REGULATION OF CONTRACT LABOUR IN INDIA
Applicability of the Act
The employment of contract labour is regulated under the Contract Labour (Regulation and
Abolition Act, 1970) [“CLRA”]. The Act is applicable to every establishment, (except which
perform work of casual or intermittent nature) wherein twenty or more workmen are employed or
were employed on any day of the preceding twelve months as contract labour or to every contractor
who employs or who employed on any day of the preceding twelve months twenty or more
workmen.1 The appropriate government might issue a notification in the Official Gazette extending
the applicability of the act to any establishment employing less than twenty workmen.
What is contract labour?
A contract labour is a workman hired through a contractor with or without the knowledge of the
principle employer (“PE”). A contractor is someone who undertakes to produce a given result for an
establishment.2
Central and state advisory boards
The central and state governments may establish advisory contract labour boards to advice the
appropriate government. These boards can constitute committees on issues as they deem fit. 3
Registration and Licensing
Every PE of the establishment to which CLRA is applicable should get itself registered with
registering officer within the time period fixed by the appropriate government. 4 The procedure is
prescribed under the rules issued by appropriate government under the Act. If the PE fails to get the
establishment registered, then they can no longer employ contract labour after expiry of prescribed
period. 5
Every contractor shall execute any work through contract labor only under and in accordance with a
licence issued by the licensing officer.
Prohibition of Employment of Contract Labour
The central government may prohibit employment of contract labor in any process, operation or
work in any establishment considering the factors like whether the work is (a) of perennial nature,
(b) incidental to or necessary for the establishment, (c) done ordinarily through regular workmen (d)
sufficient to employ considerable number of whole time workmen. It is not necessary that the
establishment should automatically absorb the contractual labour after its abolition. 6
Welfare and Health of Contract labour
1 Section 1, CLRA
2 Section 2, CLRA
3 Section 3,4,5 CLRA
4 Section 7 CLRA
5 Section 9, CLRA
6 Steel Authority of India v National Union Water Front, AIR 2001 SC 3527
Every contractor in accordance with the rules issued by the appropriate government shall provide
for canteens, rest rooms, clean drinking water, urinals, washing facilities, first aid facilities etc. 7 If
the contractor fails to provide the facilities then, the PE is responsible to provide the amenities to
8
ensure the welfare and health of contract labour. Similarly, a contractor is ordinarily responsible
for paying their wages however, if the contractor fails then PE has the duty to disburse the wages. 9
Additionally, the rights of contractual employees are protected under the Factories Act as well
which prescribe appropriate work hours, social security measures etc.
Penalties and Procedure
CLRA prescribes penalties for obstructing an inspector and contravening provisions of the act. 10 No
court lower than Magistrate of the first class shall try any offence punishable under the act. The
courts can take cognizance only upon a complaint or with previous sanction (in writing) of the labor
inspector.11
Protection of non-workmen employees
Non-workmen employees are not protected under the CLRA. They are subject to respective Shops
and Establishment Act as well as the provisions of Indian Contract Act, 1872.
7 Section 16-21, CLRA
8 Section 20, CLRA
9 Section 21, CLRA
10 Section 22-24, CLRA
11 Section 26, CLRA
