Centre enforces stricter norms on timely payments to contract workers, warns of blacklisting for delays

New Delhi: The government has set deadlines for manpower agencies and contractors who supply human resources to ministries and departments to pay wages to employees engaged on contract and warned that they will face blacklisting if they continue to fail on this count.

Issuing fresh instructions, the Procurement Policy Division of the Department of Expenditure has directed ministries, departments, statutory and autonomous bodies and central public sector enterprises to strictly ensure that contractors disburse wages within prescribed timelines and the Drawing and Disbursing Officers (DDOs) verify compliance every month.

According to officials, the instructions reiterate that under Section 55(3) of the Occupational Safety, Health and Working Conditions Code, 2020, the principal employer is responsible for ensuring that contractors pay wages on time.

Invoking Section 17(1) of the Code on Wages, 2019, which prescribes timelines for payment of wages, the Office Memorandum has said that daily wages should be paid by end of the shift, weekly wages before weekly holiday, fortnightly wages within two days of end of fortnight and monthly wages within seven days of the succeeding month.

The contractor has to make wage payments only through bank transfer or electronic mode. They must electronically inform principal employers after payment while the contracts must contain penalty clauses for delayed wage payments.

It also said ministries must ensure adequate fund availability before awarding manpower contracts and procuring entities using GeM or other platforms should block/earmark funds for outsourced manpower payments for the contract period or till the end of the financial year, whichever is earlier.

The instructions also mandate faster reimbursement cycles and contractors will have to submit bills by the 10th of every month after making wage payments, while DDOs have been directed to clear such bills by the 15th of the same month.

The Government has empowered principal employers to directly pay contract workers in cases of inordinate delay by contractors, with provisions for blacklisting and wider debarment action in repeat cases. 

An amendment to the General Financial Rules (GFR), 2017 relating to 'Debarment from Bidding' has expanded the grounds for debarment of firms from government procurement. 

"Under the revised framework, firms can now face debarment up to three years not only for corruption or integrity violations, but also for failure to pay wages to employees engaged under contracts and for failure to deposit statutory social security contributions under applicable labour laws where the procuring entity has had to step in and make such payments because of contractor default," officials said.