The ministry has also amended Rule 151 of the General Financial Rules (GFR), 2017, relating to debarment from bidding. Under the revised rules, firms can now face debarment for 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.
The debarment provisions will apply in cases where the procuring entity has had to step in and make payments because of contractor defaults.
In an office memorandum dated May 8, the procurement policy division under the department of expenditure directed ministries, departments, autonomous bodies and CPSEs to ensure contractors disburse wages within prescribed timelines. It also directed drawing and disbursing officers to verify compliance every month.
The directions invoke Section 17(1) of the Code on Wages, 2019, which prescribes timelines for payment of wages, and reiterate the responsibility of the principal employer under Section 55(3) of the Occupational Safety, Health and Working Conditions Code, 2020, to ensure contractors pay wages on time.
The finance ministry has also directed secretaries of all ministries and departments to review timely wage payments to ensure effective implementation of the Labour Codes.
The new procurement rules come alongside the final rules notified by the labour and employment ministry on Friday for implementation of the four Labour Codes.The government believes linking labour law compliance with eligibility for government contracts will help curb delays in wage payments and defaults in statutory dues affecting contract workers.
The measures are also aimed at ensuring timely remittance of social security contributions, improving accountability of contractors and principal employers and strengthening enforcement against labour law violations.