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Informist, Wednesday, Oct. 9, 2024

 

--Coal India official: Will pay up to INR 2.5 bln bonus to contract labour

--Coal India official: Contractors to pay bonus by Oct 31, co to reimburse

 

By Avishek Rakshit

 

KOLKATA – Coal India Ltd. has asked all its mining contractors to pay contractual workers engaged in mining operations a bonus in October which the company will reimburse the following month, a senior company official told Informist. The total bonus outgo on contractual workers is likely to be between INR 2 billion and INR 2.5 billion, the official added.

 

Coal India has already signed an agreement with its permanent mine workers for a total bonus payment of INR 17.6 billion. “We are yet to finalise the amount to be paid to each contractual worker, but will do so before Diwali," the Coal India official said. "The mining contractors will pay the ex-gratia amount and we will reimburse them." The official said this is the first time Coal India will be paying its contractual workers a bonus.

 

Diwali this year falls on Oct. 31. The permanent staff are scheduled to get their bonus payment Thursday, the official said.

 

“Next year onwards, we will include the bonus component for contractual staff when appointing the contractor," the company official continued. "When we float the notice inviting tenders to select contractors, the bonus component will be included in that tender. This year, we need to reimburse the contractors as the decision to pay bonus to the non-permanent mine workers has been taken now, after the contractors were appointed."

 

Of the 111,000 contractual workers in Coal India, around 70,000 are engaged in mining operations. Every eligible contractual worker is expected to get a bonus of INR 30,000-INR 35,000.

 

“Only contractual workers deployed in the mines and engaged in mining operations will get the bonus this year," the official clarified. "Other contractual staff, such as office drivers and housekeeping staff, will not be eligible."

 

Although the payout is described as a bonus in conversation, it is an ex-gratia payment. Contractual workers do not fall under the ambit of the Payment of Bonus Act, 1965.

 

For over eight years, contractual workers and trade unions have been demanding an ex-gratia payment in line with permanent staff. However, Coal India maintained until recently that since the contractual workers are not on the company's payroll, they need to settle their demands with their respective contractors. 

 

The change of heart at Coal India comes at a time when the world’s largest coal miner is gradually reducing its permanent mine workers and increasingly relying on contractual labour to mine and supply coal. During the financial year 2022-23 (Apr-Mar), Coal India had around 103,000 contractual workers. This number increased to over 111,000 during FY24. On the other hand, the headcount of permanent workers was at 223,000 during FY23, and decreased to a little over 213,000 in FY24.

 

At the same time, Coal India’s contractual expenses are on the rise while the outgo on permanent staff has been controlled in spite of a wage hike agreement. In FY24, Coal India’s contractual expenses rose 18.5% on year to nearly INR 276 billion. On the other hand, the outgo on employee benefit expenses fell a little over 1% to INR 479 billion.

 

On Wednesday, shares of Coal India closed 1.0% lower at 487.0 rupees on the National Stock Exchange.

 

Explaining the increased reliance on mine contractors and the involvement of private players in mining operations, the Coal India official said, “Mine operators and developers have introduced new technologies and management practices and are typically more agile and adaptable to changing market dynamics. For instance, we had to close some underground mines in the past as we did not have the requisite technology, but we are reopening them now under the mine operator and developer model.”

 

Mine operators and developers use their own workers for mining operations and do not engage Coal India's permanent workforce. According to the company’s annual report for FY24, of the 15 mine developer-operator projects identified for outsourcing production, 11 were opencast mines and four were underground mines. These mines have a combined capacity to produce 173 million tonnes of coal per annum.

 

Work orders for 13 projects which can produce 141 million tonnes have been issued and operations have begun in four, which contributed around 7 million tonnes of coal in FY24. Another 16 mining projects with a total capacity of 170.46 million tonnes per annum with a total sanctioned capital of INR 271 billion were approved in FY24.  End

 

Edited by Rajeev Pai

 

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