A workman is deemed to be employed asContract Labour when he is hired inconnection with the work of an establishmentby or through a contractor.Contract workmen are indirect employees;persons who are hired, supervised andremunerated by a contractor who, in turn, iscompensated by the establishment.
Contract labour should not be employed where(a)The work is perennial and must go onfrom day to day;(b) The work is incidental to and necessaryfor the work of the factory;(c) The work is sufficient to employconsiderable number of whole timeworkmen; and(d) The work is being done in most concernsthrough regular workmen.
The Contract Labour (Regulation and Abolition) Act, 1970 Act and the Contract Labour (Regulation and Abolition) Central Rules, 1971 came into force on 10.2.71
Main objective of the Contract Labour (Regulation & Abolition) Act, 1970 is two fold:-i) To regulate the employment of Contract Labour in certain establishments; andii) To provide for its abolition in certain circumstances. In order to achieve above objectives, the Act lays down various requirements with regard to hiring of Contract Labour, its wages & earnings, working conditions etc.
Every industry engaging 20 or more workers on contract basis. Every contractor engaging 20 or more workers.
Contract is awarded by the concerned department /commercial department. Concerned deptt. send a job request to the purchase deptt. Purchase deptt. go through by the following steps.I) EnquiryII) OffersIII Comparative StatementIV)NegotiationV)Award the Contract
Work Order is given by the concerned deptt. to the Contractor. Contractors fill in an application Form for engaging contract labour every month /new entry. Concerned department recommends the no. of labourers. Safety department imparts training to the labourers.
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, washing facilities and first aid facilities have been made obligatory.
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.
Since 1970 when the Contract Labour (Regulation and Abolition) Act was enacted the economy has undergone a sea-change, from an era of protectionism to liberalisation, from restricted domestic competition to international competitiveness. The system of contract labour offers tremendous opportunities for employment and allows the employers flexibility to choose what is best for them. This helps improve productivity and service competitiveness. The Act should be made applicable only to the main and core activities of the establishment in so far as abolition of contract labour system is concerned.
Supportive or allied activities of an establishment like maintenance, house keeping should be out sourced and the Act should only provide for regulating the working conditions and wages. The Principal Employer should, however, have to ensure payment of wages to contract labour as laid down under the law in force as also other basic amenities and social security benefits. Work requiring specialised skills unavailable within the establishment. If the contract labour system, which is cost effective, is not allowed to continue, industries may go in for technological restructuring with less number of workers leading to reduction in employment.
The Trade Unions are totally opposed to then idea of contracting of services and in jobswhich are perennial in nature for following reasons:- Reduction of regular employment; The contract labour generally belong to weaker sections of the society and will be deprived of the benefits that accrue to regular employees. Efficiency will decrease as establishment will be deprived of experienced staff. Coordination of activities of large number of contractors/sub-contractors will prove to be more time consuming and costly than in house activity. What is required is not privatisation but in house improvements and restructuring. Out sourcing will only lead to a type of employment founded on discrimination and exploitation of contract labour in regard to wages paid, working conditions, etc.
A contract worker at Maruti Suzukis plant in Manesar, Haryana. for the last two years is paid Rs 7,200 per month. on the same assembly line doing the same job, a permanent Maruti employee earns Rs 18,000 per month.
At the Omax Auto plant near Dharuhera, Haryana, a contract worker for the last 19 years, earns Rs 5,900 a month. But permanent employee gets Rs 12,000. Omax Auto manufactures two wheeler parts for market leader Hero Honda.
Managing Director of the Dharuhera-based Rico Auto Industries. Arvind Kapur says "We cannot afford to keep all the employees throughout the year," "There are ups and downs in the business." Rico Auto, which also has a total workforce of around 3,000, including contract workers, makes gears and oil pumps for Maruti, and gear shift drums for two-wheeler companies. It saw a 45-day strike in October 2010, with the union insisting on limited use of contract workers and equal pay for them."The market is very competitive," adds Kapur. "Using contract labour helps us to manage costs."
In the absence of any labour law reforms over the past so many years, the courts have taken contradictory positions in the recent past. One judgement said priority must be given to absorption of contract labour whenever a new position comes up, while another said no such guarantee can be given by a company because the terms of employment itself talk about a fixed contract.