A central public sector undertaking's regional office in Tamil Nadu changed its facilities contractor, then paid the final bill and released the retention. Four months later a wage claim arrived over deductions that contractor had taken from the crew's pay. The registers had gone with it, and the burden of proof sat with the employer. We helped rebuild the record, and the site paid the crew. This is a representative composite; no single client is described.
The situation
We took over the crew at a planned changeover. The close-out checklist had covered final wages, PF and ESI, and the outgoing contractor's last bill and the site's retention were both released on that basis [VERIFY: composite]. Nobody had looked at the deductions column, because the site never received it: what reached the site each month was a bill and an intimation of the total paid.
Three legal facts set the frame. A central public sector undertaking, and the establishment of contractors serving it, fall on the Central side of section 2(d) of the Code on Wages 2019 and the matching definition in the OSH Code 2020, so the Central rules and the Central authority applied. Section 18(1) allows no deduction from wages except those the Code authorises, section 18(2) lists the purposes, and the Explanation treats any payment by an employee to the employer as a deduction. Rule 98(5) of the OSH (Central) Rules 2026 adds that contract wages are paid without deductions except those the Central Government specifies. All six wage periods fell after the Code took effect on 21 November 2025, so the question of which limit applies to older shortfalls did not arise [VERIFY: composite].
What the notice asked for
It asked the site to answer once, with everything, on a fixed date. The crew's registered union filed under section 45(4)(b) of the Code, with one Form II application per wage period, because rule 49(1) of the Wages (Central) Rules 2026 ties a group application to claims for the same wage period [VERIFY: composite]. The applications named the outgoing contractor and the undertaking as opponents. The Form VIII notice came by speed post to the registered office and took six days to reach the facilities team [VERIFY: composite]. It described the date as "appointed for the final disposal of the application", and rule 49(3) lets the authority decide ex parte if an employer does not appear.
Section 59 of the Code puts the burden of proving that dues were paid on the employer, and it names unauthorised deductions expressly. The first job was to find out what paper still existed [VERIFY: composite]:
| Record | Who held it | What the site could produce |
|---|---|---|
| Register of Wages (Form IV) | The outgoing contractor | Nothing; two written requests went unanswered |
| Wage slips (Form V) | The contractor and the workers | Slips from workers who chose to share them |
| Attendance Register-cum-Muster Roll (Form IX) | The outgoing contractor | The monthly attendance sheets attached to its bills |
| Wage intimations (OSH Code s.55(2)) | The site's own inbox | All six, showing totals only |
| Contractor's bills | The site's finance team | All six, showing gross wages billed |
The registers were not the site's to keep. Rule 51 of the Central rules makes the employer maintain them and preserve them for five years after the last entry, and for this crew that employer was a contractor which had left. Its licence had expired and its office in the State had closed [VERIFY: composite].
What we did
- Left the answer to the site's counsel. Counsel ran the response and appeared on the date. Our part was the numbers, and we took no view on whether the deduction could be justified.
- Rebuilt the deductions by worker and period. We took gross wages from the bills, subtracted the employee PF and ESI shares, and compared the result with the amount intimated. The monthly gap matched the ₹600 line on the wage slips the workers shared [VERIFY: composite].
- Tested the names against attendance. The sheets showed six of the 58 people named had been on another of the contractor's sites throughout. That took the amount from ₹2,08,800 as filed to ₹1,87,200 for 52 workers [VERIFY: composite figures].
- Paid the crew through the principal employer's fallback. On counsel's advice, and with no answer from the contractor, the site paid the reconciled amount under section 55(3) of the OSH Code 2020, into each worker's bank account through our payroll, ahead of the date [VERIFY: composite].
- Explained the payment to every worker, in Tamil. Each worker was shown the months covered and how the figure was worked out, so an arrears line did not raise new questions.
Getting the money back was the harder half. Section 55(3) gives two routes, deduction from amounts payable under a contract or a debt, and rule 98(8) adds a security deposit the site holds. The bill and the retention had been released, so only the debt was left [VERIFY: composite]. The licence security was no help either: at ₹1,000 a worker under rule 90(1), a licence for about sixty is ₹60,000, and rule 92 returns it on expiry when no breach or forfeiture is on record, which is what had happened here [VERIFY: composite].
| Exposure on the reconciled amount | Amount |
|---|---|
| Claim as reconciled (52 × ₹600 × 6) | ₹1,87,200 |
| Ceiling on compensation (10 × the claim, s.45(2)) | ₹18,72,000 |
| Site's recovery routes left open | A debt claim only |
The authority closed the applications on the amount paid and ordered no compensation [VERIFY: composite]. That is not a result to assume. Section 45(2) leaves compensation to the authority, "having regard to the circumstances".
What changed
| Measure | Before | After | Notes |
|---|---|---|---|
| Final bill and retention | Released on a close-out checklist | Retention held for a period set with counsel | Composite [VERIFY] |
| Records at exit | Stayed with the contractor | Copies of Forms I, IV and IX and wage slips delivered before release | Composite [VERIFY] |
| Monthly check | Bills and intimations filed separately | Gross billed against net intimated, with the gap explained | Composite [VERIFY] |
| Deductions | Not seen by the site | Each line mapped to a clause of section 18(2) | Composite [VERIFY] |
| Legal notices | Registered office post room | Named contact in facilities and legal | Composite [VERIFY] |
The larger change was in how the site thinks about an exit. Section 45(6) gives workers three years to file, and longer on sufficient cause, so paying a contractor's final bill closes a commercial account and not the wage question. The site's contract now treats the records as something it collects on the way out, because the money it can recover from and the paper it can prove with both leave on the same day. This composite describes a method, not an outcome anyone should expect on their own facts.
How Velura Services helps
At a changeover we reconcile the outgoing contractor's wages and deductions against the site's bills and payment intimations, and ask for copies of the registers and wage slips before the final bill is released. If a claim arrives later, we help rebuild the record by worker and period from what the site holds, for the site's counsel to use.
Sources
- Figures are a representative composite drawn from our own deployments; no single client is described. Founder to confirm or replace before publish.
- The Code on Wages, 2019 (Act 29 of 2019), Gazette text hosted by the Ministry of Labour and Employment. Sections cited: s.2(d) (appropriate Government), s.18(1) and (2) (deductions), s.45(2), (4) and (6) (claims), s.59 (burden of proof). Opened and read.
- Wages (Central) Rules, 2026, G.S.R. 343(E) dated 8 May 2026, mirrored copy of the Gazette, title corrected by G.S.R. 629(E) dated 15 July 2026. Rules cited: r.49, r.51; Forms II and VIII. Opened and read [VERIFY: against the e-Gazette original].
- S.O. 2452(E) dated 12 May 2026, Ministry of Labour and Employment. Section 45(1) authorities in the Central sphere, including the Chennai Region for Tamil Nadu. Opened and read.
- Occupational Safety, Health and Working Conditions Code, 2020 (Act 37 of 2020), Gazette text hosted by DGFASLI. Sections cited: s.2(1)(d) (appropriate Government), s.45(1) (fifty or more contract labour), s.55(2) and (3) (wage intimation; principal employer's liability and recovery). 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.90(1) (₹1,000 a worker), r.92 (refund on expiry), r.98(5) and (8) (deductions; principal employer pays within fifteen days and recovers). Opened and read [VERIFY: against the e-Gazette original].
- Additional FAQs on Labour Codes, as on 16 March 2026, Ministry of Labour and Employment. Date of implementation, 21 November 2025. Opened and read.