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The Coffee Break Guide to Compliance – Vol. 20

Posted by: The Connect@ADP Team on 1 November 2018 in Compliance

This post is part of the Coffee Break Guide to Compliance by Anandan Subramaniam. Please subscribe to the blog updates if you’d like to be notified of these posts. Please comment below with your doubts and queries.

The Coffee Break Guide to Compliance – Vol. 20 {Engaging Security Personnel through a Contractor: What You Need to Know as an Employer}

Almost all establishments in India outsource their peripheral security management to external vendors. Unlike manpower outsourcing for housekeeping, maintenance, food & beverage or front office management, a few extra precautions are to be taken while engaging security personnel through Contractors.

 

Engaging a Licensed Security Manpower Agency

As a security services-providing company, the Contractor should have obtained a license under the Private Security Agency Regulation Act, 2005 (PSARA). This license is issued for a particular District or for the entire State/Union Territory by the Home Department of every State or Union Territory, and for a fixed period. The license should be valid and live when you engage their manpower. The license should be renewed as and when it is due, or when there is a change in the Directorship of the contractor establishment.

Though the security personnel perform duties in various establishments, they are in the rolls of the Contractor establishment only.

  1. Appointment order to be issued by Contractor establishment
  2. Wages should be paid by Contractor establishment
  3. Wage slip should be issued by Contractor establishment
  4. Statutory remittances/payments are to be made by Contractor establishment
  5. Service Certificate is also should be issued by Contractor establishment

Since they are engaged as a contractual employee in your establishment, the security personnel shall be paid Minimum Wages as per the notification of the appropriate authority (State Government/ UT / Central Government) for scheduled employment of security services.

During the agreement to engage a Contractor, agree to pay the Minimum wages – which should be more than or equal to the Minimum Wages notified by the appropriate authority (State Government/ Union Territory / Central Government).

 

Central Government Minimum Wages

Irrespective of the establishment’s location in India, the security personnel should be paid Central Minimum wages, if your core process is any one of the following:

  • Telecommunication
  • Bank
  • Mutual Fund
  • Oil and natural gas
  • Insurance
  • Mines, etc

Basic & DA are the two important components of the Minimum wages.  Few States include washing allowance/HRA too.

  • Basic wages notified for a scheduled employment are usually revised once in 4/5 years, by the appropriate authority (State Government/UT/Central Government).
  • DA is revised every 6 months or 1 year, as desired by the appropriate authority, based on the basis rise of Average Consumer Price Index.

Ensure payment of enhanced wages to security personnel when there is a revision in DA or Basic.  The Statutory benefit remittance should be based on the current Minimum Wages. 

Statutory Bonus and Gratuity payments for any security personnel is the responsibility of the Contractor establishment only.

Measuring the compliance status is made possible through the regular statutory audits on the contractor establishment.

As an industry practice, many security personnel perform duties in different establishments – by going to another establishment for replacement or on temporary duty, etc. Hence, statutorily, wage register or wage slip of contractual employees, may not be the right record to verify the compliance status. It becomes infructuous as it carries wages for one or more units for the contractual employee and any extended working hours/overtime cannot be easily singled out.

 

Other Statutory Requirements

  • The security personnel should have completed mandatory training (100 hours of classroom and 60 hours of filed training) before being engaged as security personnel
  • The contractor establishment cannot violate provisions of the following Acts:

(1) The Payment of Wages Act, (2) The Industrial Disputes Act, 1947, (3) The Minimum Wages Act, 1948, (4) The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, (5) The Payment of Bonus Act, 1965, (6) The Contract Labour (Regulation and Abolition) Act, 1970, (7) The Payment of Gratuity Act, 1972, (8) The Equal Remuneration Act, 1976, (9) The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979.

  • The Contractor establishment should have verified the Character and antecedent of the security guard and supervisors
  • Every security personnel shall fulfill standards of physical fitness as specified by the authority.

 

Apart from the above, other compliance requirements as per the Contract Labour Act (Regulation and Abolition) Act, 1970 shall be satisfied (Read Volume 10 of The Coffee Break Guide to Compliance for more details).

 

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