sonam sarin (service) 28 June 2010

Payment of Bonus to Outsourced employees (sales staff etc)

Dear All

This refers to payment of bonus to outsourced employees (sales personnel, office boys, administrative personnel) outsourced through Third Party.

Major points of Agreement with Third party:

1. Salary including PF/ESI paid to third party for payment to outsourced employees.

2. Outsourced employees on the payroll of Third Party Company

3. Principal to Principal relationship between Company and Third party

4. agreement is termed as service agreement and third party charges service tax to Company.

Queries:

1. Do the Company legally required to to pay Bonus to such outsourced employees (on the payroll of Third Party)?

2. Will the Company fall under the perview of Principal Employer vis a vis payment of bonus act?

Thanks and Regards

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1 Replies

V. VASUDEVAN (LEGAL COUNSEL) 15 August 2010

The principal employer must ensure that the payment of wages, statutory bonus and all other statutory benefits payable to contract employees are duly dispensed by the contractor. In the event of failure by the contractor the burden may be fastened on the principal employer, who has to pay the dues and later would have the option to recover from the contractor!!!