CONTRACT LABOR (REGULATION AND ABOLITION) ACT, 1970.

PURPOSES

The act serves essentially two purposes, as reflected in the title:

To abolish the practice of contract labor, as far as possible Where abolishing contract labor is not possible for reasons of practicality, to

regulate the same.

There are three MAIN PLAYERS under the act

Principal employer (defined in Sec 2(g))

a) Office/ deptt of the Government or local authority- head of the office or deptt.

b) Factory- Owner or Manager, as per Factories Act.

c) Mine- Owner or Agent or Manager as per Mines Act

d) Other establishment- person responsible for supervision and control.

Contractor (defined in Sec 2(c))

a) Undertakes to produce a given result for the establishment through contract labor

b) Supplies contract labor for any work and includes a subcontractor.

Workman (defined in Sec 2(i))

Any person doing any skilled, semi skilled or unskilled, manual supervisory, technical or clerical work, in an establishment, for hire or reward. Terms of employment may be express or implied.

Does NOT include:

a) Manager, Administrator.

b) Supervisor drawing wages greater than 500 p.m. or having managerial duties

c) Out worker

ie a person to whom any article or material is given out by or on behalf of the principal employer to be processed for sale and such processing is not done on the premises controlled by the principal employer.

Eg welder, washer man, polisher etc

APPLICABILITY of the act:

To every establishment employing 20 or more workers on any day of the preceding 12 months. Sec 1 (4) (a)

To every contractor employing 20 or more workmen on any day of the preceding 12 months. Sec 1 (4) (b)

 NOT APPLICABLE to:

Establishments in which work performed is of intermittent or casual nature. (Less than 120 days or for a seasonal industry less than 60 days)  

RELEVANT CASE:

Gammon India Ltd. Vs. Union of India, 1974

The constitutional validity of the Act and the Central rules were challenged before the Supreme Court The petitioner also said that the Act is against Article 19(1)(g) of the constitution , thereby amounting to unreasonable restriction on the contractors The petitioner also alleged that the Act violates Article 14 (This article deals with equality of all persons before law). JUDGEMENT : The Supreme Court upheld the constitutional validity of the Act & Rules and held that there is no unreasonableness in the measure.

CHAPTER III - REGISTRATION OF ESTABLISHMENTS EMPLOYING CONTRACT LABOUR 

SEC 7-How/when/whom to apply for registration

The principal employer applies to the registering officer (Sec 6) within a time fixed by the appropriate government (through the official gazette) for registration

SEC 8-when can the registration be revoked

If the registering officer(RO) is satisfied that the registration

has been obtained by misrepresentation or suppression of material facts, or has become useless or ineffective

Then, RO can revoke the registration after

giving an opportunity to the principal employer of being heard, and with Prior approval of the appropriate government

 SEC 9- what if registration Not obtained or revoked

Contract labor can not be employed in such cases 

SEC 10- Prohibition of employment of contract labour (MOST IMP SECTION)

1.    The appropriate government may prohibit employment of contract labour

2.   However, the following factors have to be considered:

 (a)  whether the process or work is incidental to or necessary for the industry

(b)  whether it is of  perennial nature

(c)   whether it is done ordinarily through regular workmen in that establishment or an establishment similar thereto

 (d)  whether it is sufficient to employ considerable number of  whole-time workmen

RELEVANT CASES:

1. Standard Vacuum Refinery Company Vs. their workmen, 1960

This case precedes the CLRA. Its relevance to CLRA arises from the fact that the judgement of the case was later on used to decide the factors which should be considered by govt when it is considering prohibition of contract labor in an establishment. These conditions were:

Contract labour should not be employed where: — The work is perennial The work is incidental to and necessary for the work of the factory The work is sufficient to employ considerable number of whole time

workmen; and The work is being done in most concerns through regular workmen.

2. Deena Nath Vs National Fertilizer Ltd, 1992

Concerned with the question of direct employment of contracted workers after the prohibition of contract labor in an establishment under Sec 10

JUDGEMENT : Principal Employer not liable to absorb the contract workers

3. Gujarat State Electricity Board Vs Union of India, 1995

Concerned with the question of direct employment of contracted workers after the prohibition of contract labor in an establishment under Sec 10

JUDGEMENT : 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.

4. Air India Statutory Corporation Ltd. & Ors Vs United Labour Union & Others, 1996

Concerned with the question of direct employment of contracted workers after the prohibition of contract labor in an establishment under Sec 10

JUDGEMENT : 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.

5. Steel Authority of India Ltd (SAIL) & Others Vs National Union of Waterfront Workers, 2001

Concerned with the question of direct employment of contracted workers after the prohibition of contract labor in an establishment under Sec 10

JUDGEMENT : Supreme Court held that neither Section 10 of the Act nor any other provision in the Act provides for automatic absorption of contract labour

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.

6. NTPC Vs Karri Pothuraju & others, 2003 NTPC was running a canteen for its employees, through a contractor Canteen employees claimed regularization JUDGEMENT : Canteen is essential under Sec 46 of the fact. Employees to be

regularized

CHAPTER IV: LICENSING OF CONTRACTORS

SEC 12 (1)- Obtaining a license is mandatory for a contractor to be able to employ contract labor 

SEC 13- How to apply/Validity/Renewal of license   

Application to be made in the prescribed form, containing particulars of location, nature of process, operation or work for which contract labour is employed etc

Investigation regarding the above application can be ordered by the licensing officer

License shall be valid for the period specified and may be renewed from time to time 

SEC 14- Revocation/ suspension/ amendment of license

If the licensing officer(LO) is satisfied that

License granted u/s 12 is through misrepresentation or suppression of facts, or Holder failed to comply with the provisions of the act, or contravened any

provisions

Then, LO can revoke/ suspend/ amend the license or forfeit any sum

After giving the holder an opportunity of showing cause

SEC 15- Appeal

 Any aggrieved person (u/s 7,8,12 or 14) may appeal within 30 days to the appellate officer 

CHAPTER V: WELFARE AND HEALTH OF CONTRACT LABOUR

16 - Canteens to be provided for contract laborers where n > = 100

17 – Rest rooms to be provided

18 – Facilities for drinking water/ latrines/ urinals/ washing

19 – First-aid facilities

20 – Liability of Principal employer(PE)

The amenities (covered under 16,17,18,19) shall be provided by PE if Contractor does not provide the same.

The expenses so incurred by the PE shall be recovered from the contractor.

21 – Timely payment of wages

The contractor has to pay the wages in the presence of a representative of the Principal employer

If contractor fails to pay, liability passes on to PE. The expenses so incurred by the PE shall be recovered from the contractor.

CHAPTER VI: PENALTIES AND PROCEDURES

SEC 25: Offences by companies-who is responsible?

Every person responsible for the conduct of the company’s business at the time the offence was committed, unless

Any such person proves that the offence was committed without his knowledge or that he exercised due diligence to prevent it

SEC 26: Who can complain/ who can try an offence

COMPLAIN: either by or with previous written sanction, of the Inspector only TRIAL: No court inferior to a Presidency Magistrate or Magistrate of first

class can try an offence under the CLRA.

CHAPTER VII: MISCELLANEOUS

SEC 32: Protection of action taken under the Act

No legal proceedings shall lie against any authority mentioned in the Act, for an action taken in good faith or in compliance with the provisions of the Act

No legal proceedings shall lie against the Government for an action taken in good faith or in compliance with the provisions of the Act

COMMENTS:

Appropriate government for contractor will be same as of principal employer.(Sarkar D., alias Dipak Sarkar v. State of Bihar, 1997)

Contract labour cannot become employees of principal employer merely because contractor or employer has not obtained license or registration respectively. (Dinanath v. National Fertilizers Ltd. 1992)

Wages paid by Contractor to his workers shall be equal to the wages paid by the principal employee to his workers doing similar works. (Hindustan Steel works Construction v. Commissioner of Labour, 1997)

Page updated by Naqi Abbas on January 26 (Republic Day!!), 2006Page updated by Anitha B on January 13, 2005