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INTRODUCTION
The issue of regulation of contract labour system dates back to the colonial times and the Royal Commission on Labour took cognizance of the exploitation of the contract workers in the mills and recommended suitable institutional mechanism to regulate the contract labour system. After independence, the Government, the tripartite bodies and the judiciary discussed the issue of exploration of the possibility of gradual abolition of contract labour system where possible and regulation of their working conditions. Since there was no specific law to regulate this segment of the labour market, contract labour conflicts, where issues such as wages, bonus and employment security figured in the industrial relations, and litigation abounded. Indian judiciary is known for its credibility to interpret the laws in tune with the spirit of the Constitution of India and thereby to render justice to the people. Judiciary not only interpreted laws but many times, contributed to the development of laws itself. The law relating to contract labour is one of such examples. The Contract Labour (Regulation and Abolition) Act, 1970 (hereinafter named as the Act) was enacted on the lines of decision made in the historical case of Standard Vacuum Refining Company of India v. Its Workmen^1. This judgment provided guidelines on the question of continual of contract labour for works of regular nature and the criteria mentioned in section 10 of the Act for the abolition of contract labour is almost similar to these guidelines. The judgment also laid down the circumstances in which a workman can claim that the contract is a sham or bogus one and therefore, entitled to suitable relief by the adjudicator under the Industrial Disputes Act, 1947. The spirit of the judgment could undoubtedly be called as an inspiration to the legislator for enactment of a suitable legislation for contract labour. The spirit of the judgment was further carried out in the recommendations of the first National Commission on Labour 1969 headed by Justice P.B.Gajendragadkar who was earlier a party to the said judgment. The Contract Labour (Regulation and Abolition) Act, 1970 is the major enactment exclusively dealing with the contract labour. The Act comprehensively provides for definitions, obligations of the contractors and principal employer, health and welfare of contract labourers, powers and responsibilities of administrative authorities under the Act, penal provisions for contravention, appeal and procedure and maintenance of necessary registers and other records. The Act has been amended twice as under-
- The Contract Labour (Regulation and Abolition) Amendment Act, 1986 (14 of
- (with effect from 28 January, 1986).
- The Delegated Legislation Provisions (Amendment) Act, 2004 (4 of 2005) (with effect from 11 January, 2005). The Contract Labour (Regulation and Abolition) Central Rules, 1971 further supplement and facilitate the Act. Apart from this Act, some other labour laws are claimed to be applicable to contract labour also since the definitions under these Acts include contract labour. These legislations include-
- The Industrial Disputes Act, 1947
- The Factories Act, 1948
- The Employees Compensation Act, 2010 1 AIR 1961 SC 895
- The Employees’ State Insurance Act, 1948
- The Minimum Wages Act, 1948
- The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
- The Mines Act, 1952
- The Payment of Bonus Act, 1965
- The Payment of Gratuity Act, 1972
- The Building and other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 Some authors on the subject have different views regarding the applicability of these laws to contract labour. The main basis of the argument is that Contract Labour (Regulation and Abolition) Act, 1970 is a special legislation relating to contract labour and therefore, the intention of legislature was to deal with the issues under the Act only, and not under other general legislations like Industrial Disputes Act, 1947 and Factories Act, 1948. It is, however, submitted that the definitions under these Acts do not exclude the contract labour neither the Contract Labour (Regulation and Abolition) Act provides that the issues of contract labour should be dealt with only under the Act, and therefore, the matters with which the Act does not deal or where other Acts provide for better conditions of service particularly regarding wages and health and welfare of workers, a reference may be made to these other related labour legislations. NEED FOR THE ACT There was a great need for a separate law for the regulation of contract labour because in case of contract labour, there is a triangular employment relationship contract worker, contractor and principal employer which is quite different from the normal bi-polar direct employer-employee relationship. It is evident from the reports of various labour enquiry committees and Royal Commission on Labour appointed before independence and the reports of labour bureau surveys and the findings of the first National Commission on Labour 1969, that the working and living conditions of contract workers were very poor. They were not paid even the statutory minimum wages. The principle employers refused to recognise the contract workers as their own workers and therefore, denied any accountability towards such labour. On the other hand, contractors also tried to throw responsibility on the shoulders of principle employers only and used to tell the workers that they are just like brokers appointed for commission. There was also a state of confusion in the judicial entities as to the remedies available to contract labour under the existing legislations. Meanwhile, the use of contract labour was increasing day by day even in core activities of production without any adequate legal protection to such labourers. Therefore, the Contract Labour (Regulation and Abolition) Act, 1970 was enacted to do away with this legal void. OBJECTIVES OF THE ACT The statement of Objects and Reasons of the Bill states- “The system of employment of contract labour lends itself to various abuses. The question of its abolition has been under the considerationof Government for a long time. The Planning Commission made certain recommendations in the Second Five Year Plan such as undertaking of studies to ascertain the extent of the problem of contract labour and progressive abolition of the system and improvement of service conditions of contract labour where the abolition was not possible. The matter was discussed at various meetings of
The proviso to sub-section 4 of section 1 makes it a conditional legislation and provides that the appropriate Government may apply, to any establishment or contractor, the provisions of the Act even if it employs workmen less than the threshold limit of twenty. For this, a prior two months’ notice duly published in the Official Gazette is necessary. In the case of Asia (Private) Limited, Bangalore v. Union of India , the court upheld the constitutional validity of the proviso to section 1(4) and held that the object of the Act is to prohibit employment of contract labour in certain establishments where the work is perennial or permanent in nature. In other cases, the Act endeavors to regulate the contract labour and to provide for certain benefits and facilities to contract labour. Thus, the said proviso is not unreasonable. However, the Government should use this power with caution and on the basis of rational decision. The decision should be speaking one. An opportunity of being heard must be given to the principal employer or the contractors, upon whom the Government intends to apply the Act. When the Act does not apply- Work of an intermittent or casual nature and work of seasonal character The Act excludes the establishments operating for intermittent (not more than 120 days) or seasonal (not more than 60 days) character of work performed in the last 12 months respectively. Whether the work is of intermittent or casual nature or not, will be decided by the appropriate Government after due consultation with the Central Advisory Board or the State Advisory Board, as the case may be. Thus, it is clear that the Government has great say in making the Act actually work. It also shows that like many other laws in this country, this Act is also built upon agency oriented approach. The Act does not define what is meant by intermittent or casual nature of work rather makes the time frame as the basis of decision and what if the work is performed for 119 days or 59 days respectively. The Act will not be applicable. It is submitted that legislature needs to be more vigilant on this issue and should provide some other explanation as to the real meaning of these terms apart from prescription of time frame. In the case of Lionel Edwards Limited v. Labour Enforcement Officer , the court held that whether the work is of intermittent or casual in nature or not is a mixed question of fact and law and therefore, refused to provide for any fixed formula in this regard DEFINITIONS UNDER THE ACT Appropriate Government Section 2(1)(a) defines Appropriate Government as, “(i) in relation to an establishment in respect of which the appropriate Government under the Industrial Disputes Act, 1947 (14 of 1947), is the Central Government, the Central Government; (ii) in relation to any other establishment, the Government of the State in which that other establishment is situated” 47. It has been held in the case of Steel Authority of India Limited and Others v. National Union Water Front Workers and Others 48 that the Central Government will be the appropriate Government “if the establishment pertaining to any industry is carried on by or under the authority of the Central Government such an authority may be conferred either by the statute or by virtue of relationship of principal and agent or delegation of
power and not because of the fact that the establishment is an instrumentality or an agency of the Central government for the purpose of Art.12 of the Constitution 49 Contract Labour Section 2(1) (b) provides, “A workman shall be deemed to be employed as 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 principal employer” 51. There is divergence of opinion on the scope of definition of contract labour. The most accepted view which comes from the literal meaning of the definition is that the contract labour means labour engaged for the user enterprise through intermediary which is called contractor. It suggests that this Act is applicable to those kinds of employments where there is a triangular employment relationship i.e. contract labourer, contractor and principal employer. It means where a person is directly engaged by the employer or his agent in or in connection with the work of the establishment purely on contract basis, such person is not contract labour within the definition of ‘contract labour’ under the Contract Labour Regulation and Abolition Act, 1970. The contractor is not the agent of the principal employer as per the common terminology under the law of contract of agency. If the contractor is taken as the agent of the principal employer, then the employment relationship will become bi-polar i.e. contract labour and principal employer. The Act, on some occasions, applies the principal of vicarious liability only for the benefits of contract labourers and not to create any kind of special employment relationship between the contractor and principal employer. There are two kinds of contract labour- in labour contracts and service contracts. Labour contract means when the contractor’s job is only to supply the labour at the work site of the principal employer. This kind of contracting is apparently within the literal interpretation of the provisions of the Act. The service contract means when the contractor undertakes to perform some work for the benefit of principal employer through the contract labourers engaged by him (contractor). The actual work may be performed either at the site of contractor or at the site of principal employer. If we look at the definition, it seems that both labour contracts as well as service contracts are included within the purview of the Act. However, there is uncertainty and difference of opinion on this issue. The scholars on the subject also seem to have different opinions. The dissenting view says if it is a service contract and the work is to be performed at the site of the contractor who provides necessary tools and equipments to labourers and the actual control and supervision to ensure the quality of the work lies with the contractor, then it is outsourcing and not included in the definition of contract labour under section 2(1)(b) of the Act 52. The workers engaged in such work can not avail the benefit of the provisions of the Act. The definition clause does not mention the word outsourcing. The term “outsourcing” has been coined very intelligently to create confusion 53. The out-workers working in their homes or other premises not under the control and management of the principal employer are excluded from the definition of “workman” and therefore, the Act is not applicable to them. Service contracts in which work is performed by the contract workers in the premises of the principal employer or in other premises which in under the control and management of the principal employer, will only be included under the Act. The “control and management of the premises by the principal employer” are
WELFARE AND HEALTH OF CONTRACT LABOUR
Canteens: “In every establishment wherein one hundred or more contract workers are likely to work for the prescribed time which according to Rule 42 is six months or more it is the duty of the contractor to provide for one more canteens for the use of contract labour”^3. Canteens shall be maintained by the contractor. Rule 42 provides that the facility of canteen shall be provided within sixty days of the coming into force of the Rules in case of continuing establishment or within sixty days of commencement of contract work in case of new establishment. If the contractor fails to provide for canteen, the duty is cast on the principal employer to provide for and maintain such canteen or canteens, as the case may be, within sixty days of the expiry of the time allowed to the contractor. The facilities of dining hall, furniture, utensils, serving counter, kitchen, store room, pantry, washing places, lighting, good quality walls and flooring, covered drains, arrangement for disposing of garbage etc. must be provided. Separate facilities for dining hall and related facilities shall be provided for women workers^4. Good quality foodstuffs and beverages, as per the normal eating habits of the contract workers, shall be supplied in the canteen. Rule 47 provides that charging of foodstuffs should be on ‘no-profit, no-loss bases’. The price of foodstuffs and beverages shall not include cost of construction, maintenance, furniture, water or lighting etc. provided in the canteen^5. It is the duty of contractor or the principal employer, as the case may be, to bear the cost of running the canteen. Rest-Rooms: Section 17 read with Rule 42 provides that “if the contract labour is required to work at night and the work is likely to continue for a prescribed period which is three months the contractor shall provide for adequate number of rest rooms for the use of contract labour”^6. Contractor is to provide for this facility within fifteen days from the application of the rules in case of already working establishment or within fifteen days of the commencement of work in case of new establishment. Separate rooms shall be provided for women workers. The rest rooms should be properly ventilated, lighted, clean and spacious and facility of drinking water must be provided. Rest –rooms should be adequately protected from heat, wind and rain. If contractor fails to provide for rest-rooms, the duty is cast upon the principal employer to do so. First-Aid Facilities: “A properly equipped first-aid box marked with red-cross shall be kept at the work place which shall be available during all working hours for the use of contract labour”^7. Rule 58 provides that not less than one first-aid box shall be provided for every one hundred and fifty workers. Wholesome Drinking Water, Washing Facilities, Latrines And Urinals: every contractor is required to make necessary arrangement to provide for adequate supply of drinking water at convenient places of the workplace. Sufficient facilities of latrines and urinals with separate latrines and urinals for women workers shall be provided^8. As per Rule 53, “there should be at least one latrine for every twenty five workers for males and females respectively. The number of urinals required is not less than one for fifty workers males 3 Section 16 of the Contract Labour (Regulation and Abolition) Act, 1970. 4 Rule 44 of the Contract Labour (Regulation and Abolition) Central Rules, 1971. 5 Rule 48 of the Contract Labour (Regulation and Abolition) Central Rules, 1971. 6 Section 17 of the Contract Labour (Regulation and Abolition) Act, 1970 7 Section 19 of the Contract Labour (Regulation and Abolition) Act, 1970. 8 Section 18 of the Contract Labour (Regulation and Abolition) Act, 1970.
and females separately. Latrines should be situated at convenient places and should be having privacy. Proper cleanliness and water facilities shall be provided”. It is submitted that the restriction as to minimum number of workers to be employed (which is 100 or more) to require a contractor to provide for canteen to contract workers needs to be revisited. Contract workers always need a canteen to have tea or meals etc. However, rules may be relaxed as to the standard requirements in the canteen. Same applies to the requirement of rest-rooms in night shift work. There is also a need to re-examine the provisions relating to responsibility to provide for such health and welfare measures. A distinction between labour contracts and service contracts seems to be convenient because it will not be feasible for a contractor to provide for such amenities in an establishment which belongs to principal employer and where his job is only to supply labourers. In such cases, the duty should be placed on the shoulders of principal employer. EFFECT OF LAWS AND AGREEMENTS INCONSISTENT WITH THE PROVISIONS OF THE ACT The provisions of the Contract Labour (Regulation and Abolition) Act, 1970 shall have an overriding effect over any other law, agreement, and contract of service or standing orders which is inconsistent with any of its provisions^9. However, the Act upholds the validity of any agreement or contract of service or standing order which gives or purports to give better benefits and facilities than provided under this Act^10. The provisions provided in the Act are the barest minimal provisions which must be secured by the principal employers and the contractors to the contract labourers. Contract labour is the most exploited form of labour. The Government is required not only to enact laws but to amend these laws whenever required, and to properly implement the laws by establishing a professional and efficient institutional framework. REGISTERS AND OTHER RECORDS TO BE MAINTAINED One of the important features of the Act is the requirements of a lot of paper work on the part of principal employer or the contractor. As per Section 29 read with Rules, records and registers to be maintained by the contractor are as follows-
- Register of persons employed as contract labour in respect of each establishment in Form XIII^11.
- Employment Card to be issued to contract workers in Form XIV.
- Service Certificate to be issued to the workers whose services have been terminated in Form XV.
- Muster Roll, Wage Registers, Deduction registers and Overtime Register, in Form XVI, XVII, XX, and XXIII respectively, shall be maintained by the contractor in respect of each worker employed as contract labour.
- If the wage period is one week or more, the contractor is required to issue wage slips to the workmen in Form XIX. 9 T. Chandra Mohan Nair v. Fertilizers and Chemicals Travancore Limited 1994 LLR 626 (Ker). 10 Section 30 of the Contract Labour (Regulation and Abolition) Act, 1970. 11 Rule 75 of the Contract Labour (Regulation and Abolition) Central Rules, 1971.
No court shall take cognizance of an offence punishable under this Act unless the complaint thereof is made within three months from the date on which the alleged commission of the offence came to tne knowledge of an inspector. PROVIDED that where the offence consists of disobeying a written order made by an inspector, complaint, thereof may be made within six months of the date on which the offence is alleged to have been committed PROTECTION UNDER OTHER LAWS The contract labourers are not only protected under the Contract Labour (Regulation and Abolition) Act, 1970 but also under the following other labour laws and these are as follows:
- The Employees Provident Fund and Miscellaneous Provisions Act, 1952: S.2 (f) of the Act, any person employed by or through a contractor in or in connection with the work of the establishment is also an employee unless otherwise covered under the Act and will thus be eligible to get the benefits of the scheme framed under the Act. Thus, the employees engaged through the contractor will be liable to be covered under the Employees’ Provident Funds and Miscellaneous Provisions Act.^13 ‘
- The Employees’ State Insurance Act,1948 : This Act states that the factories and the other establishments to which the Employees’ State Insurance Act applies, contract labour will be entitled to the benefits as conferred under the Act to the employees so long as they meet the requirements of the expression employees as defined in S.2(9) of the Act. 2. The Payment of Bonus Act, 1965 Neither the Contract Labour (Regulation and Abolition) Act, 1970 nor the The Payment of Bonus Act, 1965 provide that the said Act will be payable. It has been held by Kerala High Court that the principal employer will be liable to pay wages to the employees of the contractor 56 D.C.M Limited V. Regional Provident Fund Commissioner, 1998 LLR 532 (Raj HC) Page29 if the latter fails to make the payment of wages to his employees. It has further been held that the bonus will not be payable by the principal employer to the workers engaged by two contractors since the bonus does not come within the purview of wages.
- The Mines Act, 1952 : As per s. 2(1) of the Act any contract labourer working in the mine or part threof shall also be liable for compliance of various provisions of the Act and Rules.
- The Minimum Wages Act,948 : Sub – rule IV of Rule 25 of the Contract Labour (Regulation and Abolition) Act, 1970 provides that the principal employer will ensure that the workers as engaged through the contractor will be paid wages not less than the wages as fixed under the Minimum Wages Act. As also evidenced in the case of T.R. Turkey and Company v. Regional Labour Commissioner^14 decided by the Karnataka High Court.
- The Industrial Disputes Act, 1947: The workman under the Contract Labour (Regulation and Abolition) Act, 1970 is also a workman under the Industrial Disputes Act. Here also the workmen as contact labourers are given protection as is provided under the sais Act. In the case of Bharat Earth 13 D.C.M Limited V. Regional Provident Fund Commissioner, 1998 LLR 532 (Raj HC) 14 1985 Lab JC 909 (Ker HC)
Movers Ltd. v. Gangaramaiah by Sri Mahmood Mirza ,^15 the Karnataka High Court has clarified that if the workers are paid less than the minimum wages then they can recover the same from the principal employer by filing petition under S. 33(c) (2) of the Industrial Disputes Act, 1947providing for recovery of money due from the employer since the workers will also have the status of workmen as defined under S.2(s) of the Act.
- The Workmen’s Compensation Act, 1923: This Act also speaks of protection to a contract labourer as dealt under S.12 of the Act which deals with the liability of payment of compensation as per the provisions of the Act to a contract labourer for personal injury caused by accident arising out of and in the course of employment. Thus from the above provisions and case analysis it is found that not only under the Contract Labour ( Regulation and Abolition) Act but also under other labour laws it is found that the contract labourers are well protected, and the Judiciary has always intervened in order to give complete protection to the contract labourers. And it is found that any act done in contravention of any provisions of the Act is penalised JUDICIAL PRONOUNCEMENTS ON CERTAIN ISSUES There are number of judgments in which the court delivered its opinion in relation to the status of contract labour being abolished under the notification as it is one of the disputed social issues in relation to government reforms. Therefore Judiciary is always cognizant to regulate the security and status to be provided for such type of labour and to ensure that they won t be exploited by the industrial class of the society.‟ In Standard –Vacuum Refining Company of India V. Its Workmen and Others^16 , The Supreme Court declared that if the job is of perineal nature done by the contract labours and if less salary is being given to the contract labours when compared to regular workmen , then court can order regularization of service of the contract workmen with the Principal employer.^17 In Gammon India Ltd. vs. Union of India^18 Judiciary interpreted many provisions and rules of the Contract Labour Act, 1970 broadly. Various facilities, wage payment manner, duty of contractor and principal employer were broadly interpreted. In this case it was also held that the contract labour statute is constitutionally valid. In Hussain Bhai v. Alath Factory, Tezbilali Union^19 , A workmen under CLRA Act is also a workman under Industrial Disputes Act. A contractor would be the employer of such person. The Principal Employer under the Act would be employer under I.D. Act in certain circumstances. 15 2007 LLR 719:2007(114) FLR 700 (Karn HC) 16 1960, (3) SCR, 466, 17 Abraham, S, The issues, Concerns, Problems and Remedies in managing the Contract Labour, retrieved from http://www.lawbrain.in/Contract-Labour.pdf 18 1974 SCC (L&S) 252 19 1978(2) LLJ, 397
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