Professional Documents
Culture Documents
INDEX
Sr. No.
Title
Page No.
1.
Acknowledgements
2.
Introduction
3.
4.
Conclusion
5.
Bibliography
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ACKNOWLEDGEMENT
I would like to thank Mrs. Kusum Chatwal for giving me the opportunity to
research on the Contract Labour Act, 1970. The work contained herein is an
amalgamation of the remarkable works of eminent authors who have contributed to
the extent and impact of this legislation. I have prepared the project to the best of
my abilities using the guidance of these authors.
INTRODUCTION
In this age of globalization, the employment structure across the globe has been undergoing
changes in all nations. In order to effectively compete in a globalized market, one needs
flexibility relating to labour, capital, or bureaucracy; this allows a producer to adapt to the fastchanging world and compete effectively. In particular, it is argued that stringent labour
regulations not only put domestic producers at a disadvantage but also deter foreign direct
investment and eventually impact adversely on investment, output and employment. Over the
last two decades, a number of countries have attempted to liberalize their respective labour
markets and have also amended their labour laws so as to make them more investment- and
employment-friendly a process that has weakened job security and collective bargaining.1
Among different kinds of employment that have been created in various economies to
circumvent labour laws, contract labour is becoming one of the prominent forms. In India,
contract labourers are protected by the Contract Labour Regulation and Abolition Act, 1970. This
Act was enacted by the Government of India to stop the exploitation of workers under the
contract labour system. With a view to removing the difficulties of contract labour and bearing in
mind the recommendations of various commissions and committees and the decisions of the
Supreme Court, particularly in the case of Standard Vacuum Refining Company in 1960, the
Contract Labour (Regulation and Abolition) Act was enacted in 1970. This Act seeks to regulate
the employment of contract labour in certain establishments and to provide for its abolition under
certain circumstances.
Contract Labour can be distinguished from direct labour in terms of employment relationship
with the principal establishment and the method of wage payment. A workman is deemed to be a
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
Case Law
The primary objective of the Act is to stop exploitation of contract labourers by contractors and
establishments. The Act does not provide for a total abolition of contract labour system but it
provides for abolition of contract labour in appropriate cases9.
CONCLUSION
The Contract Labour (Regulation and Abolition) Act was originally enacted to regulate the
practice of contract labour to avoid exploitation of sweated labour. Section 10 of the Act
empowers the government to prohibit contract labour in certain situations at the discretion of the
government.
In practice, the Act has been interpreted as requiring the abolition of contract labour for all
services that are of a regular nature and are performed on the factory premises. Two Supreme
Court judgements in two cases involving the Gujarat State Electricity Board and Air India have
had the effect that employers using contract labour to perform regular services on the premises of
the employer become liable to absorb such labour permanently. Industry has on several occasions
expressed its disappointment at this viewpoint because it defeats the purpose of employing
contract labour.
A Planning Commission report on employment opportunities said the role of contract labour has
to be seen in the context of a growing trend towards unbundling the production process into parts
and outsourcing supply of these to different producing units. This practice will increase with the
growth of information technology. If such outsourcing leads to a greater specialisation in the
production of these services, with resulting gains in efficiency and reduced costs, it could
rather would stimulate a larger total demand for these services and, therefore, create
employment.
For example, outsourcing of security services could make these services more cost-effective and,
therefore, lead to more demand. An important aspect of cost-effectiveness is that the service can
be discontinued or contracted on a reduced scale in difficult times.
But the present legal provisions introduce a disincentive to the expansion of contractual services.
Its true that enterprises can freely outsource those services that need not be performed on the
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BIBLIOGRAPHY
Websites Referred:
http://labour.nic.in/content/dglw/Schemes/ContractLabour.html
http://pblabour.gov.in/pdf/acts_rules/contract_labour_regulation_and_abolition_act_1970
.pdf
http://www.igidr.ac.in/pdf/publication/PP-062-33.pdf
http://www.ficci.com/spdocument/20189/Industrial-Relations-and-Contract-Labour-inIndia.pdf
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