Contract labour act

THE CONTRACT LABOUR (REGULATION AND ABOLITION)

ACT, 1970

Presented by :|| K J Deepak Cyril || NIT Warangal ||

CONTENTS:

• Objective• Evolution• Definitions• Advisory Board• Applicability of the Act• Registration • Contractor Management• Licensing• Responsibilities of Employer & Contractor• Applicability of other Laws on Contract Labour Act• Labour Act : New Perspectives• General Information (Risks, Amendments)

© K J Deepak Cyril || NIT Warangal ||

OBJECTIVE:

• To regulate the employment of contract labour in certain establishments and to provide for its abolition in certain circumstances.

• It is to prevent exploitation of the contract labour and also to introduce better conditions of work.


EVOLUTION1859

• Workman’s Breach of Contract Act, 1859

1860

• Whitley Commission• Abolition of Contract Labour by implication.

1938

• Bombay Textile Labour• Enquiry Commission is formed.

1941

• The Bihar Labour Enquiry Committee

1946

• The Rega Committee• Labour Investigation Committee was formed

1960

• Standard Vaccum Refinery Issue• Second Five Year Plan, Tripartite Committes was formed

1970

• CONTRACT LABOUR ACT• 5th Sep. 1970 – Assented by the President

Came into effect from 10th Feb, 1971© K J Deepak Cyril || NIT Warangal ||

DEFINITIONS

• Abolition - Automatic absorption of Contract Labour.

• Regulation - Managing or Monitoring the Labour force

• Contract Labour - The labour of workers whose freedom is restricted by the terms of a contractual relation and by laws that make such arrangements permissible and enforceable. Should not do any main activity of the Company.– Off the Role/Indirect Employee.


• Establishment - – Any office or department of Government or local authority – Any place where any industry, trade, business, occupation

is carried on.• Principal Employer - – In a factory, the owner or occupier of the factory.– In relation to any office or department of the Government

the head of that office or department.

DEFINITIONS Contd.,


• Contractor – – Intermediary between Labour and Employer.– A person who undertakes to produce the given result

for the establishment through contract labour. – A person who supplies contract labour(min of 20 No’s)

for any work of establishment and may include a sub contractor within this category.

DEFINITIONS Contd.,


APPLICABILITY OF THE ACT

Employer

Contractor

Contract Labour

EMPLOYER

CONTRACTOR

It applies to every employer and to every contractor who employees 20 or more number of workmen on any day of the preceding twelve months as contract labour.


ADVISORY BOARD The Central Board (Sec. 3) consists of– A Chairman appointed by Central Government– The Chief Labour Commissioner– Members not exceeding 17 and not less than 11.

Similarly with the State Board (Sec. 4)– A Chairman appointed by State Government– The Labour Commissioner– Members not exceeding 11 and not less than 9.


REGISTRATION OF ESTABLISHMENT(Sec. 7)

Every establishment which proposes to engage contract workers for its work is required to obtain a certificate of registration from the appropriate Government.• Procedure:

Employer should approach the Registering office with– Application for registration in triplicate in Form No.I

to the registering officer (Sec. 6).– Receipt showing payment of the prescribed fee.


• If the application for registration is complete in all respects, the registering officer shall register the establishment and issue a registration certificate in Form-II

• Every certificate of registration shall contain the following – The name and address of the establishment– The maximum number of workmen to be employed as

contract labour in the establishment– The type of business– Relevant other particulars

Contd.,


ADMINISTRATION OF CONTRACTOR• Documents that are to be produced by the contractor to

employer for approval are– Copy of the document showing legal status of the firm. – Copy of the document showing allotment of PF Code No. – Copy of receipt / cover note / insurance policy obtained. – Copy of chalans showing remittance of security deposit– License fee to obtain the labour license.

Contractors should in an application Form for engaging contract labour every month /new entry.


LICENSING OF CONTRACTORS (Sec.11-15)

• Every contractor who has 20 or more workers on any day of the month has to get a license for engaging contract labour for the work of any establishment.

• License is issued by the authorized licensing officer (Section-12).


GRANT OF LICENCES (Sec. 13):

• Procedure:

The Contractor has to approach the Licensing Authority (Sec. 11) along with– An application for the grant of a license in triplicate in

Form No.IV– Security Amount that has to be deposited (Rs.20/ Employ).– Receipt showing the fee paid to the licensing officer.


GRANT OF LICENCES Contd.,

– Certificate by the principle employer in Form-V stating that the applicant is employed by him as contractor in relation to its establishment.

The licensing officer, after making necessary investigations will grant a license in Form VI which can be renewed from time to time.


RENEWAL OF LICENCE• Procedure for Renewal of License:– Contractor should approach the Licensing authority before

30 days of expiry date of license along with• An application for the renewal of license in Form VII in

triplicate

• Required fee that is to be remitted.

If the renewal application is not submitted by prescribed date then the contractor will have to pay a fee of 25% in excess of the fee ordinary Payable.


REGISTRATION Vs LICENSING PARAMETERS REGISTERING LICENSING

AUTHORITY Taken by the Principle Employer (Sec 7)

Taken by the Contractor (Sec 12)

ISSUED When Certain fees is paid through Demand Draft

When Fees is paid along with the Security Amount Deposition

VALIDITY ONCE TAKEN IS ENOUGH ONE YEAR

RENEWABILITY Not Needed Has to Renew Every Year before Due Date

DISPLAY Need not be displayed in the office

Should be displayed at the place of the contract work is performed

Pre-Requisities Form I for registration in triplicate copy along with prescribed fees.

form IV for license in triplicate copy along with license & security feesform V, given by Principal employer to contractor


RESPONSIBILITIES OF THE EMPLOYER

• To get the registration of the Establishment.• To engage workmen only through licensed contractors.• To display the notice showing Name & Address of the Inspector

(In English & Local Language), rate of wages, date of payment.• To recover the expenses involved from the contractor through bills

payable.• The principal employer has to nominate a representative to be

present at the time of disbursement of wages to the contract workers. – It shall be the duty of such representative to certify the amount

paid as wages in the wage-register.


Contd.,• To report the information relating to contract labour when the

inspector asks for.• To maintain a register of Contractors (Form XII).– Number of Contractors – Nature of Work performed

• To send Annual Return (Form XXV) to licensing authority by 15th Feb.

• To submit returns for each contractor within 15 days of start or completion of work (Form VI A).

• To provide welfare and Health facilities, if the contract is not providing (Sec. 16-20).


CONTRACT Vs REGULAR LABOURPARAMETERS CONTRACT LABOUR REGULAR LABOUR

Part time/ finite time Full Time

Relationship Has an Intermediary i.e., Contractor

Directly connected to the Organization

Work Performs the Supplement job Performs the main activity of the organization

Responsible/ Reporting To the Contractor To the employer

Supervision By the Contractor By the Employer

Facilities Provided by the Contractor Provided by the Employer

Payment Type Time Based/ Piece Rated Regular Pay


RESPONSIBILITIES OF THE CONTRACTOR

• To get approval from the Employer.• To obtain License from the Licensing Authority.• To submit monthly printed bill to the Company for

payment of the work done by him 1st day of following month.

• To display the Name of the Inspector, Wages paid & Abstract of the Act (In English and Local Language)


Contd.,• To maintain Muster roll, Wages, Deductions, Overtime,

Fines, Advance, Wage slips Registers(Sec. 29).• To provide Welfare and Health facilities:– Canteens (Sec. 16)• If labour is above 100 No’s

– Rest Rooms (Sec. 17)– Drinking Water, Urinals, Latrines (Sec. 18)• Urinals – 1 for 50 Workers• Latrines – 1 for 25 Workers

– First Aid (Sec. 19)


Contd.,• To be responsible for payment of wages before 7th of each

month(Sec. 21).• To disburse the wages in the presence of the representative

of employer.• To issue Employment Cards to all the workers by 3 days of

start of work.• To send half early return in form xxiv after 30 days from

close of half year i.e. June and December.


APPLICABILITY OF OTHER LABOUR LAWS UPON CONTRACT LABOUR

• The Employees’ PF & Misc. Act, 1952• The ESI Act,1948• The factories Act,1948• The Industrial Disputes Act,1947• The Minimum Wages Act,1948• The Payment of Wages Act, 1948• The Payment of Bonus Act,1965• The Payment of Gratuity Act, 1972• The Workman’s Compensation Act, 1923• Equal Remuneration Act, 1976• Child Labour Act, 1986


LATEST AMENDMENTS

• The Contract Labour (Regulation and Abolition), (Amendment) Act, 1986.

• The Delegated legislations provisions (Amendment) Act,2004.


CONTRACT LABOUR: NEW PERSPECTIVES

• Any worker should not be kept continuously as a causal or temporary worker against a permanent job for more than 2 years unless he is employed on a contract for a specified period.

• Licensed Contractors should be treated as a separate establishment in case of liability.

• Issuing smart cards to workers.


Contd.,

• Contract workers are to be paid 20% above the fixed minimum wages at entry level.

• Payment of additional 4.81% contribution as gratuity to be paid by industry in addition to EPF and ESI contributions.


GENERAL INFORMATION

• Contract Labour, doing the work of perennial nature for years together, in the absence of genuine contract between company and contractors, they become entitled to be regularized in employment.

• On prohibition of the contract labour, preference should be given to the erstwhile contract labour for employment as and when vacancy arises in their respective operational areas.


GENERAL INFORMATION

• The contract labour who performs similar kind of work as regular workmen, will be entitled to the same wages and service conditions as regular workmen as per the Contract Labour (Regulation and Abolition) Central Rules, 1971 (Section 21).

• The license of Contractor is liable to be cancelled if he does not pay same wages to his employees as paid to direct employees.


GUIDELINES

• The guidelines are mandatory in nature and are: – Conditions of work and benefits provided to the contract

labour. – Whether the work is of a perennial nature. – Whether the work is incidental or necessary for the work of

an establishment. – Whether the work is sufficient to employ a considerable

number of whole-time workmen.– Whether the work is being done ordinarily through regular

workman in that establishment or a similar establishment.


GRIEVANCE PROCEDURE

WORKER’S COMPLAINTS

CONTRACTOR/SITE IN-CHARGE

HR DEPARTMENT

PRINCIPAL EMPLOYER/HEAD


RISKS

• Risks involved in engaging the contract labour are:– It should not be a sham arrangement.– Economically viable.– No direct Supervision should be done.– Should not be at the cost of keeping own labour idle. – Jobs requiring high skills and not possessed by our

own employees can be vendored out


PROCESS FLOW

• Head of Department/Manager/Owner.• Should have the registration certificateEMPLOYER

• A person who is responsible to supply the labour to the organization• Acts as an Intermediary between Organization and Contract Labour• Should have a license.• Should get an approval from the employer.• Employer shall pay the expenses for the labour.

CONTRACTOR

• Indirect employees;• persons who are hired, supervised and remunerated by a

contractor who, in turn is compensated by the establishment.• Off the Roll Employees

CONTRACT LABOUR


REFERENCES

• Labour and Industrial Laws, II Edition, Author: P.K.Padhi• http://www.ficci.com/spdocument/20189/Industrial-

Relations-and-Contract-Labour-in-India.pdf• http://labourbureau.nic.in/CL_WC_Pet_Ref.pdf• http://clc.gov.in/Acts/shtm/cla.php• http://labour.gov.in/upload/uploadfiles/files/ActsandRules/

Service_and_Employment/TheContractLabour1970.pdf• http://pblabour.gov.in/pdf/acts_rules/

contract_labour_regulation_and_abolition_act_1970.pdf• http://www.nacib.in/pdf/Labour%20Act.pdf


THANK YOUPresented by :

|| K J Deepak Cyril || NIT Warangal ||

© K J Deepak Cyril | | NIT Warangal ||

Recruiting & HR

Contract labour act