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CONTRACT L4BOUR (REGULATION AND ABOLITION) ACT, 1970

INTRODUCTION

The purpose of the Act is to regulate the employment of contract labour and to provide for abolition ofcontract labour in certain cases.

APPLICABILITY OF THE ACT

The Act is applicable to every establishment in which 20 or more workmen are employed as contractlabour or were so employed on any day of the preceding 12 months.

IMPORTANT CONCEPTS

Meaning of EstablishmentEstablishment means any office or department of Government or a local authority or any place where anyindustry, trade, business, manufacturing, or occupation is going on. Every such establishment is required

to get itself registered under the Act.

Meaning of Contract LabourA workman is deemed to be employed as contract labour in or in relation to the work of the establishmentif he is hired for such work by or through a contractor, with or without the knowledge of the principalemployer.

ContractorThe Act applies to every contractor who employs 20 or more workmen. The contractor covered under thisAct is required to obtain a license under this Act.

A contractor is required to maintain Muster Rolls and Register of Wages. He is required to pay wages toworkman in time and in the presence of authorized representative of principal employer. If the contractorfails to make payment of wages; principal employer is liable to make payment of wages to contract labourHowever, he can recover this amount from the contractor.

A contractor is also required to provide certain facilities to the contract labour such as canteen facilities,rest rooms, first aid, drinking water, toilets, etc.

Under Section 21 (4) of the Act it has been provided that if the contractor fails to make payment ofwages within the prescribed period or makes short payment, then the principal employer shall be liable tomake payment of wages in full or the unpaid balance due, as the case may be, to the contract labouremployed by the contractor and recover the amount so paid from the contractor either by deduction fromany amount payable to the contractor under any contract or as a debt payable by the contractor.

Prohibition on Employment of Contract LabourAppropriate Government can prohibit employment of contract labour in any process, operation, or work inany establishment, by issuing a notification. Before issuing such order in respect of any establishment,appropriate Government will consider the following factors:

1) Conditions of work and benefits provided to contract labour;2) Whether process, operation or work is incidental or necessary for the industry, trade, or business;3) Whether such process, operation, or work is done ordinarily through regular workmen or contract

labour in other similar establishments.

Applicability of Other Laws to Contract LaborBesides Contract Labor (Regulation and Abolition) Act, following Acts are also applicable to contractlabour:

1) Factories Act:2) Industrial Disputes Act

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3) Workmens Compensation Act4) Employees State Insurance Act5) Payment of Wages Act6) Employees Provident Fund Act.

IMPORTANT POINT

It has been held that there is no provision in the Contract Labour (Regulation and Abolition) Act, 1970,which requires the employer to absorb the contract labour as a regular employee, if the contract labourhas been abolished by the government in such organizations. [SAIL v. National Union of Water FrontWorkers]