Academic Session

By
HighQ- The HR Club

Contract Labour (Regulation And Abolition)

Act - 1970
Objective:
An Act to regulate the employment of contract labour in certain establishments
and to provide for its abolition in certain circumstances and for matters connected
therewith.
Facilities to be provided to contract labourers (Section Wise)
16. Canteen
17. Restrooms
18. Other facilities
19. First-aid facilities
20. Liability of principal employer in certain cases
21. Responsibility for payment of wages
Applicability
It extends to the whole of India.

It applies

● To every establishment in which 20 or more workmen are employed or

were employed on any day of the preceding 12 months as contract labour;
● To every contractor who employs or employed on any day of the preceding
12 months 20 or more workmen.

Provide that appropriate government may, after giving not less than 2 months
notice of its intention to do so, by notification in Official Gazette, may apply the
provisions of this Act to any establishment or contractor employing even less than
20 workmens.
It shall not apply to establishments in which work of only an intermittent or
casual nature is performed.

If a question arises whether work performed in an establishment is of an

intermittent or casual nature, the Appropriate Government shall decide that
question after consultation with the central board or as the case maybe, a state
board, and its decision shall be final.

EXPLANATION:

For the purpose of this subsection, work performed in an establishment shall not
be deemed of an intermittent nature if it

● Was performed for more than 120 days in the preceding 12 months, or
● Is of seasonal character and is performed for more than 60 days in a year.
Registration Vs. Obtaining License
REGISTRATION LICENSING
● Contractor
● Principal Employer
● Renewable on yearly basis
● Not renewable
● License is to be displayed
● Cert. of Reg need not be
prominently at premises
displayed
● Issued on payment of Fees and
● Issued on payment of Fees only
Security Money
● Only Bank draft req.
● Bank draft and cert by PE req
● No conditions
● There is full Annexure containing
conditions for fulfillment by
contractor.
Definitions
APPROPRIATE GOVT.: (i) in relation to an establishment in respect of which the
appropriate Government under the Industrial Disputes Act, 1947 (14 of 1947), is the
Central Government;

(ii) in relation to any other establishment, the Government of the State in which that
other establishment is situated.

CONTRACT LABOUR: A workman is deemed to be employed as a contract labour in

or in relation to the work of establishment if he is hired for such work by or through a
contractor & with or without the knowledge of principal employer.

ESTABLISHMENT: Any office or department of government or a local authority OR

any place where any industry, trade, business, manufacturing or occupation is carried
out.
CONTRACTOR: One who supplies contract labour to an establishment undertaking to
produce a given result for it. He hires labour in connection with the work of an
establishment.

The contractor covered under this act is required to

● Obtain a license under this act

● Maintain Muster Rolls and Register of Wages
● Provide facilities like canteen, restrooms, first-aid, drinking water, toilets etc.
● Pay wages to workmen in time and in presence of authorized representative of
principal employer.

SECTION 21(4) - If the contractor

● Fails to make payment of wages, (or)

● Make short of payment of wages

Then principal employer is liable to make payment of wages to contract labour.

PRINCIPAL EMPLOYER :

(i) in relation to any office or department of the Government or a local authority,

the head of that office or department or such other officer as the Government or
the local authority, as the case may be, may specify in this behalf,

(ii) in a factory, the owner or occupier of the factory and where a person has
been named as the manager of the factory under the Factories Act, 1948 (63 of
1948), the person so named.
Prohibition on employment of Contract Labour
Appropriate government can prohibit employment of contract labour in any
process, operation, or work in any establishment by issuing a notification.

However, appropriate government will consider following factors before issuing

such order:

● Conditions of work and benefits provided to contract labour;

● Whether process, operation or work is incidental or necessary for the industry
trade or business;
● Whether such process, operation or work is done ordinarily through regular
workmen or contract labour in other similar establishments.
Important Sections
● (Sec. 10) Prohibition of employment of contract labour.
● (Sec. 09) Effect of non-registration.
● (Sec. 14) Revocation, suspension and amendment of licences.
● (Sec. 16) Canteens.
● (Sec. 17) Restrooms.
● (Sec. 30) Effect of laws and agreements inconsistent with this Act.
● (Sec. 20) Liabilities Of Principal Employer
● (Sec. 21) Responsibility for payment of wages.
● (Sec. 22) Obstructions.
● (Sec. 23) Contravention of provisions regarding employment of contract
labour.
Liabilities Of the Principal Employer (Sec.20)
● To pay wages in-case the contractor fails to do so
● To nominate a representative to be present at the time of disbursement of wages by the contractor
● To provide welfare and health facilities
● Right to recover the expenses involved from the Contractor through bills payable.
● Maintain a register and records in form XII giving particulars like
▪ No of Contractors and contract labour employed.
▪ Nature of work.
▪ Rate of wages.
● Display Notice at a conspicuous place in English and Local Language containing information like
▪ Rate of wages.
▪ Hour of work.
▪ Wage period.
▪ Date of payment of wages.
▪ Name and address of the Inspectors.
● Submission of yearly return to Licensing Officer in Form XXV.
Liabilities Of the Contractor
● Maintain a register in form XIII containing information like
▪ Muster Roll
▪ Wages
▪ Deductions.
▪ Over time
▪ Fines
▪ Advance
● Issue an employment card in form XIV to each worker and to issue a service
certificate in termination of employment in form XV
● Submission of a half yearly return to licensing officer in form XXIV
Applicability of other laws to Contract Labour
Besides Contract Labour (Regulation and Abolition) Act, the following Acts are
also applicable to contract labour :

● Factories Act;
● Industrial Disputes Act;
● Workmen’s Compensation Act;
● Employees State Insurance Act;
● Payment Of Wages Act;
● Employees Provident Fund Act.
Recent Amendments
● The Contract Labour (Regulation and Abolition) (Amendment) Act, 1986.
● The Delegated Legislation Provisions Act, 2004.

Parliament does not make delegated legislation, instead they delegate that
power to another.

In delegating the power to make delegated legislation, Parliament imposes

precise restrictions on the exercise of this power.

Delegated legislation is often called subordinate legislation or legislative

instruments, and can include regulations, rules, orders, statutory instruments,
by-laws and so on.
Case Laws
CONTRACT LABOUR AND LABOUR COURT

Can the employees engaged by the contractor make a demand upon the
employer to take them on the muster roll? Whether the appropriate government,
on a dispute raised by such employees, can make a reference to the labour court
or the industrial tribunal for adjudication to this effect?

Philips Workers' union, thane vs. state of maharashtra

Section 10 - the jurisdiction lies either with Central or State Government, as

the case may be.
CONTRACT LABOUR AND THEIR RIGHTS

Whether workmen engaged by a contractor not holding a valid licence under the
Contract Labour (Regulation and Abolition) Act, 1970, can be treated as workmen
of principal employer?

Workmen of Best & Crompton Industries Ltd. VS. Best & Crompton
Engineering Ltd.

New Delhi General Mazdoor Union and Delhi Offices and Establishments
Employees Union vs. SCOPE

General Labour Union (Red Flag) vs. K M. Desai & others

Sections 7 & 12
CONTRACTOR’S EMPLOYEE AND EPF

Are the employees engaged/employed through the contractor coverable under the
Employees Provident Fund and Miscellaneous Provisions Act?

Orissa Cement Ltd. vs. Union of India.

Past : By amendments to the scheme in 1958 and 1960, the persons employed by or
through ,contractor or in connection with an establishment to which the Act applied were
brought within the purview of the scheme and principal employer was made responsible
for compliance with the provisions, of the Act and the scheme in respect of such
employees.

Now : The defect pointed out by the Supreme Court has now been removed by the
Amending Act 28 of 1963. Accordingly, contractor's employees have become eligible
for the provident fund benefits w.e.f. 30th November, 1963.
CONTRACTOR’S EMPLOYEE AND ESI

Whether employees engaged by a contractor will be covered by ESI?

P.D. Vidavatak and others vs. ESIC

C.E.S.E. Limited Etc. vs. Subhash Chandra Bose and others

The employees as engaged by a contractor in an establishment covered under

ESI Act will have to be enrolled as members of ESI.
GRATUITY AND BONUS

Will the principal employer be liable to pay gratuity and bonus to the employees
employed by the contractor?

Cominco Binani Zinc Ltd. VS. Pappachan

The gratuity and bonus will not be payable by the principal employer since these
do not come within the definition of 'wages'
IMPLICATIONS OF CONTRACT LABOUR ACT

What would be the consequences if an employer engages the workers through a

contractor, who should have been registered under the Contract Labour Act?

Workmen of Best & Crompton Industries Ltd., General Secretary, Socialist

Workers' Union Madras vs. Best & Crompton 'Engineering Ltd. Madras and
others

Section 2(3)(b) of the Contract Labour (Regulation and Abolition) Act, 1970,
implies that if the workman is not hired through contractor holding a valid licence
under the Act, he would be a workman employed by the management itself.
ABSORPTION AS A REGULAR EMPLOYEE

Will the principal employer be liable to absorb the contract labour which has been
abolished by the appropriate Government?

SAIL Vs. National Union of Water Front workers

There is no provision in the contract labour (Regulation and Abolition) Act, 1970,
which requires the employer to absorb the contract labour as a regular employee,
if the contract labour has been abolished by the government in such
organisations.
PROCEDURE FOR PROHIBITING CONTRACT LABOUR

What are the formalities in prohibiting contract labour by the appropriate government?

Gujarat Electricity Board and Thermal Power Station vs. Hind Mazdoor Sabha

The Orissa High Court has held that the appropriate Government is bound to
consult Advisory Board before issuing notification under Section 10 of the
Contract Labour (Regulation and Abolition) Act, prohibiting the employment of
contract labour in any process, operation or other work.The decision regarding the
prohibition of employment of contract labour is no doubt with the appropriate
Government but this decision is subject to judicial review. It was further held that
when the appropriate Government failed to place material before the Court to indicate
the nature of the condition, the appropriate Government had with the Advisory Board
and the relevant factors that weighed with the appropriate Government in issuing the
notification abolishing the contract labour, the notification is liable to be quashed.
Common Interview Questions
► What Are The Differences Between Contract Labour And Outsourcing? Which Is A Better Option And Why?

► Is Contract Labour Act Applicable When Jobs And Services Are Outsourced?

► Is Contract Labour Act Applicable To Seasonal Labour?

► What Are Non-Perennial And Non-Permanent Jobs Which Can Be Assigned To Contract Labor?

► Each Contractor Engaging Less Than 20 But Together They Engage More Than 20. Will The Provisions Of Registration,
Licensing And Other Statutory Provisions Apply?

► If A Contractor Engages A Subcontractor, Who Is The Principal Employer?

► How To Convert Labour Supply Contract Into Job Contract?

► Can And Should Employer Have A Say In The Number And Selection Of Contract Labour?
► Can We Engage Contract Labour In Place Of Permanent Employee?

► Can And Should We Engage Contract Labour In Manufacturing Jobs? What Is The Risk Involved?

► Should The Contractor Issue Appointment Letter To Contract Labour?

► Is It Necessary And Desirable To Issue Employment Card/Gate Pass/Identity Card To Contract Labour? If So Under
Whose Authority/Signature? What Are The Safeguards Required?

► Can We Have Permanent Employees And Contract Labour Working Side By Side On The Same Job?

► What Is The Best Ratio Between Permanent Employees And Contract Labour? Can We Engage 100% Contract Labour?

► Should Contractor And Contract Labour Be Rotated? Why? How Often?

► Can We Have Different Wages And Other Terms For Permanent Employees And Contract Labour Doing The Same Or
Similar Job?

► Can We Transfer Casuals/Temporaries On The Rolls Of Contractor?

► Application And Implication Of P.F., ESI, Bonus, Gratuity And Other Benefits To Contract Labour And How To Ensure
Compliance?
► How To Ensure Submission Of PF And ESI Returns By The Contractor?

► How To Get A New Code/Sub-Code Number From PF Authorities?

► Security, Housekeeping, Drivers, Canteens, Horticulture Etc. On Contract/Voucher Payment. Sustainability? Case Laws?

► What Is The Liability Of Principal Employer For Injury, Illness, Disability, Death Etc.

► Who Is To Take Disciplinary Action Against Contract Labour? Under What Rules? Are Standing Orders Applicable To
Contract Labour?

► In which activities Contract labour is prohibited ?

► Is it permissible to deploy Contract labour even in Core activity under certain conditions ?

LINKS

https://www.citehr.com/354347-35-interesting-questions-related-contract-labour.html

https://www.google.co.in/amp/s/interviewquestionsanswers.org/__Contract-Labour-Based-Job-
Interview-Questions-amp