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Principals and contractors



In the construction industry and other industries a person who is given work to be executed is called a Principal. He does not keep a pool of workers but relies on contractors and subcontractors who usually have a team of workers.  He subcontracts this work to sub-subcontractors to execute the work. Sometimes the subcontractors would vanish from the scene after receiving their dues from the Principal leaving the sub-subcontractors and their workers in the lurch. 


Fortunately the Employment Act 1955 has provisions for employees of renegade subcontractors to file claims against the Principal employer. Some Principals who have previously engaged contractors, know about the risks and the misdeeds of contractors - and would insist that contractors show proof of payment of wages to their employees before they released final payment to their contractors. If they failed to do this, they stood the risk of being hauled up to the Labour Courts - where if the employees were able to prove that subcontractors owed them wages and had gone missing, the Principal would have to face claims for balance of wages owed to them by contractors or subcontractors.


One day, I found a group of employees milling around the office. When I asked them their reasons for coming to the office, they claimed that their employer a contractor, had absconded after collecting the monies due from the Principal. I advised them to file a claim against the Principal. They were reluctant as it was not his fault. Moreover he was a kind man who always treated them to lunch at the nearby coffee shop. I advised them that they should file a claim against the Principal as it was the only way they could recover their  wages.  Reluctantly they filed their claims as advised, one against their employer and another against the Principal. On the date of hearing the Principal brought  his counsel who denied the claim stating his client was not their employer and that this was the first time he is seeing them. He however conceded that he was the one who had obtained the contract but he had subcontracted the work to a contractor. He was advised of his duties and responsibilities as a Principal and duly settled the payment.


All contents (c) Ganapathy Ramasamy, mynameisgana@blogspot.com


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