CONTRACT LABOUR IN INDIA
(d) The work is being done in most concerns
through regular workmen.
10.1 The system of employing contract
THE CONTRACT LABOUR (REGULATION AND
labour is prevalent in most industries in
ABOLITION) ACT, 1970
different occupations including skilled and
semi skilled jobs. It is also prevalent in
10.3 The concern for providing legislative
agricultural and allied operations and to some
protection to this category of workers,
extent in the services sector. A workman is
whose conditions have been found to be
deemed to be employed as Contract Labour
abysmal, resulted in the enactment of the
when he is hired in connection with the work
Contract Labour (Regulation and Abolition)
of an establishment by or through a contractor.
Contract workmen are indirect employees;
persons who are hired, supervised and OBJECTS AND PURPOSES OF THE ACT
remunerated by a contractor who, in turn, is
10.4 The Contract Labour (Regulation and
compensated by the establishment. Contract
Abolition) Act, 1970 was brought on the
labour has to be employed for work which is
Statute Book to regulate the employment of
specific and for definite duration. Inferior
Contract Labour in certain establishments and
labour status, casual nature of employment,
to provide for its abolition in certain
lack of job security and poor economic
circumstances and for matters connected
conditions are the major characteristics of
contract labour. While economic factors like
cost effectiveness may justify system of
contract labour, considerations of social
justice call for its abolition or regulation.
10.5 The Contract Labour (Regulation and
10.2 The condition of contract labour in India Abolition) Act, 1970 and the Contract Labour
was studied by various Commissions, (Regulation and Abolition) Central Rules, 1971
Committees, and also Labour Bureau, Ministry came into force on 10.2.71.The constitutional
of Labour, before independence and after validity of the Act and the Central rules were
independence. All these have found their challenged before the Supreme Court in
condition to be appalling and exploitative in Gammon India Ltd. Vs. Union of India 1974-I-
nature. The Supreme Court of India in the case LLJ-480. The Supreme Court upheld the
of Standard Vacuum Refinery Company Vs. constitutional validity of the Act & Rules and
their workmen (1960-II-ILJ page 233) observed held that there is no unreasonableness in the
that contract labour should not be employed measure. The Act & Rules were enforced w.e.f.
where: — 21.03.1974.
(a) The work is perennial and must go on
10.6 The Act applies to every establishment
from day to day;
in which 20 or more workmen are employed or
(b) The work is incidental to and necessary were employed on any day on the preceding
for the work of the factory; 12 months as contract labour and to every
contractor who employs or who employed on
(c) The work is sufficient to employ
any day of the preceding 12 months 20 or more
considerable number of whole time
workmen. It does not apply to establishments
86 CONTRACT LABOUR IN INDIA
where the work performed is of intermittent or office till their successors are appointed. The
seasonal nature. An establishment wherein appointment of employer and employee
work is of intermittent and seasonal nature members of the Board is under process. Fifty
will be covered by the Act if the work meetings of the Central Advisory Contract
performed is more than 120 days and 60 days Labour Board (CACLB) have so far been held.
in a year respectively. The Act also applies to The last meeting was held on 22nd November
establishments of the Government and local 2001.
authorities as well.
10.11 The existing Central Advisory Contract
APPROPRIATE GOVERNMENT Labour Board has held three meetings during
the year under report and considered various
10.7 The jurisdiction of the Central and State issues relating to abolition of contract labour
Government has been laid down by the system in certain establishments. The working
definition of the ‘Appropriate Government’ in of the Act was also reviewed in these meetings.
Section 2(1)(a) of the Act, as amended in 1986. As a consequence, the Central Government
The Appropriate Government, in respect of on the recommendation of the Board, have
an establishment under the Contract Labour prohibited employment of contract labour in
(Regulation and Abolition) Act, 1970 is the various operations/ category of jobs in
same as that in the Industrial Disputes Act, various establishments. The position of
1947. notifications issued by the Central
Government during the period under report is
10.8 As per the interpretation given by the
given in Box 10.1.
Supreme Court, through its judgement dated
30.08.2000, in Steel Authority of India Limited
REGISTRATION OF ESTABLISHMENT
and Ors Vs. National Union Water Front
AND LICENSING OF CONTRACTORS
Workers & Ors., the ‘appropriate government’
in relation to an establishment would be the 10.12 The establishments covered under the
Central Government if (i) the concerned Act are required to be registered as principal
Central Government company/ undertaking or employers with the appropriate authorities.
any undertaking is included by name in clause Every contractor is required to obtain a licence
(a) of Section 2 of the Industrial Disputes Act, and not to undertake or execute any work
or (ii) any industry carried on by or under the through contract labour except under and in
authority of Central Government or by a accordance with the licence issued in that
railway company, or (iii) any such controlled behalf by the licensing officer. The licence
industry as may be specified in this behalf by granted is subject to such conditions as to
the Central Government, otherwise in relation hours of work, fixation of wages and other
to any other establishment, the Government essential amenities in respect of contract
of the State in which that other establishment labour as laid down in the rules.
is situated, will be the appropriate government.
WELFARE AND HEALTH OF
THE CENTRAL AND STATE ADVISORY CONTRACT LABOUR
10.13 The Act has laid down certain amenities
10.9 The Central Government and State to be provided by the contractor to the
Governments are required to set up Central contract labour for establishment of Canteens
and State Advisory Contract Labour Boards and rest rooms ; and arrangements for
to advise the respective Governments on sufficient supply of wholesome drinking water,
matters arising out of the administration of latrines and urinals, washing facilities and first
the Act as are referred to them. The Boards aid facilities and have been made obligatory.
are authorised to constitute Committees as In cases of failure on the part of the contractor
deemed proper. to provide these facilities, the Principal
Employer is liable to provide the same.
10.10 The Central Advisory Board –a tripartite
Body was last re-constituted on 30th October, PAYMENT OF WAGES
1996. On expiry of the term of appointment of
10.14 The contractor is required to pay wages
the Chairman, he has been reappointed on 16th
and a duty is cast on him to ensure
November 1999 for a period of three years.
disbursement of wages in the presence of the
The term of non-official members of the Board
authorised representative of the Principal
was three years but they will continue to hold
CONTRACT LABOUR IN INDIA 87
Employer. In case of failure on the part of the 10.18 The Central Government on the
contractor to pay wages either in part or in recommendations of the Central Advisory
full, the Principal Employer is liable to pay the Contract Labour Board, have prohibited
same. The contract labour who performs same employment of contract labour in various
or similar kind of work as regular workmen, operations/ category of jobs in various
will be entitled to the same wages and service establishments. So far 48 notifications have
conditions as regular workmen as per the been issued since inception of the Act.
Contract Labour (Regulation and Abolition)
Central Rules, 1971.
10.19 The ‘appropriate government’ is
empowered to grant exemption to any
10.15For contravention of the provisions of establishment or class of establishments or
the Act or any rules made thereunder, the any class of contractors from applicability of
punishment is imprisonment for a maximum the provisions of the Act or the rules made
term upto 3 months and a fine upto a maximum thereunder on such conditions and
of Rs.1000/-. restrictions as may be prescribed. Nine
notifications granting exemption to
OTHER PROVISIONS establishments in exercise of this power in the
Central sphere have been issued.
10.16The Act makes provision for the
appointment of Inspecting staff, for
maintenance of registers and records and for
making Rules for carrying out the purpose of 10.20 In the Central sphere, the Central
the Act. In the central sphere, officers of the Industrial Relations Machinery (CIRM) have
CIRM have been appointed as Inspectors. been entrusted with the responsibility of
enforcing the provisions of the Act and the
PROHIBITION rules made thereunder, through Inspectors,
Licensing Officers, Registering Officers and
10.17Apart from the regulatory measures
Appellate Authorities appointed under the
provided under the Act for the benefit of the
contract labour, the ‘appropriate government’
under section 10(1) of the Act is authorised, 10.21 Regular inspections are being
after consultation with the Central Board or conducted by the Field Officers of the CIRM
State Board, as the case may be, to prohibit, and prosecutions are launched against the
by notification in the official gazette, establishments, whenever violations of the
employment of contract labour in any Act/Rules/notifications prohibiting
establishment in any process, operation or employment of contract labour are detected.
other work. From time to time, instructions/directions have
been issued to the field officers of CIRM and
Sub-section (2) of Section 10 lays down
State Government for proper implementation
sufficient guidelines for deciding upon the
of the Act.
abolition of contract labour in any process,
operation or other work in any establishment. 10.23 A statement indicating the number of
The guidelines are mandatory in nature and inspections carried out, prosecutions
are:-Conditions of work and benefits provided launched, licences issued, establishments
to the contract labour. registered, etc. under the Act in the Central
Sphere by the Industrial Relations Machinery
• Whether the work is of Perennial nature.
is at Table-10.2.
• Whether the work is incidental or
10.24 A number of representations/petitions
necessary for the work of an
have been received by the Deputy Chief Labour
Commissioner (Central) under Rule
• Whether the work is sufficient to employ 25(2)(V)(a)&(b) from the contract worker or their
a considerable number of whole-time unions claiming that the contract workers are
workmen. performing the same or similar work as
performed by the workmen employed by the
• Whether the work is being done
principal employer. Out of 83 cases received till
ordinarily through regular workman in
2000 orders have been passed in 33 cases and
that establishment or a similar
50 cases are under investigation. Table-10.3.
88 CONTRACT LABOUR IN INDIA
10.25 The Labour Bureau of the Ministry absorption of the contract labour working in
launched a survey on contract labour and the the concerned establishment. The judgement
implementation of the Act in respect of Cement in Air India’s case was over-ruled
Industry including related mines, FCI Depots prospectively.
and N.T.P.C. Units in March, 2000. The report
STREAMLINING CONTRACT LABOUR
was brought out in July, 2001 and by and large
compliance with the provisions of the Act has
been found. 10.30 In the wake of economic liberalisation
as well as the judgements of the courts,
IMPORTANT JUDGEMENTS OF THE
proposals have been received from social
partners to bring about amendments in the
10.26 Three judgements delivered by the Contract Labour Act.
Supreme Court in the cases of Gujarat State
Views of Employers’ Associations
Electricity Board Vs Union of India, Air India
Statutory Corporation Ltd. & Ors Vs United • Since 1970 when the Contract Labour
Labour Union & Others, and Steel Authority (Regulation and Abolition) Act was
of India Ltd. & Others Vs National Union of enacted the economy has undergone a
Waterfront Workers and others on 09.05.1995, sea-change, from an era of
06.12.1996 and 30.08.2001 respectively, are protectionism to liberalisation, from
landmark judgements. restricted domestic competition to
10.27 In Gujarat State Electricity Board case,
inter-alia, the Supreme Court recommended • The system of contract labour offers
that the Central Government should amend tremendous opportunities for
the Act by incorporating a suitable provision employment and allows the employers
to refer to industrial adjudicator the question flexibility to choose what is best for
of the direct employment of the workers of the them. This helps improve productivity
ex-contractor in the principal establishments, and service competitiveness.
when the appropriate Government abolishes
• The Act should be made applicable only
the contract labour.
to the main and core activities of the
10.28 In Air India Statutory Corporation case, establishment in so far as abolition of
the Supreme Court held that though there contract labour system is concerned.
exists no express provision in the Act for
• Supportive or allied activities of an
absorption of employees in establishments
establishment like maintenance, house
where contract labour system is abolished by
keeping should be out sourced and the
publication of the notification under section
Act should only provide for regulating
10 (1) of the Act, the principal Employer is
the working conditions and wages.
under statutory obligation to absorb the
contract labour. The linkage between the • The Principal Employer should,
contractor and employee stood snapped and however, have to ensure payment of
direct relationship stood restored between wages to contract labour as laid down
principal employer and contract labour as its under the law in force as also other basic
employees. amenities and social security benefits.
10.29 The Supreme Court in the case of Steel • Work requiring specialised skills
Authority of India Ltd. Vs National Union of unavailable within the establishment.
Waterfront Workers & Others and others have
• If the contract labour system, which is
held that neither Section 10 of the Act nor any
cost effective, is not allowed to continue,
other provision in the Act whether expressly
industries may go in for technological
or by necessary implication provides for
restructuring with less number of
automatic absorption of contract labour on
workers leading to reduction in
issuing a Notification by the appropriate
Government under sub section (1) of Section
10 prohibiting employment of contract labour Views of the Trade Unions
in any process or operation or other work in
• The Trade Unions are totally opposed to the
any establishment. Consequently the
idea of contracting of services and in jobs
Principal Employer cannot be required to order
CONTRACT LABOUR IN INDIA 89
which are perennial in nature for following Out sourcing will only lead to a type of
reasons:- employment founded on discrimination and
• exploitation of contract labour in regard to
Reduction of regular employment;
wages paid, working conditions, etc.
• The contract labour generally belong to
weaker sections of the society and will be
• The Second National Labour Commission has
deprived of the benefits that accrue to regular
been entrusted with the task of rationalisation
of labour laws and hence its report should be
• Efficiency will decrease as establishment will
be deprived of experienced staff.
• 10.31 The Government, at the moment, has
Coordination of activities of large number of
undertaken a thorough review of the Act,
contractors/sub-contractors will prove to be
more time consuming and costly than in house keeping in view the aforesaid views of the
activity. employers’ association and that of the trade
• unions. The changes to be made in the law are
What is required is not privatisation but in
still being worked out.
house improvements and restructuring.
90 CONTRACT LABOUR IN INDIA
NOTIFICATIONS ISSUED UNDER SECTION-10 OF THE CONTRACT LABOUR (REGULATION AND
ABOLITION) ACT, 1970 (DURING THE YEAR 2001-2002 w.e.f. 01.03.2001)
Sl. Notification No. & Date Establishment/ Industry in Works/ Jobs prohibited
No. respect of whom notification is
1. 1. No. S-16014/330/99-LW dated Hindustan Petroleum Stacking of cylinders, removing of
1St March, 2001. No.S.O. 189 (E) Corporation, Liquefied excess or under filled cylinders,
Petroleum Gas Plant, White transfer of defective cylinders and any
Field Road, Mahadevpura Post, other related work in cylinder handling
Bangalore-560022. in the process of bottling of liquefied
44. U-23013/11/2000-LW dated Hospitals of the Employees’ Electrical maintenance jobs of Wiremen,
State Insurance Corporation at Khalasi, Air Condition Operator and
Kandivali, Merol, Thane and Pump Operator.
Ulahasnagar in the State of
45. U23013/5/2000-LW dated Airport Authority of India, Air Computer operations.
4.7.2001 Cargo Complex (Export and
Import) at International Airport
Division at International
Airports, Calcutta and Chennai
4. 46. U-23013/8/99-LW dated Paradip Port Trust, Paradip Muck cleaning; and spillage removal .
5. 47. U-23013/25/99-LW dated Godowns and depots of the Handling of foodgrains, including their
12.11.2001 Food Corporation of India loading/unloading from any means of
(1) West Hill, Calicut, Kerala. transport, storing and stacking of the
(2) Mavelikkara, Kerala same in the godown
(3) Chalakudy, Kerala
6. No. S-16014/254/99-LW dated Sree Chitra Thirunal Institute for Operation of air condition plant and
12.11.01 Medical Sciences and allied installations namely air handling
Technology, units, compressors, pipelines,
Thiruvananthapuram. connected electrical accessories,
cooling towers, pumps, package units,
solar units, chillers.
CONTRACT LABOUR IN INDIA 91
ENFORCEMENT OF CONTRACT LABOUR ( R & A) Act, 1970
ENFORCEMENT OF CONTRACT LABOUR (REGULATION & ABOTION) ACT, 1970
Sl. Item Year
1996 1997 1998 1999 2000
1. No. of Registration Certificates issued to
principal employers. 375 425 639 670 658
2. No. of Licences issued to contractors*. 3613 4660 5471 6632 7734
3. No. of Inspections conducted. 4653 3956 4263 5281 5479
4. No. of Irregularities detected. 72541 70709 65509 85936 83414
5. No. of prosecutions launched. 3705 3330 3147 3805 3857
6. No. of convictions. 2770 2240 2060 2019 2126
7. No. of contract labourers covered by
licences@. 489776 588678 664216 762425 773849
8. No. of Licences revoked/ cancelled. 757 1371 1669 1099 3562
9. No. of registration certificates revoked. 23 Nil Nil Nil 2
* Total no. of licensed contractors at the end of the year 2000: 24208.
@ Total no. of contract labourers covered by the license issued to the contractors a the end of year 2000:
No. of cases received/disposed of during the last five years under Rule 25(2) (v) (a) and (b) of the Contract
Labour (Regulation and Abolition) Central Rules, 1971 relating to payment of wages.
Year No. of cases received during the last four years Order issued
under Rule 25(2) (v) (a) and (b)
1996 04 01
1997 06 04
1998 15 03
1999 35 05
2000 23 20
** Rule 25 (2) (v) (a) of the Contract Labour (Regulation and Abolition) Central Rules, 1971 has been
amended vide notification No. GSR 41(E) dated 21st January, 1999 delegating powers to the Deputy
Labour Commissioners (Central) instead of the Chief Labour Commissioner (Central).