THE CONTRACT LABOUR

(REGULATION AND
ABOLITION) ACT, 1970
PRESENTED BY :

Astha Sharma (17PGHR14)

Jiten Kakar (17PGHR26)
Kanksha Vyas (17PGHR30)
Rajat Sharma (17PGHR41)
Shaunak Mahendru (17PGHR50)
Shubham Gupta (17PGHR52)
Plight of contract laborers before 1947

bonded
labour

engaged in
hazardous
Condtions very little
occupations
endangering
their health
of bargaining
power,
and safety
laborers

have little
or no social
security
 Recommendations of committees
The Whitley Commission (1860) in pre-Independence India recommended the
abolition of contract labour.
The Bombay Textile Labour Enquiry Committee (1938)
The Bihar Labour Enquiry Committee (1941)
The Rega Committee (1946)

As a result, in the Standard Vacuum Refinery Company Vs. Their Workmen (1960) the
Supreme Court of India observed that contract labour should not be employed where:

(a) The work is perennial and must go on from day to day;

(b) The work is incidental to and necessary for the work of the factory.
(c) The work is sufficient to employ considerable number of whole time workmen; and
(d) The work is being done in most concerns through regular workmen.

The government finally passed the Contract Labour (Regulation and Prohibition) Act,
1970.
 Objectives of the Act
Affording security in consonance with objectives of a
socialist economic model
Affording equal treatment and security to all
employees
Avoiding exploitation of contract employees
 Salient features of the Act
Covers every establishment in which 20 or more workmen are employed on any day
of the preceding 12 months as contract labour and every contractor who employs
or who employed on any day of the preceding 12 months, 20 or more contract
employees.
Does not apply to establishments where the work is of intermittent and casual nature
unless work performed is more than 120 days and 60 days in a year respectively
Provides for setting up of Central and State Advisory Contract Labour Boards by the
Central and State Governments to advise the respective Governments on matters
arising out of the administration of the Act (Section 3 & 4).
Establishments covered under the Act are required to be registered as principal
employers with the appropriate authorities. The license granted is subject to
conditions relating to hours of work, fixation of wages and other essential amenities
in respect of contract as prescribed in the rules (Section 7 & 12).
Certain amenities have been laid down to be provided by the contractor to the
contract labour for establishment of Canteens and rest rooms etc. In case of failure
on the part of the contractor to provide these facilities, the Principal Employer is
liable to provide the same (Section 16, 17, 18, 19 and 20).
 Salient features of the Act
The contractor is required to pay wages and a duty is cast on him to ensure
disbursement of wages in the presence of the authorized representative of the
Principal Employer. In case of failure on the part of the contractor to pay wages
either in part or in full, the Principal Employer is liable to pay the same.
The contract labour who performs same or 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).
For contravention of the provisions of the Act or any rules made thereunder, the
punishment is imprisonment for a maximum term up to 3 months and a fine up to a
maximum of Rs.1000/- (Section 23 & 24).
Apart from the regulatory measures provided under the Act for the benefit of
contract labour, the 'appropriate government' under section 10(1) of the Act is
authorized, after consultation with the Central Board or State Board, as the case may
be, to prohibit, by notification in the official gazette, employment of contract labour
in any establishment in any process, operation or other work.
 Problem with the Indian workforce
Contract Labour Act is unable to cater to the needs of the contract labour as only 10%
of the Indian workforce is in the organized sector and comes under the scope of the Act
while the vast majority of the 80 million people (nearly 90% of the workforce) are in
the unorganized sector.

Relationship between sector and type of employment:

Thus, the question of organized versus unorganized employment is more important that
the temporary/ permanent or core/ perennial issue.
Judgments related to the Act
 Employers perspective
Contracting work to experts provides flexibility, leads to efficient utilization of
resources and improves overall competitiveness
There is a disparity among employers associations whether contracting jobs is
actually providing real benefits in flexibility and cost benefits as recent amendments
have nearly brought contract employees at par with permanent employees.
Even the industry wants these employees to be brought under the net of the
organized workforce and make them countable as formalizing such employment
would reduce the need for approvals and licenses and make it very easy to operate,
besides reducing informalization.
 Our recommendations
More information needs to be disclosed by companies on the number and
percentage of workers hired on contract, their monthly wages and the
nondiscriminatory policies followed by the company.
Government schemes (like Direct benefit transfer) should be integrated with other
skill development programs to better implement socio economic benefits enshrined
under the CLA.
The Central and State Labour Boards should directly monitor the contract laboureres
under the contractors and form welfare schemes keeping them in mind with help
from the employers and trade unions.
Increased scope of the ESI Act, PF Act, Gratuity Act, etc. should be applied on the
contractual employees so as to better provide them with social welfare benefits.
The initiative by the Government towards linking the bank accounts with the Aadhar
card can prove incremental in ensuring that the benefits for the labour reach to
them . But the implementation of this scheme on the ground level is still an
unanswered question.
 Conclusion
There is an important need to formalize the informal sector and form welfare schemes
keeping in mind the contract employees of the unorganized sector as well
Changes in the Industrial Disputes Act and other legislations will be needed to
reduce the dependence on the Contract Labour Act.
Trade Unions, rather than just going to the legislative for solutions to the wide
problems, need to strengthen and widen their social coalitions and press for equity
both at the workplace and in the larger society.
There is the need to further increase the scope of the Contract Labour Act as
currently, it has a very narrow scope just like other laws. The labour welfare laws in
India, while many in number, just cover 8% of the workforce at maximum and needs
to involve the informal sector as well.
Thank you