Besides, it has amended Rule 151 of the General Financial Rules (GFR), 2017 relating to “Debarment from Bidding” under which firms can now face debarment up to three years not only for corruption or integrity violations, but also for failure to pay wages to employees engaged under contracts and failure to deposit statutory social security contributions under applicable labour laws in cases where the procuring entity has had to step in and make such payments because of contractor default.
In an office memorandum, dated May 8, 2026, the procurement policy division of the department of expenditure has directed the ministries, departments, autonomous bodies and CPSES to strictly ensure that contractors disburse wages within prescribed timelines and the Drawing and Disbursing Officers (DDOs) verify compliance every month.
The directions also invoke Section 17(1) of the Code on Wages, 2019, which prescribes timelines for payment of wages besides reiterating the responsibility of the principal employer for ensuring that contractors pay wages on time under Section 55(3) of the Occupational Safety, Health and Working Conditions Code, 2020.
It has also directed the secretaries of all ministries and departments to review timely payment of wages to ensure effective implementation of the Labour Codes.
The new procurement rules coincide with the final Rules across four Labour Codes, notified by the ministry of labour and employment on Friday, to ensure smooth implementation of the Codes.
The government is of the view that linking labour law compliance directly with eligibility for government contracts and bidding will help curb delays in wage payments and defaults in statutory dues affecting contract workers.
Besides, these reform measures will also timely remittance of social security contributions, greater accountability of contractors and principal employers, and stronger enforcement mechanisms against violations of labour laws.