Finance Ministry cracks down on contractor wage delays with new procurement rules
The ministry also amended Rule 151 of the General Financial Rules (GFR) 2017 on the ban on tenders. Under the revised rules, companies can now face suspensions of up to three years not only for corruption or integrity violations, but also for failing to pay salaries to employees working under contract and failing to deposit statutory social security contributions in accordance with applicable labor laws.
Prohibition provisions will apply in cases where the contracting authority is obliged to step in and make payment due to the contractor’s default.
In an office memorandum dated May 8, the procurement policy division under the expenditure department directed ministries, departments, autonomous bodies and CPSEs to ensure that contractors pay wages within stipulated time frames. He also directed drawing and disbursing officers to verify compliance every month.
The guidelines refer to Article 17(1) of the Wages Act 2019, which sets out timescales for the payment of wages, and reiterates the principal employer’s responsibility under Article 55(3) of the Occupational Safety, Health and Working Conditions Act 2020 to ensure contractors pay wages on time.
The finance ministry also instructed secretaries of all ministries and departments to review salary payments in a timely manner to ensure effective implementation of Labor Laws.
The new procurement rules come alongside final rules on the implementation of four Labor Codes notified by the Ministry of Labor and Employment on Friday. The government believes that linking compliance with labor laws to compliance with government contracts will help prevent delays in wage payments and legal dues that affect contract workers.
The measures also aim to ensure timely payment of social security premiums, increase the accountability of contractors and principal employers, and strengthen sanctions against labor law violations.
