A plastics moulding plant in Tamil Nadu used two contractors: one for its moulding crews and us for maintenance and material handling. When the larger contractor missed the seventh-day payday for its whole crew, the law put the wages on the site. We helped rebuild the wage sheet from the site's own records, the site paid every worker inside the fortnight the rules allow, and it recovered the money from what it owed the contractor. This is a representative composite; no single client is described.
The situation
The rules leave no gap between the contractor's failure and the site's duty. Wages for a wage period must be paid "before the expiry of seventh day after the last day of the wage period" (OSH (Central) Rules 2026, r.98(2)), by bank transfer or electronically (r.98(4)), and the contractor tells the site what it paid (OSH Code s.55(2)). If it does not pay within those seven days, rule 98(8) says the principal employer "shall" pay the wages in full, or the unpaid balance, within fifteen days, and recover the amount from the contractor.
The first fortnight
The site treated the missing intimation as the alarm, not the workers' complaints. The sequence ran like this [VERIFY: composite timings]:
| When | What happened | Rule |
|---|---|---|
| Day 7 after the wage period | No electronic payment intimation from the contractor; the site's HR asked for it the same evening | OSH Code s.55(2); r.98(2) |
| Day 8 | The contractor confirmed it could not pay; the site's finance head and counsel were told | r.98(8) duty triggered |
| Days 8 to 11 | The wage sheet was rebuilt from the site's gate register, the contractor's last attendance file and the notified wage rates for each category | r.98(8) |
| Days 9 to 12 | Bank details collected for the workers who had not given them to the site before; a handful were paid in cash against signed receipts, as the proviso to r.98(4) allows where transfer is not practicable | r.98(4) |
| Day 20 | Every worker in the crew paid in full for the wage period | r.98(8) |
Our part was the wage sheet. We had no access to the other contractor's payroll, so we built the month from the site's own gate register, cross-checked against the contractor's last attendance export, priced at the Tamil Nadu notified rates for each worker's category and zone. The site's finance team checked it line by line and made the payments from its own account [VERIFY: composite].
Paying and recovering
- Recovery from the bill first. The contractor's invoice for the same month was still unpaid, so rule 98(8)'s first route, deduction "from any amount payable to the contractor under any contract", covered most of it [VERIFY: composite].
- The site's retention for the rest. The balance came from the security deposit the site held under its contract, the third route rule 98(8) names [VERIFY: composite].
- The licence security was not needed. The contractor's statutory security, lodged with the licensing authority, can be used to pay unpaid wages after an inquiry (OSH Code s.55(4); Central Rules r.99). Because the site paid directly, that route was not needed, and the site kept a record so the licensing authority could be told [VERIFY: composite].
- Contributions stayed live. The month's PF and ESI remained the site's responsibility for workers engaged through a contractor (EPF Scheme 2026 para 20(4); Code on Social Security s.31(1)). How they were remitted was settled with the contractor and the two regional offices, on counsel's advice [VERIFY: composite].
What changed
| Measure | Before | After | Notes |
|---|---|---|---|
| Payment intimation | Filed when it arrived | Checked on the seventh day; a missing one is escalated that day | OSH Code s.55(2) [VERIFY: composite] |
| Attendance and wage data | Held only by the contractor | A copy of each month's attendance and wage sheet sent to the site with the intimation | So a site-paid month can be priced from the site's own file |
| Workers' bank details | With the contractor only | Held by the site for every contract worker, with consent | Composite [VERIFY] |
| Contractor's bills | Paid on receipt | Released after the month's intimation, ECR and ESIC challan are in | r.98(3) leaves bill timing to the contract |
| The crew | With the defaulting contractor | Moved to us after the month, on their existing UAN and ESIC numbers | Composite [VERIFY] |
The lesson carries to any site using a contractor. The seventh-day intimation is the earliest warning the law provides, and a site that checks for it on the day has a week's head start on a fortnight's deadline. A site that also holds a copy of the attendance and the bank details can pay its contract workers itself without waiting for the contractor's records. How a particular default is handled is a matter for that site's own counsel. This composite describes a method, not an outcome.
How Velura Services helps
Our wage intimation reaches each site on the statutory day with a copy of the month's attendance and wage sheet, so the site always holds what it would need to pay the crew itself. When another contractor on a site defaults, we can rebuild the month from the site's gate register at the notified rates and take over the crew on their existing UAN and ESIC numbers.
Sources
- Figures are a representative composite drawn from our own deployments; no single client is described. Founder to confirm or replace before publish.
- Occupational Safety, Health and Working Conditions Code, 2020 (Act 37 of 2020), Gazette text hosted by DGFASLI. Sections cited: s.55(2) (electronic intimation of wages paid), s.55(3) (principal employer pays unpaid wages and recovers), s.55(4) (payment from the contractor's security deposit). Opened and read.
- Occupational Safety, Health and Working Conditions (Central) Rules, 2026, G.S.R. 345(E) dated 8 May 2026, mirrored copy of the Gazette. Rules cited: r.98(2) (wages before the seventh day), r.98(3) (bills settled on contract terms), r.98(4) and proviso (bank transfer; cash where not practicable), r.98(8) (principal employer pays within fifteen days and recovers from bills, as a debt or from the deposit it holds), r.99 (payment from the licence security after inquiry). Opened and read [VERIFY: against the e-Gazette original].
- Employees' Provident Funds Scheme, 2026, G.S.R. 525(E), mirrored copy of the Gazette. Paragraph 20(4) (principal employer responsible for contract workers' contributions). Opened and read for earlier articles in this cluster.
- Code on Social Security, 2020 (Act 36 of 2020), Gazette text hosted by the Ministry of Labour and Employment. Section cited: s.31(1) (ESI contributions for employees engaged through a contractor). Opened and read.