Payroll

When must contract workers be paid?

Before the 7th day after the wage period ends, by bank transfer, with the site told what was paid. If the contractor misses it, the site pays.

Close-up of a white wall calendar with red push pins stuck into a diagonal line of dates and the 30th circled in red marker.

Before the seventh day after the wage period ends. Section 55(1) of the OSH Code 2020 makes the contractor responsible for paying its contract labour within a prescribed period, and both the OSH (Central) Rules 2026 and Tamil Nadu's 2022 draft rules set it at seven days. Payment goes by bank transfer or electronically, the principal employer is told what was paid, and if the contractor misses the date, the site pays.

The deadline, by wage period

The contractor fixes a wage period of no more than a month and pays before the seventh day after it ends. That is rule 98(1) and (2) of the OSH (Central) Rules 2026, and rule 55(1) and (2) of Tamil Nadu's draft OSH rules uses the same words. The Code on Wages 2019 sets its own deadlines for every employer in section 17(1), and the two line up only for a monthly wage period:

Wage periodCode on Wages 2019, s.17(1)Contract labour rule (Central r.98(2); TN draft r.55(2))
DailyAt the end of the shiftBefore the seventh day after the wage period
WeeklyOn the last working day of the week, before the weekly holidayBefore the seventh day after the week ends
FortnightlyBefore the end of the second day after the fortnightBefore the seventh day after the fortnight ends
MonthlyBefore the seventh day of the following month expiresBefore the seventh day after the month ends

Most contract crews are paid monthly, where both rules give the same date. For a daily, weekly or fortnightly crew they do not, and section 17(4) of the Code on Wages says section 17 does not affect a time limit set by any other law. Which date binds a weekly-paid contract crew is a question for the site's own counsel. A site that holds its contractor to the earlier of the two does not need the answer. Wages for a worker who leaves follow a separate rule: within two working days, under section 17(2).

Which rules apply depends on the appropriate government. The Central rules govern establishments for which the Central Government is the appropriate government; a Tamil Nadu factory or warehouse follows the State's rules, which were published in draft in April 2022 [VERIFY: whether Tamil Nadu's final OSH rules keep rule 55 as drafted].

How the wages must be paid

By bank transfer or electronic mode, with the contractor informing the principal employer electronically of the amount paid. That is section 55(2) of the OSH Code, and it is narrower than the general rule: section 15 of the Code on Wages still allows coin, currency notes or cheque for other employment.

  • Cash only as a fallback, and only under the Central rules. Rule 98(4) allows current coin or currency where bank or electronic payment "is not practicable". Tamil Nadu's draft rule 55(3) says bank transfer or electronic mode "only", with no fallback.
  • A notice on the wall. Rule 98(6) of the Central rules requires a notice of the wage period and the date and time wages are disbursed at the place of work, with a copy sent by the contractor to the principal employer electronically.
  • No deductions beyond those allowed. Rule 98(5) says contract wages are paid without deductions of any kind except those the Central Government specifies.

When the contractor misses the date

The principal employer pays the wages in full, or the unpaid balance, and recovers the amount from the contractor. Section 55(3) of the OSH Code sets that liability, and rule 98(8) of the Central rules puts a clock on it: if the contractor has not paid within seven days of the end of the wage period, the principal employer pays within fifteen days. Recovery is by deduction from anything payable under the contract, as a debt, or from a security deposit the principal employer holds. Tamil Nadu's draft rules carry the liability through section 55(3) but set no fifteen-day figure.

There is a second route through the contractor's licence. Section 55(4) lets the government order wages to be paid out of the security deposit the contractor lodged with its licence; under rule 99 of the Central rules, and rule 56 of the Tamil Nadu draft, that follows an inquiry and a hearing, and the contractor must top the deposit up within fifteen days or face suspension of the licence. Section 43 of the Code on Wages separately makes the proprietor of the establishment responsible for any amount the employer fails to pay under that Code.

Rule 98(3) adds that the principal employer settles the contractor's bills within the timeline the two agreed. A contract that pays the contractor thirty days after invoice does not move the seventh-day deadline for the workers. How the liability is allocated on a particular engagement is for the site's counsel and the contract to settle.

What a late payment can cost

A claim from the workers, and a fine. Under section 45 of the Code on Wages a worker, their registered union or the Inspector-cum-Facilitator can file a claim within three years, and the authority can order compensation of up to ten times the amount determined, recoverable as arrears of land revenue. Paying less than is due is punishable under section 54(1)(a) with a fine of up to ₹50,000, rising to three months' imprisonment or ₹1 lakh for a repeat within five years; other contraventions carry up to ₹20,000 under section 54(1)(c).

7 daysafter the wage period ends: the contractor's deadline (OSH Central r.98(2); TN draft r.55(2))
15 daysfor the principal employer to pay what a contractor did not (OSH Central r.98(8))
10×maximum compensation on a wage claim, on top of the claim itself (CoW s.45(2))

What a site should check each month

  • The electronic intimation, by day seven. The amount paid per worker, matched against the headcount on the gate register for the same wage period. No intimation on day eight is the trigger to ask, not a reason to wait for the next bill.
  • Bank credit dates, not payroll run dates. A payroll processed on the fifth and credited on the ninth is late.
  • Any cash payment, with its reason. Under the Central rules cash needs a reason; under Tamil Nadu's draft it has none.
  • The disbursement notice. A copy of the wage-period and pay-date notice the contractor displays, kept with the month's file.
  • Contract payment terms. Bill settlement dates that leave the contractor funding payroll before the site pays its invoice, written down so neither side treats a delayed bill as a reason for delayed wages.

How Velura Services helps

Velura pays every crew by bank transfer within the statutory window and sends your site the payment intimation the rules require. You can check each payday against the gate register and spot a late payment before it becomes the site's problem.

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Sources

Frequently asked questions

What is the deadline for a contractor to pay contract workers?

Before the seventh day after the last day of the wage period, which cannot be longer than a month. Rule 98(2) of the OSH (Central) Rules 2026 sets this under section 55(1) of the OSH Code 2020, and rule 55(2) of Tamil Nadu's 2022 draft OSH rules uses the same wording. For a monthly wage period it matches section 17(1) of the Code on Wages 2019.

Can a contractor pay contract workers in cash?

Section 55(2) of the OSH Code 2020 requires contract wages to be paid by bank transfer or electronic mode. The OSH (Central) Rules 2026 allow coin or currency only where that is not practicable (rule 98(4)). Tamil Nadu's 2022 draft rules say bank transfer or electronic mode only, with no cash exception, so a Tamil Nadu site should expect bank payment.

What happens if a contractor does not pay contract workers on time?

Section 55(3) of the OSH Code 2020 makes the principal employer liable to pay the wages in full, or the unpaid balance, and recover the amount from the contractor. Under rule 98(8) of the OSH (Central) Rules 2026, the principal employer pays within fifteen days and recovers by deduction from contract payments, as a debt, or from a security deposit it holds.

What penalty applies for paying wages late or short?

Under section 54(1) of the Code on Wages 2019, paying less than is due carries a fine of up to ₹50,000, and a repeat within five years up to three months' imprisonment or ₹1 lakh. Other contraventions carry up to ₹20,000. Workers can also claim under section 45 within three years, where compensation of up to ten times the claim can be ordered.