Guidelines for the Principal Employer in respect of Labour contract.

1 An employee of the Lab should not be made as a contractor (Sham/ False contract). Go for an independent contractor. As far as possible, the preference should be given to a contractor, who has got the contract in similar concern of the same type.
2 If the contractor has similar type of contract in different concerns, then he should try to transfer the employees from one establishment to another establishment. Hence the contract employees can be transferable. This is a with a view that the contractor should not employ the contract workmen in the same establishment for not more than a certain stipulated period.
3 The contractor shall select and appoint the workmen without any interference of the Lab. The supervision and control on the workmen of contractor will be solely by the Contractor. Hence the Lab will not have supervision and control over the contractor’s workmen.
4 The contractor shall determine the mode, method and manner of working. The Lab shall not interfere in regard to the same.
5 The Contractor shall employ the workforce according to his requirement but he shall not in any case exceed the number of workmen shown in the licence or do any other work what is not given in the licence.
6.1 Similarly Employer shall register itself under the Contract Labour (Regulation & Abolition) Act, 1970.
6.2 The Contractor shall submit monthly printed bill to the Lab for payment of the work done by him by 1st day of following month and the printed bill should be signed under the Rubber Stamp.
6.3 The Employer has to ensure that the Contractor is paying the workmen minimum wages and the payment to them is made on or before 7th of every month in presence of the representatives of the Lab who shall also sign on the muster/register.
6.4 The Contractor shall deduct the income tax as per income tax act or any other law applicable from time to time from the payment made to his workmen.
6.5 The Contractor shall pay his own taxes as per provisions of statutory acts.
6.6 The Contract shall be given for the job to be done and rates of job shall be paid to contractor as per mutual agreed basis.
6.7 The Lab shall ensure while making payment to the contractor that the contractor has paid the employees’ provident fund and ESI contributions deductions both of employees and of contractor on time (along with copy of challan paid).
7 The Lab shall check up that the Contractor renews his licence from time to time.
8 The Contractor shall decide about the disciplinary action to be taken against his employees in case of any acts of misconducts committed by his employees.
9 The Lab shall see that if possible the Contractor has obtained separate code numbers of Employees State Insurance and Employees Provident Fund under the respective Acts.
10 The Contractor shall maintain necessary records such as identical card. Attendance register and/or card and other statutory registers through his staff and not by the staff of the Lab.
11 The contract workmen shall do the specific work of the contract and not any other work of the Lab.
12 Contract Labourers are not to be employed for doing perennial and permanent nature of jobs of the Lab.
13 Contract Labourers should not be employed for doing any main activity of the Lab.
14 Do not pay from the regular fund of Lab
15 If possible insert following clause in NIT/ Contract w.r.t LIABILITIES, CONTROL ETC. OF THE PERSONS DEPLOYED
(a) The Contractor shall depute a co-odinator who would be responsible for immediate interaction with the Lab so that optimal services of the persons deployed by the agency could be availed without any disruption.
(b) It will be the responsibilities of the Contractor to meet transportation, food, medical and any other requirements in respect of the persons deployed by it (Agency) in this Lab and this Lab will have no liabilities in this regard.
©. For all intents and purposes, the Contractor shall be the “Employer” within the meaning of different Labour Legislations in respect of Persons so employed and deployed in this Lab. The persons deployed by the Contractor in the Lab shall not have claims of any Master and Servant relationship nor have any principal and agent relationship not have any principal and agent relationship with or against Lab.
(d).The Contractor shall be solely responsible for the redressal of grievances / resolution of disputes relating to person deployed. This Lab shall, in no way, be responsible for settlement of such issues whatsoever.
(e) This Lab shall not be responsible for any damages, losses, claims, financial or other injury to any person deployed by service providing agency in the course of their performing the functions/duties, or for payment towards any compensation.
(f) The persons deployed by the Contractor shall not claim nor shall be entitled to pay, perks and other facilities admissible to casual, ad hoc, regular / confirmed employees of this Lab during the currency or after expiry of the contract.
(g) In case of termination of this contract on its expiry or otherwise, the persons deployed by the Contractor shall not be entitled to and will have no claim for any absorption nor for any relaxation for absorption in the regular / otherwise capacity in this Lab

CONTRACT LABOUR IN INDIA

The system of employing contract labour is prevalent in most industries in different occupations including skilled and semi skilled jobs. It is also prevalent in agricultural and allied operations and to some extent in the services sector. A workman is deemed to be employed as Contract Labour when he is hired in connection with the work of an establishment by or through a contractor. Contract workmen are indirect employees; persons who are hired, supervised and remunerated by a contractor who, in turn, is compensated by the establishment. Contract labour has to be employed for work which is specific and for definite duration. Inferior labour status, casual nature of employment, lack of job security and poor economic 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.

The condition of contract labour in India was studied by various Commissions, Committees, and also Labour Bureau, Ministry of Labour, before independence and after independence. All these have found their condition to be appalling and exploitative in nature. The Supreme Court of India in the case of Standard Vacuum Refinery Company Vs. their workmen (1960-II-ILJ page 233) observed that contract labour should not be employed where:

(a) The work is perennial and must go on from day to day;

(b) The work is incidental to and necessary for the work of the factory;

(c) The work is sufficient to employ considerable number of whole time workmen; and

(d) The work is being done in most concerns through regular workmen.

THE CONTRACT LABOUR (REGULATION AND ABOLITION) ACT, 1970

The concern for providing legislative protection to this category of workers, whose conditions have been found to be abysmal, resulted in the enactment of the Contract Labour (Regulation and Abolition) Act, 1970.

OBJECTS AND PURPOSES OF THE ACT

The Contract Labour (Regulation and Abolition) Act, 1970 was brought on the Statute Book to regulate the employment of Contract Labour in certain establishments and to provide for its abolition in certain circumstances and for matters connected therewith.

APPLICATION

The Contract Labour (Regulation and Abolition) Act, 1970 and the Contract Labour (Regulation and Abolition) Central Rules, 1971 came into force on 10.2.71.The constitutional validity of the Act and the Central rules were challenged before the Supreme Court in Gammon India Ltd. Vs. Union of India 1974-ILLJ-480. The Supreme Court upheld the constitutional validity of the Act & Rules and held that there is no unreasonableness in the measure. The Act & Rules were enforced w.e.f. 21.03.1974.

The Act applies to every establishment in which 20 or more workmen are employed or were employed on any day on the preceding 12 months as contract labour and to every contractor who employs or who employed on any day of the preceding 12 months 20 or more workmen. It does not apply to establishments where the work performed is of intermittent or seasonal nature. An establishment wherein work is of intermittent and seasonal nature will be covered by the Act if the work performed is more than 120 days and 60 days in a year respectively. The Act also applies to establishments of the Government and local authorities as well.

APPROPRIATE GOVERNMENT

The jurisdiction of the Central and State Government has been laid down by the definition of the ‘Appropriate Government’ in Section 2(1)(a) of the Act, as amended in 1986. The Appropriate Government, in respect of an establishment under the Contract Labour (Regulation and Abolition) Act, 1970 is the same as that in the Industrial Disputes Act, 1947.

As per the interpretation given by the Supreme Court, through its judgement dated 30.08.2000, in Steel Authority of India Limited and Ors Vs. National Union Water Front Workers & Ors., the ‘appropriate government’ in relation to an establishment would be the Central Government if (i) the concerned Central Government company/ undertaking or any undertaking is included by name in clause (a) of Section 2 of the Industrial Disputes Act, or (ii) any industry carried on by or under the authority of Central Government or by a railway company, or (iii) any such controlled industry as may be specified in this behalf by the Central Government, otherwise in relation to any other establishment, the Government of the State in which that other establishment is situated, will be the appropriate government.

REGISTRATION OF ESTABLISHMENT AND LICENSING OF CONTRACTORS

The establishments covered under the Act are required to be registered as principal employers with the appropriate authorities. Every contractor is required to obtain a licence and not to undertake or execute any work through contract labour except under and in accordance with the licence issued in that behalf by the licensing officer. The licence granted is subject to such conditions as to hours of work, fixation of wages and other essential amenities in respect of contract labour as laid down in the rules.

WELFARE AND HEALTH OF CONTRACT LABOUR

The Act has laid down certain amenities to be provided by the contractor to the contract labour for establishment of Canteens and rest rooms ; and arrangements for sufficient supply of wholesome drinking water, latrines and urinals, washing facilities and first aid facilities and have been made obligatory. In cases of failure on the part of the contractor to provide these facilities, the Principal Employer is liable to provide the same.

PAYMENT OF WAGES

The contractor is required to pay wages and a duty is cast on him to ensure disbursement of wages in the presence of the authorised representative of the Principal Employer. In case of failure on the part of the contractor to pay wages either in part or in full, the Principal Employer is liable to pay the same. The contract labour who performs same or similar kind of work as regular workmen, will be entitled to the same wages and service conditions as regular workmen as per the Contract Labour (Regulation and Abolition) Central Rules, 1971.

PENAL PROVISIONS

For contravention of the provisions of the Act or any rules made there under, the punishment is imprisonment for a maximum term upto 3 months and a fine upto a maximum of Rs.1000/-.

OTHER PROVISIONS

The 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 the Act. In the central sphere, officers of the CIRM have been appointed as Inspectors.

PROHIBITION

Apart from the regulatory measures provided under the Act for the benefit of the contract labour, the ‘appropriate government’ under section 10(1) of the Act is authorised, after consultation with the Central Board or

State Board, as the case may be, to prohibit, by notification in the official gazette, employment of contract labour in any establishment in any process, operation or other work. Sub-section (2) of Section 10 lays down sufficient guidelines for deciding upon the abolition of contract labour in any process, operation or other work in any establishment.

The guidelines are mandatory in nature and are:-Conditions of work and benefits provided to the contract labour.

• Whether the work is of Perennial nature.

• Whether the work is incidental or necessary for the work of an establishment.

• Whether the work is sufficient to employ a considerable number of whole-time workmen.

• Whether the work is being done ordinarily through regular workman in that establishment or a similar establishment.

The Central Government on the recommendations of the Central Advisory Contract Labour Board, have prohibited employment of contract labour in various operations/ category of jobs in various establishments. So far 48 notifications have been issued since inception of the Act.

EXEMPTION

The ‘appropriate government’ is empowered to grant exemption to any establishment or class of establishments or any class of contractors from applicability of the provisions of the Act or the rules made thereunder on such conditions and restrictions as may be prescribed. Nine notifications granting exemption to establishments in exercise of this power in the Central sphere have been issued.

ENFORCEMENT

In the Central sphere, the Central Industrial Relations Machinery (CIRM) have been entrusted with the responsibility of enforcing the provisions of the Act and the rules made thereunder, through Inspectors, Licensing Officers, Registering Officers and Appellate Authorities appointed under the Act.

Regular inspections are being conducted by the Field Officers of the CIRM and prosecutions are launched against the establishments, whenever violations of the Act/Rules/notifications prohibiting employment of contract labour are detected. From time to time, instructions/directions have been issued to the field officers of CIRM and State Government for proper implementation of the Act.

IMPORTANT JUDGEMENTS OF THE SUPREME COURT.

Three judgements delivered by the Supreme Court in the cases of Gujarat State Electricity Board Vs Union of India, Air India Statutory Corporation Ltd. & Ors Vs United Labour Union & Others, and Steel Authority of India Ltd. & Others Vs National Union of Waterfront Workers and others on 09.05.1995, 06.12.1996 and 30.08.2001 respectively, are landmark judgements.

In Gujarat State Electricity Board case, inter-alia, the Supreme Court recommended that the Central Government should amend the Act by incorporating a suitable provision to refer to industrial adjudicator the question of the direct employment of the workers of the ex-contractor in the principal establishments, when the appropriate Government abolishes the contract labour.

In Air India Statutory Corporation case, the Supreme Court held that though there exists no express provision in the Act for absorption of employees in establishments where contract labour system is abolished by publication of the notification under section 10 (1) of the Act, the principal Employer is under statutory obligation to absorb the contract labour. The linkage between the contractor and employee stood snapped and direct relationship stood restored between principal employer and contract labour as its employees.

The Supreme Court in the case of Steel Authority of India Ltd. Vs National Union of Waterfront Workers & Others and others have held that neither Section 10 of the Act nor any other provision in the Act whether expressly or by necessary implication provides for automatic absorption of contract labour on issuing a Notification by the appropriate Government under sub section (1) of Section 10 prohibiting employment of contract labour in any process or operation or other work in any establishment. Consequently the Principal Employer cannot be required to order absorption of the contract labour working in the concerned establishment. The judgement in Air India’s case was over-ruled prospectively.

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