Authored By – JAYAPRIYA.A, CHENNAI DR. AMBEDKAR GOVERNMENT LAW COLLEGE, PUDUPAKKAM

A) INTRODUCTION

India is the fastest-growing economy due to its efficient industrial sector. The backbone of this industrial growth is the contribution of labour. While machinery plays a vital role, the industrial sector cannot achieve global market success without manpower or labour contributions. Among various categories of labour, contract labour is one of the most vital yet vulnerable sectors. Contract labourers are employees not directly employed by the principal employer but are engaged through a contractor. There exists a tri-partite relationship between the principal employer, contractor, and contract labour.

The contractor must be licensed to enter into a contractual employment agreement with an establishment. By virtue of this agreement, contract labourers are employed for a specific period. Typically, they are assigned tasks requiring lower efficiency than those performed by permanent workers. Contract labour is an expanding employment sector, offering opportunities to both skilled and unskilled workers.

The primary concern regarding contract labour is job security. The key legislation governing contract labour is the Contract Labour (Regulation and Abolition) Act, 1970, which ensures rights such as minimum wages, proper remuneration, and certain benefits. This Act was enacted to prevent the exploitation of labour and to regulate contract employment. This article discusses in detail the facilities and benefits available to contract labourers, the liabilities of principal employers and contractors, and issues related to the Act’s implementation.

Keywords: Contract labour, principal employer, contractor, minimum wage, contractual employment, job security.

B) History and Background of the Act

The concept of contract labour originated during the industrialization era and has become an important trend in employment. In most industrial sectors, contract labourers are employed in large numbers, forming a tri-partite relationship between the principal employer, contractor, and contract labourers.

Over time, contract labourers faced exploitation, particularly regarding minimum wages. Though considered temporary workers, they often performed tasks equivalent to those of permanent employees but received unequal remuneration. This category of workers is predominantly found in the unorganized sector, making it difficult for the government and its agencies to safeguard their rights.

To address this issue, the Contract Labour (Regulation and Abolition) Act, 1970, was enacted to regulate the employment of contract labour, prevent their exploitation, and ensure their rights. The Act also provides for the abolition of contract labour in certain sectors. Its primary purpose is to ensure social security benefits, health and safety measures, fixed working hours, and minimum wages.

The Act came into force on February 10, 1971. However, its constitutional validity was challenged in Gammon India Ltd. vs. Union of India (1974). The Supreme Court upheld the constitutionality of the Act.

2. Application of the Act

This Act applies to every industrial establishment that employs 20 or more contract labourers during the preceding 12 months in a calendar year. It does not apply to seasonal establishments unless the period of work exceeds 60 to 120 days.

The Act mandates that all establishments employing contract labour must be registered under the appropriate authority. The implementation and administration of the Act are overseen by:

• The Central Advisory Board (at the Central level).
• The State Advisory Board (at the State level).

These boards ensure compliance with the Act’s provisions.

3. Licensing of Contractors

Every contractor must obtain a license from the licensing officer to engage contract labour in an establishment. The license is granted subject to conditions, including compliance with minimum wage laws, fixed working hours, and the nature of work assigned.

The Act mandates that contract labourers must be provided with:

• Clean washrooms, latrines, and urinals
• Canteen facilities
• First-aid facilities
• Drinking water
• Washing facilities

A contractor cannot employ contract labour without a valid license, and if the license is revoked, contract labour cannot be engaged in the establishment.

4. Duties of the Contractor

The contractor bears the primary responsibility for ensuring the rights of contract labourers, including:

• Payment of minimum wages
• Providing welfare amenities (canteen, restrooms, first-aid facilities, etc.)
• Obtaining a license from the licensing officer

The principal employer appoints a representative to supervise wage distribution by the contractor. The contractor must distribute wages in the presence of this representative.

Without a valid license, contract labour cannot be employed in any establishment.

5. Liability of the Principal Employer

The principal employer is secondarily liable if the contractor fails to fulfill obligations such as:

• Payment of wages (if the contractor fails to pay, the principal employer must pay and recover the amount later).
• Providing facilities (if the contractor fails to provide canteen, restroom, or first-aid facilities, the principal employer must do so and recover the cost from the contractor).
• Hiring only licensed contractors (to avoid legal liability).

Every establishment must be registered to engage contract labour.

6. Prohibition of Contract Labour

The appropriate government may prohibit contract labour in specific industries and establishments. In Standard Vacuum Refinery Co. vs. Their Workmen (1960), the Supreme Court ruled that contract labour should not be employed when:

• The work is perennial in nature.
• The work is necessary and incidental to the establishment.
• The work can be done by permanent workers.
• The work is traditionally performed by permanent employees.

In Steel Authority of India vs. National Union Waterfront Workers (2001), the Supreme Court held that the government could prohibit the employment of contract labour in industrial establishments.

7. Problems Faced by Contract Labourers

The major issues faced by contract labourers include:

• Unequal pay (despite performing tasks similar to permanent employees).
• Sham agreements that exploit workers.
• Lack of minimum wages and basic facilities (safety measures, canteens, restrooms, first aid).
• Denial of overtime wages.
• Exploitation of migrant labourers.
• Lack of social security benefits, particularly in the unorganized sector.

8. Benefits under the Act

Contract labourers are entitled to various social security benefits, including:

• Employee State Insurance Act (sickness, medical, dependents, and disablement benefits).
• Maternity Benefits Act (for female employees).
• Provident Fund benefits (M/S Pawan Hans Ltd. vs. Aviation Karmachari Sanghatana, 2012).
• Gratuity benefits (if employed for 5 years under the same employer).
• Compensation for workplace injuries (State of Maharashtra vs. Mahadeo Krishna Waghmore, 1971).

9. Challenges and Issues in Implementation

Despite its provisions, the Act has several challenges:

• Difficult implementation of social security benefits for temporary workers.
• Gratuity and provident fund issues due to the temporary nature of contract employment.
• Uncertainty in employment when contract labour is abolished.
• Lack of support for contract workers after discontinuation of employment.

The Act also fails to address issues in the unorganized sector, leading to continued exploitation.

CONCLUSION & COMMENTS

Although the Contract Labour (Regulation and Abolition) Act, 1970, provides certain benefits and protections, it has several shortcomings. While the Act seeks to prevent exploitation, it lacks stringent provisions to eliminate contract labour exploitation completely.

The Act also fails to address the issues of contract labour in the unorganized sector. In today’s globalized economy, contract labour plays a significant role in economic growth. Hence, separate legislation is needed to protect contract labourers in unorganized sectors and ensure their absorption into permanent employment if contract labour is prohibited.