Labour Cess Clause Samples

The Labour Cess clause establishes the obligation to pay a specific levy or tax imposed by government authorities on construction or infrastructure projects, typically to fund welfare measures for laborers. In practice, this clause clarifies whether the contractor or the employer is responsible for calculating, deducting, and remitting the cess, and may outline the applicable rate and payment process. Its core function is to ensure compliance with statutory requirements regarding labor welfare contributions, thereby preventing disputes over financial responsibility and ensuring legal adherence during project execution.
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Labour Cess. The rates of the contractor shall be inclusive of labour cess Employer shall make a recovery @ 1% on account of labour cess from each Stage payment of the contractor and labour cess so recovered/deducted shall be deposited with the Labour Board of the concerned state. Every contractor, sub-contractor, affiliates, their legal assigns or heirs as the case may, shall be responsible for registration of every Building worker who has completed eighteen years of age but has not completed sixty years of age and who has been engaged in any Building or Other Construction Work for not less than Ninety Days during the preceding twelve months; with the Board / Funds as applicable under various sections of “The Buildings And Other Construction Workers (Regulation Of Employment And Conditions Of Service) Act, 1996 And The Building And Other Construction Workers’ Welfare Cess Act, 1996. The contractor shall also be responsible for maintaining register of beneficiaries i.e. the workers in such form as may be prescribed by the competent authority & the same shall be kept open at all reasonable times for inspection of relevant authority and officials of Employer. The contractor shall be further responsible for maintaining such register & records; giving such particulars of Building workers employed by him, the work performed by them, the number of hours of work which shall constitute a normal working day, the wages paid to them, the receipts given by them and, such other particulars in such form as may be prescribed by the Employer. In the event of contractor failing to comply with the above clause(s) in part or in full, Employer, without prejudice to any other rights or remedy available under law or any other clause(s) of contract, shall be at absolute liberty to forfeit any sum or sums that are payable or could become payable on account of execution of contract work and decision of Employer / Employer’s Engineer shall be final & binding in this regard on the contractor.
Labour Cess. The Contractor shall be responsible for paying the Labour Cess to the concerned government authorities and submit proof of such payment to the Employer each month. Post receipt of supporting documents in respect of payment of labour cess, the payment of 1% of monthly RA bill value shall be released to the Contractor