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CONTRACT LABOUR(REGULATION ANDABOLITION) ACT,

1970

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AN ACT TO REGULATETHE

EMPLOYMENT OF CONTRACTLABOUR IN CERTAIN

ESTABLISHMENTS,

AND TO PROVIDE FOR ITSABOLITIONIN CERTAIN

CIRCUMSTANCES

AND FOR MATTERS CONNECTEDTHEREWITH

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NECESSITY OF THIS ACT

o The contractors usually lack a sense of moral aswell as legal obligation towards contract labour

which the employees or the managers are expected

to have, and , therefore do not hesitate to exploit the

hapless position of labour in their charge- BiharLabour Enquiry Committee

o The condition of contract labour in India was

studied by various Commissions Committees,Labour Bureau, and also Ministry of Labour, before

independence and after independence. All these

have found their condition to be appalling and

exploitative in nature.

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Views of other commissions and

Judgments

National Labour Commission found that contract

labour was unorganized, and that the system worked

to the advantage of the employers.

Various judicial awards(The Supreme Court of India in

the case of Standard Vacuum Refinery Company Vs

their workmen) also discouraged the practice of

employment of contract especially when the work is-

1. Perennial and must go from day to day,

2. Incidental and necessary for the work of factory,

3. Sufficient to employ a considerable number of

whole time workmen,

4. Being done in most concerns through regularworkmen

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MAIN FEATURES

1. To regulate the employment of contract labour andin establishments and in certain circumstances toabolish the use.

2. The act applies to every establishment which

employs twenty or more labour.3. Central and state advisory boards to be formed by

respective Governments.

4. Every establishment covered under the act to be

registered by the principle employer.5. The act authorizes the appropriate Government to

make rules for health and welfare of contract labourat work places.

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5. The contractor is required to pay wages and a duty

is cast on him to ensure the disbursement of wagesin the presence of the authorized representative ofprinciple employer.

6. Appointment of an inspecting officer, maintenance

of records and registers, penalties for nonconformation of act is provided.

7. The appropriate Govt. is authorized, in consultation

with the advisory boards, to abolish use of contractlabour in certain establishments.

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CONSTITUTIONAL

VALIDITY OF THE

ACT

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Gammon India Ltd. Vs Union of

India

The petitioners carried out business ofconstruction of roads, buildings, bridges anddams.

Objections to Act The application of the act in respect of pending

work of contractor amounts to an unreasonablerestriction on the right of the contractor

The fees prescribed for registration, license andrenewal amount to a tax and hence beyond the

rule making powers of Central and State Govt. Provisions in regards to canteens, rest rooms,

latrines and urinals are unconstitutional andunreasonable due to impracticability ofimplementation.

Provision for forfeiture of security areunconstitutional.

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Supreme Court Verdict cont..

Art ic le 14

-- The court held that provision of canteens, rest

rooms, supply of drinking water, latrines, urinal

and first aid facilities are amenities are amenitiesfor dignity of labour and not in excess of the

object of law.

-- Further the provision in the act for forfeiture ofsecurity in case of noncompliance is

constitutionally valid because this amounts to

departmental penalty and the party is given

reasonable opportunity to show cause and to

appeal against if necessary.

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NON CONFORMANCE TO THE ACT IS

VIOLATION OF FUNDAMENTAL RIGHT.

In ASIADcase it was argued that writ petition under art32 could not be maintained as it was only a violation oflabour laws.

The Supreme Court observed that in light of thejudgments given by it in Maneka Gandh icase as well asin Franc is Coral iecase, the right to life is confined notmerely to physical existence but also to live with basic

human dignity. And the provisions of the act are clearlyintended to ensure basic human dignity to the workmen,so any non observance of the act shall amount toviolation of Art 21.

References can also be drawn to Olga Tell isand

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THE ACT

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Chapter V - Welfare and Health, (Sections 16

21)

Chapter VI - Penalties and Procedures (Sec 22 27)

Chapter VII - Miscellaneous (Sections 28 35)

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CHAPTER 1

Applies to: 1(4)(a) & 1(4)(b)

To every establishment employing 20 or more workers

on any day of the preceding 12 months.

To every contractor employing 20 or more workmenon any day of the preceding 12 months.

Shall Not Apply To: 5(a)

Establishment in which work only of an intermittent or

casual nature is performed. i.e. less then 120 days and

if it is a seasonal character 60 days.

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DEFINITIONS

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Appropriate Government

1) In relation to-

i.) Any establishment pertaining to any industry carriedout by or under the authority of the CentralGovernment, or pertaining to any such controlledIndustry as may be specified in this behalf by

CentralGovernment, or

ii.) Any establishment of any railway, cantonment board,major port, mine or oilfield, or

iii.) Any establishment of a banking or insuranceindustry

the Central Government,

2) In relation to any other establishment, the Governmentof the state in which that other establishment is situated.

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ESTABLISHMENT

i). Any office or department of the

Government or a local authority, or

ii). Any place where any industry, trade,

business, manufacture or occupation is

carried on;

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PRINCIPLE EMPLOYER

i). In relation to any office or department of the

government or local authority, the head of that officeor department or such other officers as thegovernment or the local authority , as the case maybe, may specify in this behalf,

ii). in a factory, the owner or occupier of the factoryand where a person has been named as the managerof the factory under factories act 1948, the person sonamed.

iii). In a mine, the owner or agent of the mine andwhere a person has been named as the manager ofthe mine, the person so named,

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FACTORY

The term Factory has been defined under the factory act,1948 as under:

Any premises including the precincts thereof Whereon ten or more workers are working, or were working on

any day of the preceding twelve months, and in any part ofwhich a manufacturing process is being carried on with the aid

of power, or is ordinarily so carried on, or

Whereon twenty or more workers are working, or were workingon any day of the preceding twelve months, and in any part ofwhich a manufacturing process is being carried on without theaid of power, or is ordinarily so carried on.

But does not include a mine subject to a operation of mines actor a mobile unit of the armed forces of the union, a railwayrunning shed or a hotel, restaurants or eating place.

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WORKMAN

Any person employed in or in connection

with the work of any establishment to do any

skilled, semi-skilled, or unskilled manual,

supervisory, technical or clerical work forhire or reward, whether the terms of

employment be express or implied, but does

not include any such person-

Who is employed mainly in a managerial or

administrative capacity; or

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Who, being employed in a supervisory capacity,draws wages exceeding five hundred rupees per

mensem or exercises, either by the nature of theduties attached to the office or by reason of thepowers vested in him, functions mainly of amanagerial nature, or

Who is an out worker, that is to say, a person towhom any articles or materials are given out by or onbehalf of the principle employer to be made up,cleaned, washed, repaired, altered, ornamented,finished, adapted or otherwise processed for sale forthe purpose of the trade or business of the principleemployer and the process is to be carried out eitherin the home of the outworker or in some otherpremises, not being premises under the control andmanagement of the principal employer.

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CONTRACTOR

In relation to an establishment, means a

person who undertakes to produce a given

result for the establishment, other than a

mere supply of goods or articles ofmanufacture to such establishment,

through contract labour or who supplies

contract labour for any work of the

establishment and include a subcontractor.

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CONTRACT LABOUR

A workman shall be deemed to be

employed as a contract labour in or in

connection with the work of an

establishment when he is hired in or inconnection with such work by or through a

contractor, with or without the knowledge

of the principle employer

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Chapter IIIRegistration

Sec. - 6 Appointment of Registering officers

Sec. -7 Registration

Sec. - 8 Revocation Sec. - 9 Effect of non-registration

Sec. - 10 Prohibition of employment of contract

labor

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Gammon India Ltd.

Vs.

Union of India, 1974 The constitutional validityof 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 tounreasonable 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.

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Air India Statutory Corporation Ltd.

Vs

Ors Vs United Labour Union & Others, 1996

Concerned with the question of direct employment of contractedworkers after the prohibition of contract labour in an establishmentunder Sec 10

JUDGEMENT: Supreme Court held that though there exists noexpress provision in the Act for absorption of employees inestablishments where contract labour system is abolished bypublication of the notification under section 10 (1) of the Act, theprincipal Employer is under statutory obligation to absorb the

contract labour.

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Steel Authority of India Ltd (SAIL) & Others

Vs

National Union ofWaterfront Workers, 2001

Concerned with the question of direct employment of

contracted workers after the prohibition of contract labour

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 Indias case was over-ruled

prospectively.

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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 underSec 10

JUDGEMENT: Principal Employer not liable to absorb the

contract workers

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Gujarat State Electricity Board Vs Union of India,

1995

Concerned with the question of direct employment of contracted

workers after the prohibition of contract labour in an

establishment underSec 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

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NTPC Vs Karri Pothuraju & others, 2003

NTPC was running a canteen for its employees, througha contractor

Canteen employees claimed regularization

JUDGEMENT: Canteen is essential under Sec 46 of thefact. Employees to be regularized

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Chapter IVLicense

Sec.11- Appointment of Licensing officers.

Sec.12 - Licensing of Contractors

Sec.13 - Grant of Licenses Sec.14 - Revocation, suspension and

amendment of licenses.

Sec.15 - Appeal

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Chapter V- Welfare & Health

Sec.-16 Canteens

Sec.-17 Rest Rooms

Sec.-19 First-aid

Sec.-20 Liability of Principal Employer

Sec.-21 Responsibility for Payment of wages.

People Union Democratic Society of India

vs.

Union of India(1982). (Asiad Case)

Responsibility for payment of wages if not paid

by the contractor.

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Chapters VI and VII

Chapter-6 (Penalties and Procedure)

Sec. 22 Obstructions

Sec. 23 Contravention

SEC 25 Offences by companies-who is responsible?

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

Chapter-7 (Miscellaneous)

Sec. 30 Effect of laws and agreements in consistent with

this Act.

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THANK YOU