganesan said the department has received numerous complaints regarding companies refusing to pay temporary or contract employees for the present period.

Even after an extensive discourse around labour reforms, what is still holding industries to rectify the issues. The Azim Premji University’s 2019 State of Working in India report says, “Contract workers are employed in almost every aspect of the production operation now.”

ETHRWorld interacted with several recruitment agencies to get the pulse of the situation.


Opaque contracts giving way to less bargaining power

Prashant Singh, Vice President and Business Head – Compliance and Payroll Outsourcing, TeamLease Services, said issues related to delay or non-payment of wages, extra working hours, among others, normally happen in the unorganised sectors.

In the unorganised sectors, he said employers, both principal employers and contractors. do not register themselves under various labour laws and obtain the required registration certificates and licenses.

“In this scenario, the employers are scot-free and not subject to any labour department inspections due to non-registration,” Singh added.

Abhishek Agarwal, President – Judge India (Global Delivery), The Judge Group, opined that temporary workers’ contracts are often not transparent enough or have vague definitions due to which payments are delayed and longer working hours are demanded by the employers.

“Another reason is that the contractual employees do not have as much bargaining and legal power as full-time employees. The third reason can be a mistake on the part of the workers themselves. They often forget to fill in their timesheets punctually and as their wages are processed according to timesheets, they lose out on them,” he explained.

Yogita Tulsiani, MD, iXceed Solutions, believes unemployment in India or getting fired is the main issue why temporary workers tend to stick to the unorganised pay scale.

“In India, Labour Law is a concurrent subject, so it keeps on revising the appropriate laws and minimum wages. The problem of job security is one of the many prominent issues faced by contractual employees,” she said.

Besides, Tulsiani highlighted that there is no legal concern for contractual workers due to which they have to suffer the delay in payment. “They are always deprived of the benefits that accrue to the regular employees. They are often questioned on their reliability towards work,” she added.

Opportunity to make substantial changes

Industry experts think there should be some changes in the present rules in the contractual employees’ agreements with the companies. According to Agarwal, The Judge Group, the Contract Labour (Regulation and Abolition) Act (CLA), 1970, insists on certain functions having to be performed by full-time employees of an organisation.

This, he believes, appears to be completely out of sync with the market realities. In addition, Singh propounded that the distinction between “core” and “non-core” activities created under the CLA is increasingly used as a self-serving weapon by organised trade unions.

“Trade union leaders are prone to using this distinction to keep labour market outsiders (less skilled, less educated, people from small towns, women, etc) out of organised employment,” Agarwal said.

He further suggested that the prevailing macro-economic situation presents a perfect opportunity for the government to do away with the artificial distinction under the CLA, and make a push for organisations to engage in temporary labour, depending on their requirements.

Nowadays, experts say employees and employers are aware of the legal provisions and the consequences that they are likely to face in the case of any non-compliance.

Singh, TeamLease, believes, most of the labour issues will be resolved once the employers register themselves under various labour laws and obtain valid RCs or Licenses.

“The principal employers who engage with contractors for the supply of skilled or unskilled manpower to their establishments should ensure that the contractors are registered and they comply with the labour laws,” Singh said, adding, “A contract should be awarded only on satisfying these conditions.”

Suggesting steps for the government to take to resolve the issues of contractual or temporary workers, Singh said registrations need to be made mandatory so that compliance is ensured. He also suggested offering incentives and aids for principal employers and contractors.

“Principal employers should provide some incentive and association benefit to those contractors who abide by the law and have robust service level agreements,” he added.

Agarwal said most contract workers are labour market outsiders for whom temporary jobs have a powerful “apprenticeship effect”.

Furthermore, he said, “Temporary jobs reduce frictional unemployment by providing labour market liquidity and acting as a non-fiscal market substitute for social security and unemployment insurance.”

“The government should acknowledge this reality, and enable the inclusion of the large unorganised workforce into the mainstream,” Agarwal added.

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