Employer’s liability when contractor is engaged

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Employer’s liability when contractor is engaged

Under section 12 of the Act, it envisages the employer’s liability when contractor is engaged. At times, the employer may engage a contractor instead of employing his own employees. For the purpose of doing any work in respect of his trade or business. Such a contractor then executes the work with the help of the employee engaged by him. If, any injury is caused by an accident to any of these employees.

The employer cannot be held liable, because they are not employed by him. Hence they are not his employees. But now Section 12(1) makes the employer liable for compensation to such employees hired by the contractor under following circumstances:

• The contractor is engaged to do a work which is part of the trade or business of the employer (called principal).
• The employees were engaged in the course of or for the purpose of his trade or business.
• The accident occurred in or about the premises on which the principal employer has undertaken or undertakes to execute the work concerned.

The amount of compensation shall be calculated with reference to the wages of the employee under the employer by whom he is immediately employed.

Under section12 of the Act, the liability to pay compensation is on the principal.

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