Centre Tightens Labour Compliance Rules to Protect Contract and Outsourced Workers

The Centre has introduced a stricter compliance framework aimed at strengthening protections for outsourced and contractual workers employed across Central Ministries, Departments, autonomous bodies and Central Public Sector Enterprises (CPSEs).

The Ministry of Labour and Employment said the new procurement-linked measures are designed to ensure timely wage payments, mandatory deposit of social security contributions, and stronger accountability for contractors as well as principal employers. The reforms also seek to improve enforcement of labour laws and prevent repeated violations affecting contract workers.

Under the new framework, labour law compliance will now be directly linked to eligibility for government tenders and contracts. The government believes this step will help curb delays in salary payments and defaults in statutory dues by contractors.

Fresh instructions issued by the Procurement Policy Division under the Department of Expenditure direct all Ministries, Departments, statutory bodies, autonomous institutions and CPSEs to closely monitor wage payments made by contractors. Drawing and Disbursing Officers (DDOs) have been instructed to verify compliance every month.

The directions reiterate that under Section 55(3) of the Occupational Safety, Health and Working Conditions Code, 2020, the principal employer is responsible for ensuring timely payment of wages by contractors. The instructions also cite Section 17(1) of the Code on Wages, 2019, which specifies wage payment timelines.

According to the prescribed schedule:

• Daily wage workers must be paid by the end of the shift
• Weekly wage workers must be paid before the weekly holiday
• Fortnightly wages must be cleared within two days after the end of the fortnight
• Monthly wages must be paid within seven days of the succeeding month

The government has further mandated that wage payments should only be made through bank transfer or electronic mode. Contractors will also be required to electronically notify principal employers after disbursing wages.

In addition, all manpower contracts must include penalty clauses for delayed wage payments. Ministries and departments have been instructed to ensure adequate funds are available before awarding such contracts. Procuring entities using GeM and other procurement platforms must earmark or block funds for outsourced manpower payments for the duration of the contract or until the end of the financial year, whichever is earlier.

The new guidelines also introduce faster reimbursement timelines. Contractors must submit bills by the 10th of every month after paying wages, while DDOs have been directed to clear the bills by the 15th of the same month.

In cases where contractors delay payments excessively, principal employers have been empowered to directly pay workers. The government has also warned of strict action, including blacklisting and debarment, against repeat violators.