DEFINITION OF CONTRACT LABOUR AS PER THE THE ACT
Contract Labour: Definition & engagement “Contract labour” can be distinguished from “direct labour” in terms of the employment relationship with the principal establishment and the method of wage payment. A workman is deemed to be contract labour when he/she is hired in connection with the work or “contract for service” of an establishment by or through a contractor.
They are indirect employees; persons who are hired, supervised and remunerated by a contractor who, in turn, is compensated by the establishment. In either form, contract labour is neither borne on payroll or muster roll or wages paid directly to the labour. (Report of the National Commission on Labour, 1969) The Contract Labour (Regulation & Abolition) Act, 1970 (Act) permits companies and establishments in the manufacturing and services sectors to engage contract labour through contractors. Such engagement can be only for work that does not form part of the core operations, which is guided by the memorandum of association of the company.
Prior to the enactment of the Act, in the case of Standard Vacuum Refinery Company v. Their Workmen (1960), the Supreme Court of India had observed that contract labour should not be employed where:
(i) The work is perennial and must go on from day to day;
(ii) The work is incidental to and necessary for the work of the factory;
(iii) The work is sufficient to employ considerable number of whole-time workmen; and
(iv) The work is being done in most concerns through regular workmen.
The Act allows the government to prohibit employers from employing contract labour in its core process after examining whether
(i) the work performed by contract labour is permanent in nature;
(ii) the process or operation is incidental or necessary for the employer;
(iii) such process or work is ordinarily performed by regular employees of other similar employers, and (iv) a sufficient number of whole-time employees can be deployed to perform the work. Therefore, contract labours are generally engaged for support services like housekeeping, gardening, security, catering, maintenance, transport, etc.
MOST IMPORTANT FEATURES OF CONTACT LABOUR ACT
Intent & coverage: The Act provides for regulation of the employment of contract labour and its abolition under certain circumstances. It covers every establishment in which 20 or more workmen are employed on any day of the preceding 12 months as contract labour and every contractor who employs or who employed on any day of the preceding 12 months, 20 or more contract employee.
It does not apply to establishments where the work is of intermittent and casual nature unless work performed is more than 120 days and 60 days in a year respectively. (Section 1)
Advisory Boards: The Act provides for setting up of Central and State Advisory Contract Labour Boards by the central and state governments to advise the respective governments on matters arising out of the administration of the Act. (Section 3 & 4)
Registration & licenses: The establishments covered under the Act are required to be registered as principal employers with the appropriate authorities.
Every contractor is required to obtain a licence and not to undertake or execute any work through contract labour, except under and in accordance with the licence issued in that behalf by the licensing officer.
The licence granted is subject to conditions relating to hours of work, fixation of wages and other essential amenities in respect of contract as prescribed in the rules. (Section 7 & 12)
Facilities to contract labours: The Act has laid down certain amenities to be provided by the contractor to the contract labour for establishment of canteens and rest rooms, arrangements for sufficient supply of wholesome drinking water, latrines and urinals, washing facilities and first aid facilities have been made obligatory. In case of failure on the part of the contractor to provide these facilities, the principal employer is liable to provide the same. (Section 16, 17, 18, 19 and 20)
Payment of wages: The contractor is required to pay wages and a duty is cast on him to ensure disbursement of wages in the presence of the authorised representative of the principal employer. In case of failure on the part of the contractor to pay wages either in part or in full, the principal employer is liable to pay the same. The contract labour that performs same or similar kind of work as regular workmen will be entitled to the same wages and service conditions as regular workmen as per the Rules. (Section 21)
Offences: For contravention of the provisions of the Act or any rules made there under, the punishment is imprisonment for a maximum term up to 3 months and a fine up to a maximum of Rs. 1000. In case of a company, the company as well as every person-in-charge of and responsible to the company for the conduct of its business at the time of the commission of the offence shall be deemed guilty. (Section 23, 24 & 25)
Registers & displays: Principal employer and contractor have the responsibility to maintain registers and records of contract labours, work performed by them, wages, and other particulars as specified in the Rules. Notices are also to be exhibited within the premises regarding hours of work, nature of duty and other information as prescribed under the Rules. (Section 29)
Abolition of contract labour: After consultation with the Central Board or State Board, government can prohibit, by notification in the official gazette, employment of contract labour in any establishment in any process, operation or other work.
The guidelines for deciding upon the abolition of contract labour in any process, operation or other work in any establishment are –
(i) Conditions of work and benefits provided to the contract labour;
(ii) Whether the work is of a perennial nature;
(iii) Whether the work is incidental or necessary for the work of an establishment;
(iv) Whether the work is sufficient to employ a considerable number of wholetime workmen;
(v) Whether the work is being done ordinarily through regular workman in that establishment or a similar establishment.