Course mtl. mr. vittala rao

NIPM – Kerala Chapter.
Legal Update – 2015.
An interactive session
On
Recent Amendments to Labour Legislations
And
Recent Trend setting judicial pronouncement in regard to Management of
Contract Labour.
Designed, Prepared & conducted
By
K.Vittala Rao.
Management Consultant,Bangalore.
23rd
May, 2015.
Email: vittalarao@gmail.com

Recent Amendments to Labour
Legislations.
Legislations covered:
1.Apprentices Act.
2.Employees Provident Fund & Miscellaneous Acts
3.Factories Act.
4.Small Factories Act.
5.Industrial Disputes Act.
6.Payment of Bonus Act.
7.The Labour Laws (Exemption from furnishing Returns and Maintaining
Registers by certain Establishments)
Amendment Act,2014.
8.Rajasthan Model.
9.Wage Code Bill, 2015
10.Industrial Relations Bill 2015

Session I
Recent Amendments to Labour
Legislations.

Apprentices (Amendment)Act,2014
Brought into force from 22nd
December, 2014.

Apprentices
(Amendment)Act,2014
To simplify workflow for establishments while engaging apprentices
Sec.2 (1)(d) has been amended.
An employer in the private sector having pan-India operations has to go to each
State/UT for work relating to engagement of apprentices which they feel that such
process is cumbersome. Such employers prefer to go to respective Regional
Directorate of Apprenticeship Training (RDAT) under DGE&T for engagement of
apprentices.
The amendment is aimed at implementation of Apprenticeship Training Scheme
in those organizations which are operating business /trade in more than four States,
will rest with the Central Government.

Apprentices
(Amendment)Act,2014
Change in the definition of “Worker”
Of late majority of employers hire contractual workers in their premises instead of
employing regular workers thereby resulting in reduction in number apprentices to be
engaged and causing training facilities going unutilized. Under the Act, contractual
workers are not counted while locating the apprenticeship seats in the establishment.
Accordingly, new definition of worker in clause “(r)” of section 2 of the Act is substituted
Expanding the scope of Apprenticeship
The scope of the apprenticeship training is enhanced in order to bring the internship/on-
the-job training of other courses, all graduates in various fields such as B.A, B.Com., B.Sc.,
etc. may be brought under Act to enhance their skills and employability’
This is brought under the category “non-engineering”.
Accordingly, Section 2(j)(K) & Section 6 is amended

Apprentices
(Amendment)Act,2014
Government regulation on additional new trades: Optional Trades
At present, the Employers can not start training in the trade/occupation
under the Act in spite of having immediate potential of employment unless
the government notified such trade/occupation in the Official Gazette.
Now, Companies may be allowed to starts new trade without waiting for
notifying such trades in the official gazette of India. But it may be obligatory
for the establishment to disclose the duration and syllabi of the Optional
Trades on the web-portal to check the quality of training
Accordingly, section 2 & section 37 are amended. Further new section would
be added to regulate optional trades..

Apprentices
(Amendment)Act,2014
Trade-wise and Unit-wise regulation and deployment of apprentices in the
service & informal sector.
Employers’ associations exhorted that present system of location of seats restrict
their freedom in engaging the apprentices as per their requirement and they have to
engage apprentices where they don’t need.
To encourage employers to engage more number of persons as apprentices, these
are more liberalized provisions.
The Central government shall prescribe the number of apprentices to be engaged in
designated trade and optional trade.
Several employers may join together themselves or through an agency approved by
App Advisor according to the guidelines issued from time to time by the Central
Government, for the purpose of providing training to the apprentices.
Accordingly, Sec.2 (p),(q) & Sec.8 has been amended.

Apprentices
(Amendment)Act,2014
Age requirement : Sec 3.
1.Not less than 14 yrs in case of designated trades .
2.Not less than 18 yrs in case of designated trades in case of Hazardous
industries.
Qualification: Sec. 5 A:
The qualification, period, holding test, grant of certificate and other
conditions shall be as prescribed.
[Rules are yet to come]

Apprentices
(Amendment)Act,2014
Provision Existing Amendment.
Sec 2 (pp) Technician (vocational)
apprentice:……………………….as
may be prescribed.
Technician (vocational) apprentice:……………………….in any
designated trade.[Central Govt shall notify]
Sec 2 ( q) Trade apprentices:
…………………..as may be
prescribed
Trade apprentices: An apprentice who undergoes
apprenticeship in any designated trade.[Central Govt shall
notify]
The word “may be prescribed” has been substituted by “in any designated trade”.
“Designated trade has been defined as any trade or occupation or any subject field
In engineering or non engineering or technology or any vacational course, which
the Central Government shall notify.
The scope of engaging is much wider so that number of apprentices to be engaged
will , obviously, be more.

Apprentices
(Amendment)Act,2014
Provision Existing Amended
Sec 4 Registration of contracts.
(4) ……..shall be sent by
employer within such
period ……….for
registration.
Registration of contracts.
(4) : Replaced.
Every contract shall be on line submission on
the web portal and in turn the registration
will be accepted by the Apprenticeship
Advisor
Sec 5 A New provision: The qualification, period of
apprenticeship, holding of tests, grant of
certificate and other conditions relating to
the apprentices in optional trade shall such
as may be prescribed.
Sec 5 B New provision: The employer may engage
apprentices from other States for the
purpose of providing training.

Apprentices
(Amendment)Act,2014
Provision Existing Amendment
Sec 6 (aa) Period of apprenticeship training. [Of
those who have already passed the
trade tests etc]
Period of apprenticeship training.
(aa) substituted: In order to take care of optional
trade, it is added “ courses approved under any
scheme” and also “who have trade tests
conducted by any other agency”.
Sec 8 Number of apprentices for a designated
trade
Sec 8 is replaced by new Section.
Features: The Central government shall prescribe
the number of apprentices to be engaged in
designated trade and optional trade.
Several employers may join together
themselves or through an agency approved
by App Advisor according to the guidelines
issued from time to time by the Central
Government, for the purpose of providing
training to the apprentices.
To encourage employers to engage more number of persons as apprentices, these
are more liberalized provisions. The Training of apprentices, can, now, be taken
care of by an outsider.

Apprentices
(Amendment)Act,2014
Sec 9 This section pertains to imparting
practical training and related
instructions training either by the
employer or by deputing them to
the nearest Industrial Training
Institutes . It was stipulated that if
the strength was more than 500,
it was mandatory to impart such
related instruction classes by the
Employer under such conditions
as stipulated.
Replaced;
1.Practical Training shall be imparted by the Employer.
2.For related instruction training, basic training may be
given in any institute having adequate facilities.
This amendment further encourages the employers to engage persons and impart
apprenticeship training, not only in designated trades, but also optional trades. The
Training pertaining to basic training, related instructions etc can, now be entrusted
to an Institute having adequate facilities.

Apprentices
(Amendment)Act,2014
Sec 15 Hours of work, overtime, leave
and holidays: As prescribed by the
Apprenticeship Advisor.
1. The weekly holiday and daily hours of work shall be as
determined by the employer subject to the
compliance with the training duration, if prescribed.
2. Leave and holidays as are observed in the
establishment .
Sec 19 Records & returns. A web-site is to be developed. Till such time, the web-
portal is developed, the returns and information shall be
furnished, as prescribed on this behalf.
The Employer shall also give trade-wise requirements and
engagement of apprentices on the we-portal.
Sec 21 Holding of test and grant of
certificate and conclusion of
training.
At present, completely held by
the State/Central apprenticeship
Board.
The amendment:
1.Tests for determination of proficiency by any other
Agency authorized by the Central Government also.
2.The proficiency certificate may also be awarded by the
Agency, so authorized by the Central Government.

Apprentices
(Amendment)Act,2014
Sec 22 ( 1):
Every employer shall formulate its own policy for recruiting any
apprentice who has completed the period of apprenticeship in his
Establishment.
Prior to this amendment:
1.It is not obligatory on the part of the Employer to provide any permanent
employment to an apprentice after completion of the Training and not it is obligatory to
accept any such employment. Sec 22 ( 1)
2.However, notwithstanding the above, if there is an agreed clause incorporated in the
Contract, then, the Employer shall offer the employment . Sec 22 ( 2 )
The Supreme Court in the case of Narendrakumar Vs State of Punjab, 1985, upheld this
provision. “The object of this provision is to guarantee to the extent of the existence of
the vacancies, that the apprentices will not be rendered jobless after they complete the
Training”.
The reasons for the amendment of Sec 22 ( 1 ) is in this background.

Apprentices
(Amendment)Act,2014
Penal provisions amended:
1.Any employer who contravenes the provisions of this Act including not
engaging the required number of apprentices , then he shall be given one
month’s notice for explaining the reasons for such contravention.
2.If the Employer fails to offer satisfactory explanation or fails to offer any
explanation, then, after being heard, he shall be punishable with fine of Rs.
500 per month for each short fall of apprentices for the first 3 months and
thereafter Rs 1000 per month till such number of seats are filled up.
3.If the employer engages as an apprentice who is not qualified or fails to
carryout the terms & conditions of a contract of apprenticeship, he shall be
punishable with a fine of one thousand rupees or imprisonment of six months
or both.

Employees Provident Funds and Miscellaneous
Provisions Act, 1952
Amendment 2014.
Came into force from 1st
September,2014.

Prior to amendment After amendment
Salary limit : Rs. 6500 PM Salary limit : Rs.15000 PM
In case the salary exceeds Rs.6500, the
contributions could be limited to Rs.6500
In case the salary exceeds Rs.15000
contributions can be limited to Rs. 15000.
In case, if both employer & employee agree to
contribute on actual salary exceeding Rs.6500,
the contributions be 12 % accordingly.
In case, if both employer & employee agree to
contribute on actual salary exceeding
Rs.15,000, the contributions be 12 %
accordingly.
Diversion of employer’s contribution to
pension Fund was 8.33% of the employer’s
contribution subject to a limit of Rs.6500.
Hence, EPS contribution : Rs.541 [ Max]
Diversion of employer’s contribution to
pension Fund was 8.33% of the employer’s
contribution subject to a limit of Rs.15000
Hence, EPS contribution : Rs 1250.[Max]
Contribution by Central Government : 1.16 %
limited to Rs.6500
Contribution by Central Government : 1.16 %
limited to Rs.15000

Prior to amendment After Amendment
Employer: In addition to 12 %
contribution.
Pay 0.5 % on Rs.6500 towards EDLI
Pay 1.1 % on total salary [ PF salary] of all
the employees.
Pay 0.01 % as administrative expenses on
Rs. 6,500
Employer: In addition to 12 %
contribution.
Pay 0.5 % on Rs.15000 towards EDLI
Pay 0.85 % on Rs 15000 on total [PF
salary] of all the employees.
Pay 0.01 % as administrative expenses on
Rs. 15,000.

Pensionable salary
Prior to amendment After the amendment
Pensionable salary:
Average of monthly pay drawn by him
in the span of 12 months preceding
the date of his exit.
[However subject to a max. of
Rs 6500]
Pensionable salary:
Average of monthly pay drawn by him
in the span of 60 months preceding
the date of his exit.
[However subject to a max. of Rs
15000.].
For service prior to Sept. 2014, the
maximum limit Rs.6500.
For service beyond Sept.2014, the
maximum limit Rs.15000.

Calculation of pension.
Pensionable salary multiplied by pensionable
service divided by 70.
[Maximum pensionable salary limited to Rs. 6500]
Pensionable salary multiplied by pensionable
service divided by 70.
Maximum pensionable salary limited to Rs.6500
for the service prior to Sept. 14. AND
Maximum pensionable salary limited to Rs.15000
for the service after Sept,14.
The pension so arrived at adding the sum in both
the calculations, shall be subject to a minimum
guaranteed amount of Rs.1000 per month.
Hence, arising out of this amendment, the pension will be calculated on two
Calculations & the total, thus, arrived shall be the pension, subject to a
Minimum of Rs. 1000 per month.

Calculation of pension.
Calculation of pensionable salary:
In case where there are periods of non
contributions during the preceding 12
months, then the actual salary drawn
by him shall be divided by the actual
number of days worked by him to
arrive @ daily rate and multiplied by 30
to workout average monthly pay.
Calculation of pensionable salary:
In case where there are periods of non
contributions during the preceding 60
months, then the actual salary drawn
by him shall be divided by the actual
number of days worked by him to
arrive @ daily rate and multiplied by 30
to workout average monthly pay.

Limit on payment of pension.
The maximum pensionable salary shall
be limited to Rs.6500, however, if
employer or employee agree to
contribute 8.33% on pay higher than Rs.
6500, and the contributions of 8.33 %
on such higher pay & paid to Pension,
the pensionable salary shall be based on
such higher pay. And accordingly,
pension is arrived.
The maximum pensionable salary shall
be limited to Rs.15000.

Limit on contribution to pension.
New insertion Paragraph 11 sub para ( 4 )
If the existing members who are contributing at the option of both the employer
and employee, a higher contribution than the limit of Rs.6500, towards pension
scheme, can, now exercise their option to continue to contribute beyond 15,000
subject to the following:
1.Payment of additional contribution by the employee @ 1.16 % on such higher
amount. [It means, the Government shall not pay their contribution beyond
Rs. 15000].
2.A fresh option be exercised within a period of 6 months from 1st
Sept,2014.
3.If no option is exercised, it will be presumed that the member has not opted and
the additional contribution, so paid by him, shall be transferred to his PF account.

Withdrawal benefit:
If a member has not rendered the eligible
service required prescribed in paragraph on the
date of his exit [10 yrs of contribution] or on
attaining 58 yrs, he shall be entitled to
withdrawal benefit as laid down in Table “D” or
may opt for the scheme certificate.
There is no change in this provision.

Benefits to members; Pension Scheme.
Pension on exit / retirement
[58 yrs] as calculated.
Pension on exit / retirement
[58 yrs] as calculated. Min. pension: Rs1000
Widow pension: As per the table C,
depending the salary at the time of death.
[ Min: Rs.425, Max: Rs. 2051]
Widow pension: As per the table C, depending the salary
at the time of death.[ Min: Rs.1000, Max: Rs. 2051]
Monthly children pension 25 % of the
widow pension subject to a minimum of
Rs.150 per child, limiting to 2 children
Monthly children pension 25 % of the widow pension
subject to a minimum of Rs.250 per child, limiting to 2
children
Orphan pension: 75 % of the widow
pension, subject to a minimum of Rs.250
PM.
Orphan pension: 75 % of the widow pension, subject to a
minimum of Rs.750 PM.

Return of capital:
1.Pension is payable for 20 years starting at the age of 58 years.
2.The member has an option to commute the pension to 1/3 of the amount.
He will get the commuted amount: 1/3 X 100 times= The commutation
amount.
3.The pension will be balance 2/3 per month for next 20 years.
4.After 20 years, the withdrawal benefit will be the pension so paid every
month multiplied by 100.
5.If the employee do not opt for commutation, then he will receive full
pension for 20 years and thereafter, the withdrawal amount equivalent to
pension amount multiplied by 100.

Ex: 1 Pension so calculated is Rs 4500.
In case he opts for commutation: 1/3 of Rs.4500 will be the commuted amount. This
will be Rs.1500.
Commuted amount payable to him on superannuation: 1500 X 100 = Rs.1,50,000
Pension per month will be Rs. 3000 per month.
Withdrawal benefit after 20 years of pension:
Rs. 3000 X 100 = Rs.3,00,000.
Ex: 2 Pension so calculated is Rs 4500.
He does not opt for commutation:
His monthly pension will be Rs. 4500 PM for 20 years.
Withdrawal benefit after 20 years: Rs.4500 X 100 = Rs.4,50,000.
Example:

EDLI:
Prior to amendment After amendment.
Benefit to the family:
The average monthly salary,
subject to a maximum of Rs.6,500
during previous 12 months
multiplied by 20 times
Benefit to the family:
The average monthly salary, subject to a
maximum of Rs.15,000 during previous 12
months multiplied by 20 times
The benefit under the scheme shall further be
increased by 20 % in addition to the benefits
payable.
This additional benefit has prospective effect. Members who have died prior
To 1st
September, 2014, shall be governed as per the pre-amendment calculation.

Provisions relating to International workers:
1.A new International worker who is not an existing
Member of the Scheme, will only become Member of
PF & not Pension Scheme.
2.For an international worker who is an existing
member of the Pension Scheme as on 1.9.2014, out of
Employer’s contribution, 8.33 % of salary is still
required to be paid.

Amendments on the way.
1.Number of employees for coverage under the
Act will be 10 as against 20.
2.HRA is likely to be deleted in the exclusion
definition. It means, HRA will also attract PF
contributions.
3.There appears to redefine the definition of
“Salary”.

Factories Act.
Amendment- 2014.

Factories Act. Amendment- 2014.
The Amendment aims to ensure adequate safety
measures and promote the health and welfare of the
workers employed in Factories.
The statement of Objects and Reasons states that the
amendments are based on the changes in the
manufacturing practices and technologies, ratification
of ILO conventions, judicial decisions,
recommendations of various committees and decision
taken in the conference of Chief Inspector of Factories.

Factories Act. Amendment- 2014.
Salient features:
1.Definitions of Factory, hazardous process, manufacturing process. It also
adds hazardous substance and disability.
2.Ensure safety.
3.Workers’ safety.
4.Facilities for workers.
5.Overtime and paid leave.
6.Employment of women and persons with disability
7.Power to make Rules
8.Compounding of offences
9.Penalties.

Factories Act. Amendment- 2014
Existing provision Amendment
Hazardous process.
As per the First schedule of the Act
Redefined to include usage of “hazardous substance”
in any process. Hence, the First schedule is deleted.
Insertion: “ Hazardous substance “ shall have the
same as defined under Environment Protection Act.
Insertion: ‘Disability” shall have the same meaning
under “Persons With Disabilities ( Equal
Opportunities, Protection of Rights and Full
Participation) Act,1995.
On account of changed process and usage of various chemicals, hazardous substances
and processes, the listed activities in First Schedule do not match which the definition
and controls stipulated under Environment Protection Act, it has been aligned with
the same. “Disability” has been defined to identify persons affected due to process
to ensure safety and social security for them.

Definition of “Hazardous Substance”:
The Environment ( Protection) Act.
“Means any substance or preparation which, by reason of its chemical or physio-
chemical properties or handling, is liable to cause harm to human beings, other
living creatures, plants, micro-organism, property or the environment.
Definition of “ Disability”
Persons with Disabilities etc Act, 1995.
“ Disability “ means:
1.Blindness.
2.Low vision.
3.Leprosy-cured.
4.Hearing impairment.
5.Locomotors disability
6.Mental retardation
7.Mental illness.
“Person with disability means a person suffering from not less than forty percent
of any disability as certified by a medical authority.

Existing provision Amendment
Factory has been defined as:
10 or more with power.
20 or more without power.
Factory has been defined as:
20 or more with power.
40 or more without power.
The State Government can fix any number
not exceeding the above limit.
Extension of the Factory:
A certificate from a competent person
need to be taken even in cases of
replacement of plant & machinery or in
addition, to ensure the safety ,
environment, cause accident, dangerous
occurrences to public etc.
Horse power Power is “ Kilowatts”.

1. General duties & responsibilities of manufacturers regarding usage, manufacturers is extended to
include in erection & commissioning installation to ensure health, safety, hazards , lilely to cause any
injuries-physical or otherwise in particular usage of hazardous substance is elaborately dealt.
2. Sec 13 of the Act regarding ventilation and temperature, & lighting the State Government shall frame
standards.
3. Drinking water/cool water availability irrespective of the size of the Factory.
4. “Week” can be defined by the Chief Inspector of Factories even in respect of a Factory.
5 “Manufacturing Process” to include processing of printing etc
6. Tight fitting cloth to be supplied by the Factory for adult male & female workers who works on machine in
motion or near.
7 Restriction on engaging young persons on dangerous operations.
8. The manufactures, suppliers of articles including machinery ,responsible for manufacturing/ supplying
safe machinery to be used in Factory.
Amendments at a glance:

9. Prohibition of engaging women , pregnant, persons with disability & young on or near cotton openers.
10. Permission to engage women workers during night shifts subject to such safety conditions as may be
imposed. Consultations with workers, unions is essential. No engagement of women before 6 weeks before
delivery and 6 weeks thereafter.
11. Further restrictions in regard to hoist, lift, lifting machinery, pressure vessels,
pressure plant.
12 Protection to eyes in areas of dusts, fume, dangerous gases , excessive lights etc.
13. State Governments to make rules in regard to personal safety equipment, designs, specifications, etc.
12. Additional safety precautions in respect of explosive, inflammable dust, gas, electrical equipment,
apparatus, & fittings etc. in line with the National Electrical Code and shall conform to the National
Standards or International Standards. To be approved by Directorate of Occupational Safety & health.
13. State Government to make rules regarding fire-safety
14 Regarding appointment of Safety Officers, the State Government is empowered to make rules regarding
the number of Safety officers considering the nature of industry & process involved.
15. On-site emergency plan, disaster management plans – approval, display, information to workers & the
public in general. In consultations with the workers.
16. Specific responsibilities on occupier in regard to “hazardous process’, “hazardous substance” – handling,
health checkups, health records, maintaining documents etc

17. Threshold limits of exposure of chemical and toxic substances . Schedule
18. Canteen to be provided in case there are 200 or more workers as against 250.
19. Further safety precautions to be taken to entry inside a tank, vessel, underground tank etc, for cleaning or
repair or to carryout any work- before they enter inside.
20. Spread over may be extended upto 12 hrs with permission.
21.”Such allowances” excludes HRA, transport and small family allowance.
22. Overtime hours enhanced to 100 hrs as against 50.[ Deemed exemptions]
23 Overtime hours in a quarter enhanced to 150 hr a quarter as against 75 [ Specific order of exemption]
24. Annual leave eligibility reduced to 90 days instead of 240 days.
25. Enhancement of penalty to 3 lakhs & imprisonment upto 3 years for any contraventions.
26. Penalties to other than Occupier, namely, suppliers, etc, who are responsible for hazardous and dangerous
occurrences.
27. Compounding of certain offences. The listed offences may be compounded by the Inspectorate before
launching any prosecutions against the Occupier/Manager.

28. The owner of a premises in which there are 2 or more factories are located, it is
the responsibility of such owner to provide all suitable protections of fire safety,
stair cases, etc. For the purpose of this Act, all the workers working in such premises
shall be considered as single unit for enforcement of safety regulations under this
Act.
29. For repeated offences, fines will go up to six lakh rupees and imprisonment up to
one year.
30. Penalty for offences by workers enhanced to Rs.3000.
31. Wherever “ women or young person” appears in the Act, it is replaced by the
words “women or young persons or a person or woman with disability”.

The Small Factories (Regulation of employment
& conditions of services) Bill 2014.
In view of the amendment of the Factories Act,2014,
wherein the “Factory” is being defined as 20 & 40 in
case of power & no power respectively, such excluded
factories are to be covered under legislation.
Hence, this proposed Bill.
Once, this Bill is enacted, then, those excluded under
the Factories Act, shall get covered under this new Bill.

The Bill is a very comprehensive inclusive of certain
basic elements of Factories Act, Payment of wages Act,
Minimum Wages Act, Maternity Benefit Act, Payment
of Bonus Act, Social security, unfair labour practices,
powers of labour courts, returns to be filed, joint
responsibilities of Directorate of Factories and Labour
Commissioner etc.
This Bill is a combination of all the above Acts.

The Small Factories (Regulation of
employment & conditions of services) Bill
2014.

“ Small Factory” has been defined as: Premises where the manufacturing activities
take place with workers employing less than 40.
Definitions namely, Wages, Week, Day, Employer, are as defined under the
Factories Act.
“ Worker” has been defined as one who is employed directly whether full time or
part time or through a contractor. But do not include persons engaged in
Administrative/ supervisory/ managerial cadre.
If the Small Factory is engaging in “Hazardous Process”, then the provisions
related to such process under the Factories Act shall apply.
The Authorities under this Act are both the Labour Commissioner and the
Directorate of Factories.

The Small Factories (Regulation of employment &
conditions of services) Bill 2014.
It is the Registration of “Small Factory” not licensing .
The Chapters under the Bill covers:
1.Safety & Health Hazardous in non hazardous small factory.
2.Resolution of Disputes by Labour Courts & powers of the Labor Court.
3.Procedure in dealing with complaints of unfair labour practices.
4.Application of the provisions of the Industrial Disputes Act.
5.Retrenchment & termination.
6.Payment of Gratuity.
7.Health Insurance .
8.Provident Fund.
9.Maternity Benefit.
10.Leave benefits.[ 7 days CL & 7 days SL plus the Annual leave].
11.Other service conditions like, attendance, late coming, absents etc.
12.Shift working & rest intervals, Hours of work.
13.Payment of Overtime @ double the normal wages.
14.Appointment letters, welfare facilities like First Aid, crèche, toilets/urinals etc.
15.No discrimination of female employees in terms of salary, service conditions, promotions,
transfers, deputations etc.
16.Payment of Bonus, Payment of wages, Payment of Minimum wages

The Payment of Bonus (Amendment)
Rules 2014.
Rule 5:
1.Every employer shall on or before 1st
Feb,in each year,upload annual returns
in FORM D on the web-portal of the Ministry of Labour & Employment giving
information as to the particulars specified in respect of the preceding year,
provided that the annual returns shall be filed within the limit specified in Sec
19 of the Act.
2.Every employer shall on or before 1st Feb,in each year, upload annual
returns in FORM D to the Inspector. The Inspector shall require production of
accounts, books, register & other documents, if the same are maintained in
annual form or electronic form.
3.In the Principal Rules, for FORM D, the new FORM D shall be substituted.
This notification along with new FORM D has been gazette by Central
Government on November, 10, 2014.
The date of coming into force is expected.

The Labour Laws (Exemption from furnishing Returns and
Maintaining Registers by certain Establishments)
Amendment Act,2014.
This Act applies to small establishments who are employing 40 or less
persons.
The object of this Act is to exempt such establishments from furnishing
Returns and Maintaining Registers. This Act is enacted in the year 1988.
Now, few amendments are passed. The Amended Act is published by the
Central Government on 10.12.2014.
The Amendment Act has come into force from 1st
January, 2015.
[Notification of central gazette dated 31st
December, 2014.]

The Labour Laws (Exemption from furnishing Returns
and Maintaining Registers by certain Establishments)
Amendment Act,2014.
The amendment mainly aims at:
1.Submission of Annual Returns as prescribed.
2.The First Schedule list all the Labour Laws applicable.
3.The Second Schedule : Annual Returns in FORM I, FORM II-
Register, FORM III- Muster Roll-Cum-Wage Register.

Industrial Disputes Act, 1947.
Insertion of Sec.9C: Grievance Redressal Machinery.
This amendment has brought into effect in the year
2010.
1.Enhancing the wage limit to Rs.10,000 as against
Rs.1600 in the definition of “Workman”.
2.Sec. 9C – Grievance Redressal Machinery.

Industrial Disputes Act, 1947.
9C. (1) Every industrial establishment employing twenty or more workmen shall have one or more Grievance
Redressal Committee for the resolution of disputes arising out of individual grievances.
(2) The Grievance Redressal Committee shall consist of equal number of members from the employer and
the workmen.
(3) The chairperson of the Grievance Redressal Committee shall be selected from the employer and from
among the workmen alternatively on rotation basis every year.
(4) The total number of members of the Grievance Redressal Committee shall not exceed more than six:
Provided that there shall be, as far as practicable one woman member if the Grievance Redressal
Committee has two members and in case the number of members are more than two, the number of
women members may be increased proportionately.
(5) Notwithstanding anything contained in this section, the setting up of Grievance Redressal Committee
shall not affect the right of the workman to raise industrial dispute on the same matter under the
provisions of this Act.
(6) The Grievance Redressal Committee may complete its proceedings within thirty days on receipt of a
written application by or on behalf of the aggrieved party.
(7) The workman who is aggrieved of the decision of the Grievance Redressal Committee may prefer an
appeal to the employer against the decision of Grievance Redressal Committee and the employer shall,
within one month from the date of receipt of such appeal, dispose off the same and send a copy of his
decision to the workman concerned.

LABOUR CODE ON WAGES BILL, 2015
Labour Code on Wages Bill, 2015 has been drafted and circulated to all
interested & concerned to submit their remarks, objections, suggestions ,
if any.
The Bill aims at consolidation of the following legislations for
simplification of labour law compliances.
1.Payment of Wages Act.
2.Minimum Wages Act.
3.Equal Remuneration Act.
4.Payment of Bonus Act.

On plain reading of the Bill:
1.It is applicable to all establishments including factories etc.
2.Fixation of Minimum Wages is similar to the existing procedure.
3.As far as payment of wages is concerned, most of the existing provisions have
been incorporated. Payment of Wages to be paid before 7th
every month. The
salary limit has been taken away, which means, the Act is applicable to all
employees.
4.Equal Remuneration , no discrimination of employees have been addressed as
in the Equal Remuneration Act.
5.As far as Bonus is concerned, it looks all employees would be covered.
6.However, the Central Government shall decide the minimum salary limit for
payment of Bonus @ 8.33 %.
7.Higher percentage of Bonus shall be payable if the allocable surplus permits.
8.The Schedules for calculation of allocable surplus, set-on & set-off, the other
particulars to be taken into, to include in the Schedule have been mentioned; it is
same as existing one.
9.Maintaining Records, Registers and submission of Annual Returns.
10.The Central Government shall frame Rules & also the State Governments.

Study reveals the following issues to be taken up:
1.The provisions relating to payment of wages, the wage limit for coverage is
eliminated. At present it is Rs. 18,000 per month.
2.This means to say that all the employees irrespective of the cadre are covered
under the Act. The Supervisory/Managerial personnel also will be empowered to
file a compliant before the Authorities for any acts of the Employer. Even the
definition of “Employee” supports this view.
3.Definition of “wages” is the same as existing one.
4.As far as the provisions dealing with the payment of Bonus, the present wage
meaning Basic plus DA, is replaced by the wages which means the Bonus pay out
will be on the gross salary.
5.Again, the salary/wage limit either for eligibility or for the purposes of
calculating the Bonus is not mentioned. It goes on say that the Central
Government shall announce the minimum salary/wage limit for payment of
Bonus.

Labour Code On Industrial Relations
Bill, 2015
The newly drafted Bill has been published for
inviting objections / suggestions from all
concerned. The Bill replaces the following Acts.
1.Trade Unions Act.
2.Industrial Disputes Act.
3.Industrial Employment (Standing Orders) Act
The Bill has 107 sections & 3 schedules.

Bill, 2015
A brief overview of the
Bill.

Bill, 2015
Definition of “Industry”:
Made it simple just in line with Justice Krishna Iyer’s statement. All activities
carried on with the cooperation of employees etc.
The exclusion is “any agricultural operation”.
All other definitions remains the same.

Bill, 2015
Trade Union Related:
1.There are no changes in the mode of Registration of Union, the proposed
provisions are in line with the existing ones.
2.Only change proposed is that the number of outside leaders in the Executive
of the Union is reduced to two.
3.No mention of Recognition of Union and no proposals for incorporating any
criteria for Recognition in line with Code of Discipline.
4.The periodicity of election is proposed to be 2 yrs.
5.Except these, there are no any changes.
6. The other proposed provisions are as existing in the Trade Union Act.

Bill, 2015
Bi-partite Forums:
1.Works Committee. [Wherein more than 100 workmen]
2.Grievance Redressal Committee [ Wherein more than 20
workmen]
Standing Orders:
There are no changes in the provisions related to the existing
provisions of Industrial Employment(Standing Orders) Act, except
one change:
1.After the draft is prepared by the Employer, the same may be
discussed with the Trade Unions/workmen , and if an agreement is
reached, the Agreement shall be forwarded to the Certifying
Officer, who shall certify the same.
2. In case where any agreement is not reached, then the matter
may be referred to the Certifying Officer.

Bill, 2015
Notice of Change. [Present Sec.9 A].
The provision related to this remains unchanged.
1. The adjudication proceedings are held by Industrial Tribunals that the
State/Central Government, may constitute.
2. The Labour Courts are replaced by Tribunals. No Labour Courts.
3. The qualification of a Presiding Officer. Change being proposed is
that the Deputy Labour Commissioner of State/Central Labour
Department, having a Degree in Law with atleast 7 years of
experience in the Labour Department out of which includes 3 years
experience as a Conciliation Officer.

Bill, 2015
Strikes & Lockouts: Important proposals:
1.There in no “public utility services”.
2.All Industrial undertakings are treated the same.
3.Conciliation proceedings are deemed to have commenced from the date of
receipt of Notice of Strike or Lockout by the Conciliation Officer.
4.During the pendency of conciliation proceedings, Industrial
Tribunal/National Tribunal, Arbitration, there is prohibition to go on strike
/lockout.
5.During the proceedings, no worker shall stage demonstrations, encourage
or coerce others to willful “Go-slow”, gherao, squatting on the premises after
working hours, demonstrations before the residences of Executives of the
Employer etc.

Bill, 2015
Lay offs, Retrenchment & Closure.
1.There are only two changes are proposed in these matters.
2.The present number of workmen of 100 & above for seeking permission
from the State/Central Government is now proposed to be enhanced to
300.
3.The retrenchment and closure compensation is enhanced to 45 days of
wages for every completed year of service.
4.Other than these, all existing provisions are proposed.
Penalties:
1.Proposed penalties are severe. The fine ranges from three lakhs to ten
lakhs, & imprisonment from 3 months to one year for various
contraventions of the provisions.
2.Provision for compounding the offences have been made.

Rajasthan Model.
Rajasthan has taken initiatives towards Labour Reforms:
1.Contract Labour Act: Coverage under the Act is enhanced to 50 or more as against
20 or more.
2.Factories Act: Applicability raised to 20 & 40 for with power & without power
respectively.
3.Industrial Disputes Act: Chapter VB is applicable of Industries employing 300 or
more.
4.Condition precedent of payment of notice or pay is deleted
5.Retrenchment compensation is enhanced to three month’s salary for each year of
service.
6.Closure compensation is also enhanced to three month’s salary for each year of
service.
7.For the first time, “GO SLOW” has been defined.

Session II
Recent Trend Setting Judicial Pronouncements
In regard to
Management of Contract Labour.

Contract Labour engagement in India.
A flashback.
65

 Railways.
 Shipping & Transport.
 Public Works Departments.
 Telephones & Telegraphy.
 Electricity Boards.
 Power Distributions.
 Textiles, Jute, Foundries, Steel Plants etc.
66

Exploitations like:
1.Low Wages.
2.Poor working conditions.
3.Lack of safety & Health hazards.
4.No social security covers.
5.No restrictions on working hours etc.
67

The issue pertaining to contract labour was reviewed by various Commissions,
Committees and Conferences including
National Labour Commission,
Planning Commission,
Enquiry Commission,
Bihar Labour Enquiry Commission
The second Planning Commission
Recommended for the progressive elimination of the system
whenever feasible and regulate the working and
service condition where it is to be continued.
68

Contract Labour ( Regulation & Abolition) Act
came into force from 1971.
The State Governments have formulated the
Rules in line with the Central Rules.
69

Salient Features of the Act.
70

71
APPLICABLITY OF THE ACT
 Every Establishment in which 20 or more contract
laborers are employed.
 Each location is a separate Establishment.
 Every contractor who employs 20 or more workmen
as contract laborers in such Establishment.

72
REGISTRATION OF THE ESTABLISHMENT
 Every Establishment in which 20 or more contract
labourers are employed, is required to obtain Certificate
of registration from the authority under the Act & Rules.
 The Authority under the Act & Rules is the Jurisdictional
Assistant Labour Commissioner .
 The Certificate of Registration must be obtained within
30 days of commencement of work.

Licensing by the Contractors:
 Every contractor who employs 20 or more
in the Establishment.
 The License so granted by the Authority is
valid for one year.
 Renewal of the license is essential.
73

WHO IS A CONTRACTOR?
Contractor is a person who undertakes to produce
a given result for the Establishment or who supplies
Contract Labour for any work of the establishment
and includes a sub contractor
Sec. 2(1)(c)

WHO IS A WORKMAN UNDER THE ACT ?
Simple definition:
Any person who is in non-supervisory position
under any contractor.

76
WHO IS A WORKMAN UNDER THE ACT ?
Very important: Please note:
A workman shall be deemed to be employed as
“contract labour” in or in connection with the work
of an establishment when he is hired in or in connection
with such work by or through a contractor, with or
without knowledge of the Principal Employer.

WHAT IS THE RESPONSIBILITY OF THE PRINCIPAL
EMPLOYER TOWARDS PAYMENT OF WAGES TO THE
CONTRACT LABOUR ?
 The contractor shall be responsible for payment of wages to each
worker employed by him as contract labour and such wages shall be
paid before the expiry of such period as may be prescribed.
 Every principal employer shall nominate a representative duly
authorised by him to be present at the time of disbursement of wages
by the contractor and it shall be the duty of such representative to
certify in such manner as may be prescribed.
 It shall be the duty of the contractor to ensure the disbursement of
wages in the presence of the representative of the principal employer.
 In case, the contractor fails to make the payment of wages, it shall be
duty of the Principal Employer to pay the wages and the wages, so
paid, can be recovered from the amount payable to the contractor.

78
The Act has not defined:
What is Core activity ?
And
What is Non-Core activity ?
References are drawn from Sec.10 of the Act:
1.Conditions of work & benefits provided by the
Contractor
2. Whether the process, operation in incidental or
necessary
3. Whether it is of perennial nature.
4. Whether it is done ordinarily through regular workmen.
5. Whether it is sufficient to employ considerable number
of whole-time workmen.

79
The Industry and the judiciary have resorted to classify
Core and Non core activities.
To start with the functions like Security, Housekeeping,
Canteen, Estate maintenance, further extended to
Material handling, scrap removal & cleaning, packing &
forwarding etc were classified as Non Core Functions.
But, now it is further extended to any activity in the
manufacturing process which does not carry any value
addition to the product has also been slowly added to
this category.

80
But, let us miss the point that the State Government
or Central Government has the power to
prohibit the engagement of contract labour
in any activity under Sec.10 of the Act, subject
to process to be followed therein, whether
Core activity or non-core activity.

WHAT ARE OBLIGATIONS OF CONTRACTOR & THE
PRINCIPAL EMPLOYER UNDER THE APPLICABLE
LEGISLATIONS ?
The Contractor is responsible for the compliances under
all the applicable Legislations.
More importantly, it is the responsibility of the Principal
Employer to ensure the compliance by the Contractor.
If, for any acts of commission/omissions, the Principal
Employer shall be responsible.

82
Safety is utmost important.
“A Contract worker” being inside the premises
of the Factory, is also a “Worker” under the
Factories Act.
Consequently, it is responsibility of the Principal
Employer to ensure safety of contract workers.
The Occupier will be held responsible in case of
any employment injury to such workers.

83
Judicial interpretations between the Years
1971 to 1991
Pre LPG Era.

84
No Registration – No license
The contract workers are deemed to be employees of the
Principal Employer
Haryana Electricity case: Supreme Court..
Canteen workers engaged by the contractor in LIC
Office, are to be absorbed by LIC.
LIC Case: Supreme Court.
Canteen workers engaged by contractor in industrial
canteen are entitled for absorption
Air India Statutory Case: Supreme Court.
Engagement of workers on contract merely as camouflage
will be against the spirit of Contract Labour (R & A) Act and
the workers working under different contractors for last 10 years
will be absorbed by principal Employer
Steel Authority Case: Supreme Court.

85
If the contract is sham, then the contract workers are deemed to
be employees of the Principal Employer.
Gujarat Electricity Board Case: Supreme Court.
In case the engagement of contract workers is prohibited by the
Government, the contract workers shall be automatically be
absorbed.
Steel Authority Case: Supreme Court.
In the case of Airport Authority, the Central Government
abolished the engagement of contract labour in sweeping,
cleaning, housekeeping of Airports, the Supreme Court ruled
that the affected workers are to be regularized.
Airport Authority Case: Supreme Court.

86
.
In the cases of engagement of Contract Labour
the various judgments of the Supreme Court
created new rights for the contract labor.
The position became so overlapping and
confusing that even the engagement of Contract
Labour started giving raise to complicated questions
of law.
At times even the proper interpretation of the
provisions of Contract Labour Act and Judgments
became difficult.

87
JUDGMENTS OF SUPREME COURT
Even though the very object of the enactment is to
regulate and where necessary to facilitate abolition of
contract labour system, some of the decisions far
exceeded the object of the legislation.

88
In this Pre- LPG Era, the various judgments
were not strict interpretation of the Act,
but, mostly based on socialist approach.

89
Let us see the post LPG Era.
1.Engagement of contract workers.
2.Judicial pronouncements.

90
CONTRACT LABOUR
 Flexibility in engagement and deployment of labour has been the demanded by global
competitiveness.
 Frequent fluctuations in the demand & supply, thus warranting adjustment of
manpower.
 Optimum utilization of manpower & increased productivity.
 Constant war on cost reduction.
 Reluctance of the Trade Unions & permanent workers for any changes in the efforts
by the Management for higher productivity, cost reduction & high quality.
 Hence, engagement of contract workers has been an inevitable function.
 There is no exception in any business activity. Even the Central & State Governments
are engaging contract workers, be it be, offices, services like, telecom, offices,
railways, PWD etc started engaging contract workers in large volumes.

During the period between 1991 and now,
1.The outsourcing has gone up significantly
in all areas of activity.
2.Temp. Staffing has been catching up
very fast & expanding.
3. Job creation.
91

In this scenario, let us look at the judicial
pronouncements and views.
Post LPG Era.
1991 till date.
92

93
Non registration under Sec.7 and not possessing license under Sec 12 would not result in
regularization of the concerned workmen rather it would result in prosecution under
Sec.23/24 of the CLRA.
SC. 1992 FLR 39. Dena Naths’ case.
Failure to obtain registration & license by principal employer and the contractor
respectively, would not make contract labour system a sham and camouflage.
Jhar. HC. Jan 2014. 64 LLR
Abolition of contract labour will not result in direct employment by principal employer.
Also, mere violation of CLRA not to result into automatic absorption of contract workers.
SAIL Case: Supreme Court.
Jhar.HC April 2014. 362 LLR
When the employees have been appointed by the contractor and not the principal
employer and the contractor has a license under CLRA, held that the employees are the
employees of contractor not the employer.
Mad.HC Sept 2012 962 LLR.

94
Contract workers can get relief only when the system is sham.
All. HC. Dec 2012. 1249 LLR.
Contract labour system is illegal when it is sham.
Mad. HC. Oct 2012. 1077 LLR.
Reinstatement of contract labour, without finding that the contract
was sham, to be set aside.
Cal. HC July 2011. 771 LLR.
If the contract is not guanine or mere camouflage, the contract labour
will be treated as employees of the principal employer. In this case,
inspite of prohibition under Sec 10 of the Act, the engagement of
contract workers had continued.
BOM HC Feb 2014. 198 LLR.

95
The test of supervision and control may be taken as prima facie test for
determining the relationship of employment. Since the nature or extent of
control varied from business to business it became impossible to precisely
define the extent of control and supervision. The judicial dicta therefore
suggested that correct method of approach, would be to consider whether
having regard to the nature of work, there was due control and supervision
by the employer.
Dhrangadhra Chemical Works Ltd. v. State of Saurashtra, SC
Silver Jubilee Tailoring House v. Chief Inspector of Shops and
Establishments. SC
Shivnandan Sharma v. Punjab National Bank Ltd SC
Payment of wages, control & supervision are decisive to determine whether
contractor or employer employs contract labour.
. Jar.HC. August 2014. 842 LLR.

96
Workers of contractor cannot be thrusted on principal employer in the
absence of control and supervision. SC Feb 2011 113 LLR
Contract labourers cannot seek regularization in absence of notification for
abolition. Supervision of contracts’ employees will not create relationship
with the Company.
Gau.HC August 2014 819 LLR.
When the contractor’s employees were supervised by principal employer,
the contract will be sham, bogus and camouflage.
BOM HC.Sept 12 957 LLR.

97
Contractor’s employees performing work of
regular employees will be entitled to same rates of
wages and holidays etc.
Mad. HC 2012. LLR April 2012.
Also, refer Rule 25.
BE CAUTIOUS

98
Contract workers cannot claim absorption
There is no automatic absorption even
in case of abolition of the system.
Contract workers cannot raise a dispute
unless the contract is a sham one.
No Registration –No License.
Contract workers shall not be deemed to be
employees of the Principal Employer.
Principles of “Contract of Service” &
“Contract for Service”

There is perceptible change in the Judicial
pronouncements in this Era.
Courts have strictly adhere to interpretation
of Law.
There are innumerable judgments
nowadays
which are becoming trend setting ones.
99

All the recent trend setting series of
judgments are providing us various hints
and laying down certain principles so that
the engagement of contract labour is within
the parameters of the Law.
100

Hence, my presentation is aimed at:
How to manage the contract Labour within
the parameters of Law, so that the risk
factor is reduced to a considerable extent.
101

102
Let us examine the points normally put forth by
any Union of Contract Labour before the Courts:
1.Non-Compliance of legal provisions on the part of
the Principal Employer.
2. Workers are engaged in perennial nature of work.
3.Contractor is merely a supplier of workers.
4.Contract workers are under the supervision & control
of the Principal Employer.
5.There exists Employer –Employee relationship between
Principal Employer and the contract workers.
6. Finally, the contract is sham and camouflage.

103
Hence, we need to counter each of the arguments
that may be put forth by the Union, by fully
utilising the hints, suggestive guidelines and
principles enunciated by various judgments
of the Courts.

104
A sham contract: What it is ?
1.Engagement of contract labour when there is
prohibition by State / Central Govt.
2.Contract Labour is utilised on works other than
for which the License is granted.
3.Legal non-compliances by both Principal Employer
and the Contractor.
4. Contract of Service and not Contract for Service.

105
First hint by the Judiciary.
The contract must be “Contract For Service”
and not “Contract Of Service”.
This must be executed and demonstrated.

106
Contract of Service Contract for Service
1.1ttthe 1
1. Supply of Labour.
2. The end product or service is not
specified.
3. There is control & supervision
over such labour.
4. Bound to obey the orders &
instructions.
5. There is no discretionary powers.
6. Right to reject the product/service
& or to refuse to give work.
7. The invoice by the contractor is
based on the number of persons
supplied by him.
1. The end product or service is
specified.
2. No mention of supply of labour.
3. They are not subjected to control
and supervision.
4. They are bound by the instructions
of the contractor.
5. The contractor has discretionary
powers .
6. The contractor is accountable
for deficiencies in service.
7. The invoice by the contractor is
based on the quantum of work
or service.

In “Contract of Service” there is greater
amount of supervision & control.
In “Contract for Service” there is no
supervision & control.
This test is to judge “Employer – Employee
Relationship”.
The Supreme Court in one of its judgment:
“ the greater the amount of direct control &
supervision, the stronger would be the logic
for holding it to be a contract of service”.
107

Strategy:
1.Contract must be for specified & quantified
service or product.
2.Contractor alone must exercise control &
supervision.
3.No direct handling of labour by the Principal
Employer.
4.The contractor must demonstrate by engaging
his own supervisors.
5.Right thro’ recruitment to exit, all aspects of
engagement are handled by the contractor.
108

Supervision, check on productivity, Quality
of work or service by any contract labour is
inevitable.
But, as much as you can, minimise direct
control. Question the supervisor of the
contractor.
The Jarkhand High Court has, in its recent
judgment has endorsed that minimum
control will not lead to employer- employee
relationship.
109

The second hint by the Judiciary:
Ensure complete legal compliance by both
the Contractor and the Principal Employer.
There must not be any non-compliance
which becomes a pointer in a case.
110

• Next, third hint by Judiciary:
Do not engage or continue to engage
contract labour on jobs which are
prohibited by the State/Central
Government.
111

• Next, the fourth hint by the Judiciary:
Do not engage contract workers other
than
on the jobs for which the Registration and
Licensing have been taken.
112

Do ensure
 The Certificate of Registration & the license by the
contractor is valid at any time.
 Select the contractor who has specialized in the area
and has requisite expertise.
 Execute the Agreement legally on a judicial stamp
paper.
 Spell out clearly the nature of work to be entrusted. The
nature work mentioned in the Agreement must be the
same as mentioned in the Certificate of Registration and
in the License of the contractor.
114

Do ensure
1. Attendance recording system is separate & exclusive for
contract workers.
2. The contractor issues ID cards of his own & the name of
the Company should never appear.
3. The contractor supplies uniform which is different than
that of the regular employees of the Company.
4. The Company logo or emblem should never appear
either on the ID card or uniform.
5. No group photos are taken with the regular employees
or Executives of the Company.
115

Do ensure
6. No letters/memo/appreciation letters etc are issued by
the Company.
7. No payments be made to any contract worker directly by
the Company.
8. Documents in the shop floor do not mention the name of
the contract worker.
9. Carry out examination of the appointment letters
issued by the Contractor. Take care that the name of the
Company not to appear and that he/she will carryout the
work as instructed by the Contractor.
116

Do ensure
10. The Company to not to involve directly in the
recruitment process, performance evaluation. These
functions can be handled by a Consultant whose
charges be paid by the contractor.
11. The contract workers are covered under PF & ESI all
the time & check the remittances every month.
12. Contract workers do not attend any review
meetings etc. Only the Contractor must attend.
117

Do ensure
13. A periodical vendor audit is carried out
thoroughly to ensure there are no
non-compliances.
14. Contract workers are not engaged on
any work other than for which the
license has been granted.
118

Morale & Motivation
Notwithstanding, the monitory compensation,
there is need to ensure the morale of contract workers and
motivation is kept up as much as possible.
1.Technical up gradation training, so that there is personal
value addition to enable them to enhance their
employability in the market.
2.Soft-skill programs.
3.But, these programs must be organized by the
contractors.
119

Frequently asked questions
Can we engage contract workers on
production jobs?
Ans: Yes, we can, subject to the following:
1.The nature of job is not prohibited by the
State Government under Sec.10.
2. The Agreement is not a sham contract.
means that it is for “Contract for Service”.
120

If there is NO REGISTRATION or NO
LICENSE, can the contract workers claim
regular employment ?
ANS: No.
Recent judicial pronouncements are not
supporting. At best, the Principal Employer
or the Contractor can be prosecuted under
the Act.
121

Can the contract workers raise a dispute
demanding regularization ?
ANS : No, subject to the condition that:
1.There is prohibition by the Government.
2. The contract is a sham.
122

Do the contract workers have a right to
claim employment ?
ANS: NO. The recent judgments are not
supportive.
123

If there is prohibition of engagement of
contract worker in any area, will the
workmen working therein be absorbed
automatically ?
ANS: NO. The Supreme Court view in SAIL
case supports this answer.
124

Can the contract workers form a Trade
Union and / or can become members of the
Trade Union of regular employees ?
ANS: YES. It is the fundamental right of
anyone under the Constitution of India.
125

126
Is the Principal Employer is responsible for
Payment of Bonus to contract workers ?
ANS : NO.
It is not the responsibility of the Principal Employer
for payment of Bonus to contract workers. Definition
“Employee” under Payment of Bonus Act, does
not include contract workmen.
KAR HC. June 2013. 595 LLR.

127
Is Principal Employer is liable & responsible
for payment of Gratuity to contract workers?
ANS: YES:
It is the primary responsibility of the Contractor
to pay gratuity. In case, he fails or refuses to pay,
the Principal Employer is liable to pay, however,
the amount so paid, can be recovered from the
contractor.
Mad.HC. 2013 374.LLR

OBLIGATIONS
ON THE PART
OF THE
CONTRACTORS.

Following legislations becomes applicable to the
Contractors and the contract workers
1. Karnataka Shops & Commercial Establishment Act.
2. Employees Provident Fund Act.
3. Employees State Insurance Act.
4. Contract Labour ( Regulation & abolition) Act.
5. Payment of Gratuity Act.
6. Karnataka Labour Welfare Fund Act.
7. Industrial Establishments ( National & Festival Holidays)
Act.
8. Minimum Wages Act.
9. Payment of wages Act.
10. Payment of Bonus Act.

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