Every industry and organisation rely on contract labourers, who also help the
industrial economy, grow. However, contract labourers often face issues with
their working conditions, the nature of their jobs, minimum pay rates or salary
deference, welfare programmes, welfare programmes, and social security plans.
At this point in the era of globalisation and liberalisation, the use of
contract labour is the biggest problem. The purpose of this article is to focus
on an overview of the problems and difficulties with the contract labour system
in India, the development of the current legal framework, regulation, and
different loopholes under the Contract Labour Act [Regulation and
This essay also examines the distinction between contract labour and general
labour, concerns and difficulties faced by contract labourers in various
industries, the history of the contract labour Act, and the development of
India's current legal system using the suggestions of several committees. The
current study is based on the utilisation of secondary data from sources like
publications, journals, libraries of websites, etc. This essay also examines how
the courts have interpreted the Contract Labour Prohibition and Abolition Act of
According to the Contract Work [Regulated and Abolition] Act of 1970, a contract
job performed by persons who fit into these categories requires a range of
skills. Unskilled, skilled, qualified, and high categories make up the levels of
qualification. A considerable formalised of the organised workforce is indicated
by an increase in the usage of temporary agency workers, who are not directly
employed by an employer but rather serve as intermediaries or contractors on
In India, rules governing labour contracts are heavily influenced by the
government, which is unusual in wealthy nations. According to the Industrial
Employment (Standing Order) Act of 1946, employers are required to obtain
government agency approval for all conditions, including the number of hours
worked, paid time off, productivity goals, discipline policies, and worker
categorization. The responsibility of the Central Council and state entities to
prevent the publication of contractual work in the official journal, employment
in the establishment or performance of other work, or participation in its
conduct is also mentioned in the law.
Growth Of Contract Workers
In India, skilled to semi-skilled occupations are performed by contract workers
in a variety of industries. Numerous Commissions, Committees, the Labour Bureau,
the Ministry of Labour, etc. examined the status and situation of contract
labour both before and after independence, and it was discovered that its main
traits were the underprivileged economic circumstances of its employees, the ad
hoc nature of their employment, the lack of job security, etc.
The Contract Labour [Regulation and Abolition] Act, 1970 was therefore passed by
the legislature and entered into force on February 10, 1971. Its purpose was to
regulate the proper operation of contract workers and prevent their exploitation
at the hands of management.
The Contractual Labour [Regulation and Abolition] Act, of 1970 governs
contractual employment in India. An establishment or business that contracts out
more than 20 employees is subject to the Act. According to this law, a
contractual worker is a person hired for a specific period by a contractor
rather than an employer. A contractor is defined as a supplier of contractual
labour to a major employer.
A person in charge of the business or establishment is known as the principal
In the event that a factory, is the factory's owner, tenant, or manager. The
Government: The head of the office or department or an officer informed by the
government or local authority; a Mine: it is the owner or the manager of the
As opposed to direct labour, contract labour has the following advantages:
There is no direct employment link between the PE and the employee and neither
do the major employer directly hire the employee. Contractors are in charge of
setting the terms of employment and hiring employees. A contractual worker's
employment agreement is for a certain amount of time and a single duty, as
opposed to a permanent employment agreement.
The Act calls for the establishment of Central and State Advisory Boards to
provide guidance to the relevant government on issues related to the
administration of the Act. A few notices from the Central Government forbid the
use of contract labour in a variety of businesses and places where it is the
appropriate government, including mines, the Food Corporation of India god owns,
port trusts, and many more. In addition, a few Committees have been established
by the Central Advisory Contract Labour Board to investigate whether or not the
use of the contract labour system should be prohibited at certain companies.
The Contract Labour (Regulation and Abolition ) Act, of 1970 was created by the
Indian Government with the primary goal of establishing social security, safety,
health, and welfare measures, minimum wages, working conditions for contract
labourers, job security, and relationships between contractors and contract
labourers before the agreement between contractors and principal employers,
among other things.
The practice of a contractor hiring workers under a contract for a set length of
time is known as contract labour. Contract workers are considered indirect
employees; they may be paid daily wages or receive daily pay at the end of each
month. Hiring, managing, and paying contract labourers are all contractors'
Definition Of Contract Workers
Contract labour typically refers to employees that are hired for a specific job
and a limited amount of time. The phrase is sometimes used in Third World
Nations to describe a system where workers are hired by a middleman, the labour
contractor, who then provides them to the employer for a charge. Such Workers
frequently have various systems tying them to the contractor, which may limit
their range of motion.
Objective Of Contract Workers
- To avoid contract labour being abused
- To offer suitable and liveable working circumstances
- To control how the advisory boards operate
- To develop the guidelines and standards governing the registration
process for businesses using contract labour
- To outline the prerequisites and licensing process for contracts
- To set forth the punishment guidelines for offences against the Act
The Primary Employer is accountable for making sure a factory has a general
health and safety policy for the employees. The employer is responsible for
maintaining sanitary conditions, proper ventilation and temperature, enough
room, water sources, latrines, and urinals. Additionally, he or she is required
to provide cr�ches, canteens, a first aid station, and facilities for washing
and sitting. Similar necessary amenities are provided for construction employees
under the 1996 Building and Other Construction Workers Act. Employers are
required by the Building and Other Construction Workers Cess Act of 1996 to make
contributions to the BOCW fund.
The Principal Employer is required to keep a register of contractors, a register
to record the job completed, wages paid, receipts, etc., and registration of
contractors. The employer is required to post a notification indicating where
and when earnings are distributed, the rate of payments, and the number of hours
worked during a pay period. A majority of the contract labourers must be able to
understand the language in which these notices are posted inside the premises.
Problem Of Contract Workers
Issues Of Contract Workers
- Providing wages
Each employee hired under contract labour must receive the required wages
from the contractor before the allotted time period has passed. The major
employer will be responsible for making the entire payment of wages due or
the outstanding amount due if the contractor fails to make the payment
within the specified time frame. The Commissioner of Labour will set the
- Health and Safety of Contract Workers
According to Chapter 5 of the Act, it is the responsibility of the major
employer to make sure that the contractor meets the requirements set forth
by the relevant government in providing the following facilities. One or
more canteens must be provided and kept up by the contractor for the benefit
of any contract labourers that the contractor employs in quantities greater
than one hundred.
The contractor is responsible for providing and maintaining restrooms or
other appropriate facilities that are adequately lit, ventilated, clean and
comfortable for contract labourers working in establishments that require
them to stop at night.
Contractual factory workers are entitled to two things in accordance with
the employer's obligations: (I) information about health and safety at work;
and (ii) training on health and safety at work.
Other amenities like drinking water, men's, and women's separate restrooms,
washing facilities, first aid, etc.., are the responsibility of the
- Working Hours and Contractual Employee's Rights
Contractual workers may only be required to work 48 hours per week and 9
hours per day. He or She is entitled to overtime pay that is double the
regulated rate. The workers must be informed of the length of the workday. A
contractual employee is entitled to annual leave with pay after working for
240 days or more, with one day off for every 20 days worked.
- Social Security
Social Security under the Employees' State Insurance Act of 1948, contract
employees are eligible for social security benefits if they earn up to
Rs.15, 000 in monthly salary. In order to cover the employees, the employer
must register with the Employee State Insurance (ESI) Corporation. Employers
contribute 4.75% of the earnings owed to employees under the ESI plan and
employees chip in 1.75% of their income.
Employees who receive a daily wage of less than Rs. 137/- are free from
making their portion of the contribution. The programme offers medical
benefits, sickness benefits, maternity benefits, disability benefits, and
dependent benefits to employees. Contractual Workers in the unorganised
sector are eligible for benefits under the Unorganised Workers' Social
Security Act of 2008, including the Janani Suraksha Yojana and Indira Gandhi
National Old Age Pension. Yet, as registration under the Act is optional, it
has not been fully put into effect.
- Retirement Advantages
Contractual employees have the right to be provided fund benefits following
retirement under the Worker's Provident Funds and Miscellaneous Provisions
Act, 1952. If they worked for a single employer for five years, they have
the right to gratuities under the Payment of Gratuity Act, of 1972.
- Additional Advantages
If a worker has an injury while performing their job but is not covered by
the ESI plan, they may be entitled to compensation under the Workmen's
Compensation Act of 1923. Corresponding to this, under the Maternity
Benefits Act of 1961, a female contractual worker who is not covered by ESI
may request maternity leave (26 weeks for the birth of the first two
children) with pay (provided she worked in an establishment for less than 80
days in a year prior to the date of her expected delivery).
Statement of the issues Minimum Wages, a lack of Social Security and Welfare
Programmes, Significant differences between contract workers and general
labourers in working conditions, the nature of the work performed by contract
workers, the absence of skills and training programmes, and the socio-economic
conditions of contract workers are all current issues not only in India but
around the world.
Issues with Contract Workers encounter several issues in both the workplace and
in society as a whole. Compared to regular labourers, contract workers are much
less secure. The Government's top concern is the exploitation of contract
workers in the workplace. Contract Labourer has minimal bargaining power, and
social security and is often employed in a hazardous industry with fewer
amenities and security.
The Contract Worker typically comes from the less privileged parts of society
and will not receive the same perks as permanent employees. Because pay is based
on output and task completion, workdays are frequently longer. Low rates of
unionisation are found among contract workers.
Related Case Laws
In Olga Tellis v/s. Bombay Municipal Corporation
, which dealt with slum
and pavement residents in Bombay city, a five-judge Supreme Court bench once
more defended the idea that the right to life also encompasses the right to
Chief Justice Beg of the Supreme Court felt compelled to "turn to the preamble
to find the object to the Act itself, to the legislative history of the Act, and
to the socio-economic ethos and aspirations and needs of the times in which the
Act was passed" in Bangalore Water Supply & Sewerage Board v/s A. Rajappa
In Francis Coralie Mullin v/s Administrator, Union Territory Of Delhi
where it has been held by this court that the right of life guaranteed under
this article is not confined merely to physical existence or to the use of any
faculty or limb through which life is enjoyed or the soul communicates with the
outside world but is also included within its scope and ambit the right to live
with basic human dignity and the State cannot deprive anyone of this precious
and invaluable right because no procedure by which such deprivation may be
effected can ever be regarded as reasonable, fair and just.
Now, it is clear that the rights and benefits granted to workers employed by
contractors under the provisions of the Contract Labour (Regulation Abolition)
Act of 1970 and the Inter-State Migrant Workmen (Regulation of Employment and
Conditions of Service) Act of 1979 are meant to protect the workers' fundamental
human dignity. If the workers are denied any of these rights and benefits to
which they are entitled under the provisions of these two pieces of social
welfare legislation, they may take legal action.
Since there was no legislation, that addressed contract labour, the Contract
Labour (Regulation and Abolition) Act, of 1970 was passed to stop the
exploitation of contract labourers. Nonetheless, the legislature needs to take
into account some of the Act's inadequacies and make the required adjustments.
The Act should also be simplified simply for significant employers and
contractors, as well as providing improved protections and facilities for
The Contract Labour (Regulation and Abolition) Act of 1970 failed to recognise
the issues faced by contract workers. The social and economic status of the
contract workers should require a complete change. It is important to give
contract workers the attention they deserve by including them in social security
and welfare programmes.
Written By: P. Gokulapriya
- https:// blog.ipleaders.in/contract-labour-regulation-abolition-1970/
- K.D. Srivastava's commentaries on Contract Labour (Regulation and
- Labour and Industrial Law Author by P.L. MALIK