Applicability of leave encashment for contract labour
Rama mohan Acharya
(Querist) 25 July 2014
This query is : Resolved
We had executed a contract with a contractor in the Month of May. The condition of the contarct is that the contractor is to comply all applicable law. The contrcat labour submitted that they are not paid the leave encashment amount at the closure of the contract. The contractor takes the stand that Leave encashment provision is not applicable to the workers as they had not worked for 240 days in a calender year. The contract was for one year.
The leave encashment amount was taken into account while awarding the work to the contractor. Since the contractor is not able to produce the prrof of payment along with his bill, Finance department is not releasing the Bill. Guidance is sought on : whether calculation of 240 day is also applicable in this case OR it can be calculated for the whole contract period of one year which is spread over in two calender years?
Is there any supreme court jugement guiding this type of situation is available?
Kumar Doab
(Expert) 26 July 2014
Other thread by the querist is at:
http://www.lawyersclubindia.com/experts/Applicability-of-Leave-encashment-for-contract-labour-486306.asp#.U9NXpeOSwb8
What is this establishment: Commercial, Industrial, Small Enterprise?
The establishment and affected Labor are in which state?
The enactments applicable to the establishment provide clear view on the applicability and rate at which leave encashment is to be calculated if 240 days are not completed.
A. A. JOSE
(Expert) 26 July 2014
Yes, specific clarification as to nature of the establishment is imperative please.
Rama mohan Acharya
(Querist) 28 July 2014
Thanks for the response.
Our establishment is a Central PSU. manufacturing unit is situated in Uttar Pradesh. The contract executed was for housekeeping of plant and another for house keeping of the town ship area.
Contractor's stand is that none of his employees have rendered 240 days in a calendere year , hence not entitled for the encashment of earned leave at the closure of the contract. Is there any rule for the same in case 240 days are not completed?
Kumar Doab
(Expert) 29 July 2014
The leave rules of the establishment can offer benefits superior to those provided for in enactments applicable to it by leave policy, negotiated bilateral settlement between employer and employee’s, standing orders applicable to the establishment.
You may also look into the contract that you have signed with contractor and refer the matter to your legal cell/lawyer if reqd, since you have made the payment to contractor.
You may also determine which enactment is applicable to the establishment of the contractor, and provisions in the enactment…………………..
e.g;
>>> U.P. Dookan aur Vanijya Adhishthan Adhiniyam, 1962
2. Definitions
(8) 'factory' shall have the meaning assigned to it in the Factories Act, 1948, so however as not to include the premises where the clerical or other establishment of a factory, to whom the provisions of that Act do not apply, work;
9. Earned leave, sickness leave and casual leave.—(1) Every employee, who has been in continuous employment of the same employer for a period of twelve months or over, shall in addition to any holiday allowed under Section 9, be entitled to earned leave for not less than fifteen days for every twelve months of such service:
>>>
THE FACTORIES ACT : CHAPTER VIII, Annual Leave with Wages: 79. Annual leave with wages
(2) A worker whose service commences otherwise than on the first day of January shall be entitled to leave with wages at the rate laid in clause (i) or, as the case may be, clause (ii) of sub-section (1) if he has worked for two-thirds of the total number of days in the remainder of the calendar year.
Provision is also made for proportionate leave with wages for a worker who is discharged or dismissed before he has rendered 240 days service.
