The Finance Ministry’s Department of Expenditure has issued fresh directions to ensure that contract workers engaged on government projects are paid on time, with non-compliant contractors now facing the prospect of being debarred from government bids for up to three years.
The order, issued by the Procurement Policy Division on May 8, 2026, applies to all central ministries, departments, statutory and autonomous bodies, and Central Public Sector Enterprises (CPSEs). It builds on the new Labour Codes and aligns wage timelines with the Code on Wages.
Under the directions, daily wage workers must be paid by the end of the shift, weekly workers before the weekly holiday, fortnightly workers within two days of the fortnight ending, and monthly workers within seven days of the following month. All payments must move through bank transfer or other electronic channels, leaving a digital paper trail.
The teeth of the order lie in Rule 151 of the General Financial Rules, which has been updated to include failure to pay wages or social security contributions as grounds for exclusion from government bidding. Contractors who default can be barred from central government tenders for up to three years. Government departments are also required to monitor wage payments on a monthly basis through Drawing and Disbursing Officers, with the original employer empowered to step in and pay contract workers directly if the contractor delays.
Before hiring contract workers, ministries and departments must now confirm that sufficient funds are available to pay them. Social security compliance has been linked to the same enforcement framework, meaning firms that fall short on PF, ESI, or gig-worker contributions face the same debarment risk as those skipping wages.
For HR and compliance teams across PSUs and government-facing contractors, the order effectively converts what has long been a weakly enforced statutory obligation into a live commercial risk.
