Legal Question in Construction Law in India

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24.01.2013

Dear Sir / Madam, (Shirur, Pune)

Building and other Construction Workers (Regulation Employment and Conditions of service) Act, 1996 (BOCW (RECS) Act and Building and Other Construction Workers Welfare Cess Act, 1996 (BOCW Welfare Cess Act) were enacted with a view to regularizing the wages, working conditions, safety and for their health, welfare measures, etc. The Acts apply to every establishment which employs 10 or more workers. The major source of the fund to the Building and Other Construction Workers Welfare Board is the collection of cess at the rate of one percent of the cost of construction incurred by the employer under the Building and Other Construction Workers Welfare Cess Act, 1996. The fund has to be utilized for the welfare of such workers.

Section 2 of the Industrial Disputes Act, 1947 defines : "employer" means-- (i) in relation to an industry carried on by or under the authority of any department of the Central Government or a State Government, the authority prescribed in this behalf, or where no authority is prescribed, the head of the department; (ii) in relation to an industry carried on by or on behalf of a local authority, the chief executive officer of that authority.

An "employer" literally means the person who employs people and takes responsibility for payment of their wages. If the "Company" and the "Contractor" come under the same ownership and management, the employer being the Company, the liability of deducting Labour Cess and payment to the Government, is on the Company. If the "Company" and the "Contractor" are not under the same ownership and management, and if the "Company" has awarded the entire composite contract of construction to a sole "Contractor" who employs 10 or more persons, then it becomes the liability of the "Contractor" to deduct and pay Labour Cess to the Government. But if the "Company" has awarded the contract of construction to several "Contractors" who employ less than 10 persons; the liability remains with the "Company" to deduct and pay Labour Cess to the Government.

Regards,

FCA Prashant Chavan

Mumbai

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