Contract

1. Contract Labour Act 1970

2. Index
 Introduction
 Definitions
 Applicability of the Act
 Registration and Licensing
 Obligations of the Principal Employer
 Obligations of the Contractor
 Various Forms

3. Introduction to the Contract Labour Act
1970
• The Contract Labour Act 1970 is a legislation enacted by the Indian government to
regulate the employment of contract labour in certain establishments and to provide for
their welfare.
• The Act applies to establishments where 20 or more contract workers are employed,
and the principal employer is required to register under the Act.
• The Act aims to prevent the exploitation of contract workers by ensuring that they
receive basic amenities, wages, and social security benefits, and by making the
contractor and principal employer jointly responsible for ensuring compliance with the
provisions of the Act.
• The Act has undergone several amendments over the years to enhance its
effectiveness and to keep up with changing socio-economic conditions.
• This presentation will provide an overview of the Contract Labour Act 1970, its
applicability, registration and licensing requirements, obligations of the principal
employer and contractor, and important case laws. We hope that this presentation will
help you understand the key provisions of the Act and its significance in ensuring the
welfare of contract workers.

4. Definitions
• The Contract Labour Act 1970 defines various terms that are important for understanding the
provisions of the Act. Some of the key definitions are:
• "Appropriate Government" refers to the central or state government, depending on the
establishment's location.
• "Contractor" means a person who undertakes to produce a given result for the principal employer,
and who supplies contract labour for the same.
• "Contract Labour" means a workman who is hired in or in connection with the work of an
establishment by a contractor, with or without the knowledge of the principal employer, for any work of
the establishment.
• "Establishment" means any office or department of the government, a local authority, a corporation
or a company, or any other establishment to which the Act applies.
• "Principal Employer" means the person who has ultimate control over the establishment and who
engages the services of a contractor for any work of the establishment.
• "Wages" include all remuneration paid or payable to a contract worker, including basic pay, dearness
allowance, and other allowances, but exclude bonus and gratuity.
• Understanding these definitions is crucial for determining the applicability of the Act and the rights
and obligations of the principal employer, contractor, and contract workers.

5. Applicability of the Act
• The Contract Labour Act 1970 applies to all establishments where 20 or more contract workers are
employed or were employed on any day of the preceding 12 months. The Act also applies to
contractors who engage 20 or more contract workers.
• The Act is applicable to various industries, including manufacturing, construction, transport, and
mining, among others.
• The Act does not apply to establishments where work is of an intermittent or casual nature, or
where the work is of a seasonal character and is performed only for a limited period in a year.
• The Act provides certain exemptions for establishments that are operated by the central or state
government, or establishments that are covered under other labor laws, such as the Factories Act
1948.
• The Act also provides for a threshold limit, which means that the Act does not apply to
establishments that employ less than the specified number of contract workers. The threshold limit
may vary depending on the industry and the state where the establishment is located.
• It is essential for the principal employer and contractor to determine whether the Act applies to their
establishment and to comply with its provisions to avoid penalties and legal liabilities.

6. Registration and Licensing
• The principal employer of an establishment covered under the Contract Labour Act 1970 is required to
obtain a certificate of registration from the appropriate government within 30 days from the date of the Act's
applicability.
• The certificate of registration is valid for one year and needs to be renewed annually. The principal
employer needs to apply for renewal at least 60 days before the expiry of the certificate.
• The contractor who supplies contract labour to the establishment is required to obtain a license from the
appropriate government before commencing work.
• The license is valid for the period specified in the license, which should not exceed the period of the
contract between the contractor and the principal employer.
• The appropriate government may grant or refuse to grant a license based on the contractor's compliance
with various requirements, such as the provision of basic amenities, wages, and social security benefits to
contract workers.
• The contractor is also required to maintain registers and records related to the employment of contract
workers, such as the muster roll, wage register, and register of fines.
• Failure to obtain registration or license or non-compliance with the Act's provisions can attract penalties
and legal liabilities. It is essential for the principal employer and contractor to ensure timely registration and
licensing and to maintain proper records to comply with the Act's requirements.

7. Obligations of the Principal Employer
1. Registration: As mentioned earlier, the principal employer is required to obtain a certificate of registration
from the appropriate government and renew it annually.
2. Providing Basic Amenities: The principal employer is responsible for providing basic amenities such as
drinking water, canteen, restrooms, and first aid facilities to the contract workers.
3. Ensuring Payment of Wages: The principal employer is required to ensure that the contractor pays
wages to the contract workers as per the minimum wages fixed by the appropriate government.
4. Ensuring Social Security Benefits: The principal employer is responsible for ensuring that the contractor
contributes to the welfare funds, such as the Employees' Provident Fund and Employees' State Insurance,
for the benefit of contract workers.
5. Safety and Health: The principal employer is required to ensure that the contractor provides a safe and
healthy working environment to contract workers and complies with the safety and health provisions under
the Act.
6. Joint Liability: The principal employer and contractor are jointly liable for ensuring compliance with the
Act's provisions and the payment of wages, welfare measures, and social security benefits to contract
workers.
• The principal employer needs to exercise due diligence in engaging contractors and ensuring their
compliance with the Act's provisions. Any failure to comply with the Act can result in penalties and legal
liabilities.

8. Obligations of the Contractor
1. Obtaining License: The contractor is required to obtain a license from the appropriate government
before supplying contract labour to the establishment.
2. Providing Basic Amenities: The contractor is responsible for providing basic amenities such as
drinking water, canteen, restrooms, and first aid facilities to the contract workers.
3. Payment of Wages: The contractor is required to pay wages to the contract workers as per the
minimum wages fixed by the appropriate government.
4. Ensuring Social Security Benefits: The contractor is responsible for contributing to the welfare
funds, such as the Employees' Provident Fund and Employees' State Insurance, for the benefit of
contract workers.
5. Safety and Health: The contractor is required to provide a safe and healthy working environment
to contract workers and comply with the safety and health provisions under the Act.
6. Maintaining Records: The contractor is required to maintain registers and records related to the
employment of contract workers, such as the muster roll, wage register, and register of fines.
• The contractor needs to comply with the Act's provisions and ensure the welfare of contract
workers. Any failure to comply with the Act can result in penalties and legal liabilities.

9. Form – 1 Application for Registration
 This form is used for the application of a license to engage contract labour. Following information is
required when filling out this form:
1. Name and address of the establishment
2. Type of industry and nature of work
3. Details of the principal employer, including their name and address
4. Total number of workers employed, both regular and contract
5. Nature and duration of the work to be performed by contract labour
6. Details of the contractor, including their name and address
7. Details of the workmen to be engaged as contract labour, including their names, addresses, and other
particulars
8. Details of the supervisory staff employed to oversee the contract labour
9. The period for which the license is required
10. A declaration by the principal employer that the contract labour will be provided with all statutory benefits and
protections as required under the Act.