Contract Labour (Regulation and Abolition) Act, 1970
Act: An Act to regulate the employment of contract labour in certain establishments and to
provide for its abolition in certain circumstances and for matters connected therewith
- Has 7 chapters & 35 sections
- Came into force on 10th Feb 1971
Objectives:
⚫ to prevent exploitation of contract labour
⚫ to introduce better conditions of work
A workman is deemed to be employed as Contract Labour when he is hired in connection
with the work of an establishment by or through a Contractor
Contract workmen are indirect employees.
Contract Labour differs from Direct Labour in terms of employment relationship with the
establishment and method of wage payment.
Contract Labour, by and large is not borne on pay roll nor is paid directly, contract
laborers are typically not included on a company's official payroll, and they are
not paid directly by the company that utilizes their services. Instead, they are
employed and compensated through a third-party contractor or vendor.
Applicability: (to Employer & Contractor) 20 or more workmen employed on any day in
the preceding 12 months
The Contract labour: Workmen hired, supervised and remunerated by the Contractor, who
in turn, is remunerated by the Establishment hiring the services of the Contractor
Contractor: a person who undertakes to produce a given result for the establishment other
than a mere supply of goods, articles of manufacture to such establishment and includes a
sub-contractor.
Workman: a person employed in or in connection with the work of an establishment to do
skilled, semi-skilled or unskilled, manual, supervisory, technical or clerical work.
⚫ It is immaterial whether terms of employment are expressed or
implied.
⚫ Employment may be for hire or reward.
(a contractor is hired to get a job done, and a workman is anyone employed to
do different kinds of work for a business, whether they are paid or not.)
“Principal employer”
A "principal employer" is defined as follows:
- In the context of a government office or local authority, it refers to the head
of that office or a designated officer.
- In a factory, it's the factory owner or occupier, or the appointed manager. In a
mine, it's the mine owner or agent, or the named mine manager.
- For other establishments, it refers to any individual responsible for overseeing
and controlling that establishment.
- This definition helps determine who holds legal responsibilities and
obligations related to labour and employment matters in various types of
workplaces.
- Applicability of the Act: The Act in question applies to both the
Principal Employer of an Establishment and the Contractor. It becomes
applicable when there are 20 or more workmen employed as Contract
Labour, or even if they were employed for just one day during the
preceding 12 months.
- Calculation of Workmen: When determining whether the 20-
workmen threshold is met, the Act requires taking into consideration all
contract laborers employed for various purposes through different
contractors. In other words, the total number of contract laborers
across different types of work or contractors should be counted.
- Registration and Licensing: If either the Principal Employer or the
Contractor falls under the scope of the Act due to meeting the 20 or
more workmen criterion, both parties are obligated to apply for the
necessary approvals. The Principal Employer is required to apply for
the registration of the Establishment, and the Contractor needs to
obtain a license.
- Temporary Registration for Short-Term Contracts: The Act allows
for Temporary Registration when Contract Labor is hired for a period
not exceeding 15 days. This provision acknowledges that some
contracts are very short-term in nature, and the usual registration
requirements may not be practical for such situations.
- Notification of Changes: Any changes in the details provided in the
Registration or Licensing Certificate must be promptly communicated
to the relevant Registering Officer within 30 days of the change
occurring. This is important to ensure that the information remains
accurate and up-to-date.
- Individual Registration for Each Establishment: The Principal
Employer is required to apply for registration separately for each
establishment they operate. This means that if a Principal Employer
has multiple establishments, each one needs its own registration under
the Act.
Specific License for Each Contract: A license issued for one specific contract
cannot be used for an entirely different contract work, even if there is no change
in the establishment. This provision ensures that licenses are tailored to the
specific contract and its requirements, preventing misuse or non-compliance.
Penal Provisions
⚫ If the Principal Employer fails to get registered under the Act, then the Principal
Employer cannot employ contract labour.
⚫ If the Establishment is not registered or if the Contractor is not licensed, then the
contract labour shall be deemed to be the direct workmen and the Principal Employer
or the Establishment shall be liable for the wages, services and facilities of the
contract labour etc.
⚫ For contravention of the provisions of the Act or any rules made there under, the
punishment is imprisonment for a maximum term up to 3 months and a fine up to a
maximum of Rs.1000/-
Liabilities of the Principle Employer (Sec. 20)
⚫ Payment of Wages in Case of Contractor Failure: The Principal
Employer must step in to pay wages if the contractor fails to do so,
ensuring that contract laborers are compensated as agreed.
⚫ Nomination of Representative: The Principal Employer can
appoint a representative to oversee wage disbursement by the
contractor, ensuring transparency and fairness.
⚫ Provision of Welfare and Health Facilities: Depending on the
scale and duration of work, the Principal Employer must provide
facilities like canteens, rest rooms, sanitation, drinking water, and
more to contract laborers for their well-being.
⚫ Recovering Expenses from the Contractor: The Principal
Employer can recover the expenses for providing facilities from the
contractor, incentivizing compliance.
⚫ Maintenance of Records: The Principal Employer needs to
maintain records detailing the number of contractors, contract
laborers, nature of work, and wage rates, ensuring transparency and
compliance.(UNDER FORM 12)
⚫ No of Contractors and contract labour employed
⚫ Nature of work.
⚫ Rate of wages.
⚫ Display of Notices: Notices containing important labor-related
information must be displayed in a prominent place in both English
and the local language, keeping workers informed about their rights
and relevant details.
⚫ Rate of wages.
⚫ Hour of work.
⚫ Wage period.
⚫ Date of payment of wages.
⚫ Name and address of the Inspectors.
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