Contract labour act

1. Contract Labour (Regulation
and Abolition) Act, 1970
By Abhijit Panda
H16060

2. Contract Labour :- As per the ILO, contract labour is defined as pursuant to
contractual arrangement other than a contract of employment with the user
enterprise, under actual conditions of dependency on or subordination to the
user enterprise, where these conditions are similar to those that characterize an
employment relationship under national law and practice.
The relationship between employee and contract labour is characterized by
economic and organizational dependency and is commonly seen as a master-
servant or employer-employee relationship.
The commercial does not afford either party with any special legal protection
beyond those laws which support the contract.
Contract labour arise due to:-
• To avoid employment responsibilities towards the worker
• For cost cutting

3. Increase in contract labour - Reasons
• Decentralisation and specialization of production processes and work
organization
• Globalization and economic recession
• Labour shortage in certain areas
• Contract labour affords the benefit of avoiding obligations under employment
laws and protections
Effects of Contract Labour
• Deprives workers of protection under labour standards
• Prevents workers acquiring continuity of employment and building experience
• Lowers industry standards of skill and quality
• Allows the evasion of taxes and social contributions by both workers and
employers
• Denies worker access to redundancy payments and unemployment benefits

4. Main features of CLRA, 1970
• Act applies to every establishment or contractor who employs 20 or more than
20 workmen
• The act doesnot apply to establishments where work performed is of
intermittent or casual nature
• The central and state government are required to set up central advisory board
and state advisory boards which are authorized to constitute committees which
will advice on matters arising out of administration of the act
• Rules for establishment of canteens
• The contractor is required to pay wages in presence of authorized
representative of principal employer
• Provision for appointment of inspecting staff for maintenance of registers and
records, for penalties for the contravention of provisions of the act and rules
• Allows government to prohibit employment of contract labour in any
establishment

5. Chapter 1 : Preliminary
Section 1 : Short title, extent, commencement and application
• Name of the Act
• Extends whole of India
• Applies on every establishment with 20 or more workmen employed
Work performed in an establishment shall not be deemed intermittent nature :
• A) if work performed for more than 120 days in the preceding 12 months
• B) if it is of a seasonal character and is performed for more than 60 days in a
year
Section 2 : Definitions
• Appropriate Government : Central or State Government
• Definition of Contract labour, Principal Employer, Wages, Workmen, Controlled
Industry and Contractor

6. Chapter 2 : The Advisory Boards
Section 3 : Central Advisory Board
• It shall consist of a chairman appointed by central government, the chief labour commissioner and not
more than 17 but not less than 11 members representing different industries and contractors and
workmen
• The purpose of the board will be to advise the central government on such matters arising out of the
administration of this act as may be referred by the central government to the central board
• To carry out other functions assigned to it under this act
Section 4 : State Advisory Board
• It shall consist of a chairman appointed by state government, the chief labour commissioner and not
more than 17 but not less than 11 members representing different industries and contractors and
workmen
Section 5 : Power to constitute committees
• The central or state board may constitute committees for purposes they think fit
• The committees shall meet at such a time and place and shall observe such rules of procedure in regard
of transaction of business at its meetings
• The members of a committee shall be paid such fees and allowances for attending its meetings as may
be prescribed

7. Chapter 3 : Registration of Establishments employing contract labour
Section 6: Appointment of registering officers
• Appointment of Gazetted officers of the Government
• Definition of the limits of the powers conferred to registered officers
Section 7 : Registration of certain establishments
• Certificate of registration containing particulars of establishments issued by the registered
officers
Section 8 : Revocation of Registration in certain cases
• Registration done by misrepresentation, suppression of facts or registration has become useless
Section 9 : Effect of non registration
• Cannot employ contractual labour in establishment
Section 10 : Prohibition of contract labour
• Steps taken by Government before prohibition order for employment of contractual labour in
establishments

8. Chapter 4 : Licensing of Contractors
Section 11 : Appointment of licensing Officers
• Appointment of Gazetted Officers of Government as Licensing Officers
• Definition of the limits of the power of licensing officers
Section 12 : Licensing of Contractors
• A license contains work conditions requirements for contract labourers
• No contractor should employ contractual labourers without a license from licensing officer
Section 13 : Grant of licences
• Every application for the grant of a license shall be made in the prescribed form and shall contain the particulars regarding the location of
establishment, nature of process, operation of work etc.
• License officer may make investigation in respect to application given for grant of a license
• License granted may be renewed from time to time on payment of fees
Section 14 : Revocation, Suspension and amendment of licenses
• Licensing officer has the power to amend a license granted under section 12
Section 15 : Appeal
• Any person aggrieved by an order made under section 7, 8, 12 or 14 may within 30 days from the date on which the order is communicated to him ,
prefer an appeal to an appellate officer who shall be a person nominated in this behalf by the government
• On receipt of an appeal, the appellate officer shall give an opportunity to appellant of being heard dispose of the appeal

9. Chapter 5 : Welfare and health of a contract labour
Section 16 : Canteens
• No. of canteens and standards in respect of construction, accommodation, furniture and other equipments of canteens
• The foodstuffs which may be served therein and charges of the same
Section 17: Restrooms
• No. of restrooms to be provided and it should be sufficiently lighted and ventilated and maintained in clean condition
Section 18 : Other Facilities
• Supply of drinking water
Section 19: First Aid Facilities
• Readily accessible first aid box during all working hours
Section 20 : Liability of principal employer in certain cases
• If the amenities mentioned above are not provided by contractor, it should be provided by the principal employer and the costs shall be
incurred from the contractor by the principal employer later
Section 21: Responsibility for payment of wages
• Contractor is responsible for disbursement of wages to contract labourers
• If contractor fails to pay, the principal employer shall pay the wages

10. Chapter 6 : Penalties and Procedure
Section 22: Obstructions
• Whoever obstructs an inspector in the discharge of his duties or who refuses to produce on the demand of an inspector any register or
other document shall be punishable with imprisonment for a term upto 3 months or with a fine of 500 rs or both.
Section 23 : Contravention of provisions regarding employment of contract labour
• Fine – 3 months imprisonment or fine upto Rs 1000 or both
Section 24 : Other Offences
• Fine - 3 months imprisonment or fine upto Rs 1000 or both
Section 25 : Offences by Companies
• If a person in charge of a responsible position in a company is violating the CLRA or committing a offence as per CLRA, the whole company
and all the persons in a responsible position are held liable and guilty.
Section 26 : Cognizance of offences
• Only taken by the Presidency Magistrate or Magistrate court with the sanction of inspector
Section 27 : Limitation of prosecutions
• Only taken by court when the complaint thereof is made within 3 months from the date of alleged commission of the offence came to
knowledge of the inspector

11. Chapter 7 : Miscellaneous
Section 28 : Inspecting Staff
• Definition of powers of inspecting staff
• Enter the premises of establishment at all reasonable hours where workman is
employed
• Examine any person whom he finds in any such premises or place where workman is
employed
Section 29 : Registers and other records to be maintained
• It should be maintained by principal employer as well as contractors
Section 30 : Effect of laws and agreements inconsistent with this act
• CLRA will supersede all standing orders
Section 31 : Power to exempt in special cases
• The concerned government has power to exempt establishments from CLRA

12. Section 32 : Protection of action taken under this act
• No suit, prosecution or other legal proceedings shall lie against any registering officer or licensing officer
or any member of Central or State board
Section 33: Power to give directions
• The central government may give directions to the government of any state as to the carrying into
execution in the state of the provisions contained in this act
Section 34 : Power to remove difficulties
• The central government has the power to make provisions to be necessary or expedient for removing
the difficulty.
Section 35 : Power to make Rules
• The appropriate government may, subject to the condition of previous publication make rules for
carrying out the purposes of this act
• Every rule made by the central government under this act shall be laid as soon as may be after it is made
before each House of Parliament.
• Every rule made by the state government under this act shall be laid as soon as may be after it is made
before the state legislature