CONTRACT LABOUR (REGULATION AND ABOLITION) ACT, 1970

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

NECESSITY OF THIS ACT

o

The contractors usually lack a sense of moral as well 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- Bihar Labour Enquiry Committee 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.

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 is1. 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 regular workmen

MAIN FEATURES
1.

2.

3.

4.

5.

To regulate the employment of contract labour and in establishments and in certain circumstances to abolish the use. The act applies to every establishment which employs twenty or more labour. Central and state advisory boards to be formed by respective Governments. Every establishment covered under the act to be registered by the principle employer. The act authorizes the appropriate Government to make rules for health and welfare of contract labour at work places.

5.

The contractor is required to pay wages and a duty is cast on him to ensure the disbursement of wages in the presence of the authorized representative of principle employer. Appointment of an inspecting officer, maintenance of records and registers, penalties for non conformation of act is provided. The appropriate Govt. is authorized, in consultation with the advisory boards, to abolish use of contract labour in certain establishments.

6.

7.

CONSTITUTIONAL VALIDITY OF THE ACT

Gammon India Ltd. Vs Union of India

The petitioners carried out business of construction of roads, buildings, bridges and dams. Objections to Act
The application of the act in respect of pending work of contractor amounts to an unreasonable restriction on the right of the contractor The fees prescribed for registration, license and renewal 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 and unreasonable due to impracticability of implementation. Provision for forfeiture of security are unconstitutional.

Supreme Court Verdict

Gammon India Ltd. Vs Union of India

Violation

of article 19 (1)(g). Repealing the contention that application of the Act in case of pending work amounted to unreasonable restriction on the contractors, the Supreme Court held that the act dealt with contract labour and not contract. And that there is no Retrospective Action. The fees prescribed for registration, license and renewal of labour do not amount to a levy of tax.

Supreme Court Verdict cont..

Article 14
-- The court held that provision of canteens, rest rooms, supply of drinking water, latrines, urinal and first aid facilities are amenities are amenities for dignity of labour and not in excess of the object of law.
-- Further the provision in the act for forfeiture of security 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.

NON CONFORMANCE TO THE ACT IS VIOLATION OF FUNDAMENTAL RIGHT.

In ASIAD case it was argued that writ petition under art 32 could not be maintained as it was only a violation of labour laws. The Supreme Court observed that in light of the judgments given by it in Maneka Gandhi case as well as in Francis Coralie case, the right to life is confined not merely to physical existence but also to live with basic human dignity. And the provisions of the act are clearly intended to ensure basic human dignity to the workmen, so any non observance of the act shall amount to violation of Art 21.

References can also be drawn to Olga Tellis and

THE ACT

IN A NUTSHELL
Chapters - 7 Provisions - 35 Chapter I - Applicability and Definitions (Section 1 & 2)

Chapter II - Advisory Boards (Sections 3 - 5) Chapter III - Registration, (Sections 6 -10) Chapter IV - License, (Sections11-15)

Chapter V - Welfare and Health, (Sections 16 21) Chapter VI - Penalties and Procedures (Sec 22 27) Chapter VII - Miscellaneous (Sections 28 35)

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 workmen on 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.

DEFINITIONS

Appropriate Government
1) In relation toi.) Any establishment pertaining to any industry carried out by or under the authority of the Central Government, or pertaining to any such controlled Industry as may be specified in this behalf by Central Government, or ii.) Any establishment of any railway, cantonment board, major port, mine or oilfield, or iii.) Any establishment of a banking or insurance industry the Central Government,

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

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;

PRINCIPLE EMPLOYER

i). In relation to any office or department of the government or local authority, the head of that office or department or such other officers as the government or the local authority , as the case may be, may specify in this behalf, ii). in a factory, the owner or occupier of the factory and where a person has been named as the manager of the factory under factories act 1948, the person so named. iii). In a mine, the owner or agent of the mine and where a person has been named as the manager of the mine, the person so named,

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 of which 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 working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on without the aid of power, or is ordinarily so carried on.

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

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 for hire or reward, whether the terms of employment be express or implied, but does not include any such personWho is employed mainly in a managerial or administrative capacity; or

Who, being employed in a supervisory capacity, draws wages exceeding five hundred rupees per mensem or exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature, or Who is an out worker, that is to say, a person to whom any articles or materials are given out by or on behalf of the principle employer to be made up, cleaned, washed, repaired, altered, ornamented, finished, adapted or otherwise processed for sale for the purpose of the trade or business of the principle employer and the process is to be carried out either in the home of the outworker or in some other premises, not being premises under the control and management of the principal employer.

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 of manufacture to such establishment, through contract labour or who supplies contract labour for any work of the establishment and include a subcontractor.

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 in connection with such work by or through a contractor, with or without the knowledge of the principle employer

Chapter II - Boards
The Advisory Boards Section-3 Central Advisory Board Section-4 State Advisory Board

Section-5 Power To Constitute Committees.

Chapter III Registration

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

Gammon India Ltd. Vs. Union of India, 1974

The constitutional validity of 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 to unreasonable 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.

Standard Vacuum Refinery Company Vs. their workmen, 1960

This case precedes the CLRA. Its relevance to CLRA arises from the fact that the judgment of the case was later on used to decide the factors which should be considered by govt. when it is considering prohibition of contract labor in an establishment. These conditions were: Contract labour should not be employed where: 1. The work is perennial 2. The work is incidental to and necessary for the work of the factory 3. The work is sufficient to employ considerable number of whole time workmen; and 4. The work is being done in most concerns through regular workmen.

Air India Statutory Corporation Ltd. Vs Ors Vs United Labour Union & Others, 1996

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 though there exists no express provision in the Act for absorption of employees in establishments where contract labour system is abolished by publication of the notification under section 10 (1) of the Act, the principal Employer is under statutory obligation to absorb the contract labour.

Steel Authority of India Ltd (SAIL) & Others Vs National Union of Waterfront 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.

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 under Sec 10 JUDGEMENT: Principal Employer not liable to absorb the contract workers

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 under Sec 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

NTPC Vs Karri Pothuraju & others, 2003

NTPC was running a canteen for its employees, through a contractor Canteen employees claimed regularization JUDGEMENT: Canteen is essential under Sec 46 of the fact. Employees to be regularized

Chapter IV License
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

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.

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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