Principal Employer

A principal employer is someone who controls an establishment or company. The principal employer does not directly employ the worker; the contractor hires the worker and is responsible for their conditions of employment.

Who is a principal employer

The principal employer is the organisation for whom the employee carries out the assigned duties:

• A factory: the owner, occupier, or manager of the factory
• A mine: the owner or manager of the mine
• An office: the owner or manager of the office
• The government: the head of the office or department, or an officer notified by the government

Duties of a principal employer

When hiring contractual workers, the principal employer must:

• Register the establishment to hire contractual workers
• Hire workers only from contractors who are registered under the applicable labour law

If either condition is not met, the worker is not treated as a contractual labourer and is deemed employed directly by the principal employer. The principal employer must also ensure the contractor complies with applicable labour laws.

The principal employer is liable for unpaid wages or statutory compliance if the contractor does not pay them or did not include them in the wage proposal. If the principal employer pays on the contractor’s behalf, it can recover the amount from the contractor. The principal employer must also ensure the contractor pays statutory bonus to contractual workers.

Facilities a principal employer must provide

The principal employer must ensure the establishment has a general policy on health and safety for workers, and must provide cleanliness, ventilation, adequate space, drinking water, latrines, and urinals, plus washing and sitting facilities, first aid, canteens, lunch rooms, and creches.

For construction workers, the Building and Other Construction Workers Act, 1996 provides similar facilities, and the BOCW Cess Act makes the employer contribute to the BOCW fund.

The principal employer must:

• Maintain a register of contractors and a register of work performed and wages paid
• Display notices showing the place and time of wage disbursement, the rate of wages, hours of work, the wage period, and the payment dates

Under the OSHWC Code

The OSHWC Code keeps and extends these obligations. It expressly requires the principal employer to provide welfare facilities to contract labour and makes the principal employer liable to pay wages where the contractor fails to pay, with a right to recover from the contractor. See the Labour Codes overview.