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14/03/2009 10:14:49
Re: Contractor's Problem

Good day Mr Siew. Just want to seek for your advice. Recently, our company is facing a dilemma with regard to our contractor. This contractor is facing a sudden financial problem and they canít afford to pay the salary to their workers for one month. So, their workers is unhappy and had lodge a report to the labour department seeking for compensation from this contractor. The contractor still insist not to pay even though the labour department had asked them to do so. At the end, the labour department ask us (as principal) to pay the salary to their worker. Do we need to help them to pay? Is there any law stating that the principal need to pay for the contractor? It sounds like unfair to us since this is the contractor problem. is there any other solution to solve this problem?

Please advise.

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KL Siew
14/03/2009 14:43:57
Yes, you can be liable under Section 33 of the Employment Act as follow:

" 33. Liability of principals and contractors for wages.

(1) Where a principal in the course of or for the purposes of his trade or business, contracts with a contractor for the execution by or under the contractor of the whole or any part of any work undertaken by the principal, and any wages are due to any employee by the contractor or any subcontractor under the contractor for work done in the course of the performance of the contract, the principal and the contractor and any such subcontractor (not being the employer) shall be jointly and severally liable with the employer to pay such wages as if that employee had been immediately employed by the principal and by the contractor and any such subcontractor:

Provided that:

(a) in the case of a contract for constructional work the principal shall not be liable for the payment of wages under this subsection unless he is also a constructional contractor or a housing developer;

(b) the principal, and the contractor and any subcontractor (not being the employer), shall not be liable to any employee under this subsection for more than the wages due to him for any three consecutive months; and

(c ) the employee shall have instituted proceedings against the principal for the recovery of his wages or made a complaint to the Director-General under Part XV within ninety days from the date on which such wages became due for payment by his employer in accordance with the provisions for the payment of wages contained in Part III.

(2) Any person, other than the employer, who has paid wages under this section to the employee of any employer may institute civil proceedings against such employer for the recovery of the amount of wages so paid. "

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