CONTRACT LABOUR

A presentation by V.N.HITTANAGI

Deputy Labour Commissioner

Bangalore Region- II

LAW RELATING TO

CONTRACT LABOUR (REGULATION AND ABOLITION) ACT,1970 AND KARNATAKA

RULES,1974.

APPLICABILITY OF THE ACT

1. EVERY ESTABLISHMENT IN WHICH TWENTY OR MORE WORKMAN ARE EMPLOYED

2. NOT APPLICABLE TO ESTABLISHMENT IN WHICH INTER MITTENT (LESS THAN ONE TWENTY DAYS IN THE PRECEDING TWELVE MONTHS) OR WORK OF CASUAL NATURE IS PERFORMED

DEFINITION

1 CONTRACTOR : MEANS A PERSON WHO UNDERTAKES TO PRODUCE A GIVEN

RESULT FOR THE ESTABLISHMENT THROUGH CONTRACT LABOUR OR WHO SUPPLIES CONTRACT LABOUR FOR ANY WORK OF THE ESTABLISHMENT AND INCLUDES A

SUB-CONTRACTOR.

2. PRINCIPAL EMPLOYER: MEANS IN A FACTORY, THE OWNER, OCCUPIER, MANAGER OF

THE FACTORY.IN ANY OTHER ESTABLISHMENT, ANY PERSON RESPONSIBLE FOR THE SUPERVISION & CONTROL OF THE ESTABLISHMENT.

3. WAGES:

MEANS ALL REMUNERATION,ALLOWANCES AND INCLUDES O.T. WAGES, HOLIDAY WAGES AND LEAVE WAGES, INCENTIVE /ATTENDANCE BONUS, TERMINAL PAYEMENT LIKE GRATUITY, RETRENCHMENT, CLOSURE COMPENSATION BUT DOES NOT INCLUDE BONUS, HRA,TA.

4. ESTABLISHMENT:

MEANS ANY PLACE WHERE ANY INDUSTRY, TRADE, BUSINESS, MANUFACTURE OR OCCUPATION IS CARRIED ON.

5. CONTRACT LABOUR:

MEANS WORKMAN EMPLOYED IN OR IN CONNECTION WITH THE WORK OF AN ESTABLISHMENT WHEN HE IS HIRED THROUGH OR BY A CONTRACTOR WITH OR WITHOUT THE KNOWLEDGE OF THE PRINCIPAL EMPLOYER.

OBLIGATIONS OF PRINCIPAL EMPLOYER.

1. TO OBTAIN REGISTRATION OF THE ESTABLISHMENT.

2. AMENITIES LIKE CANTEEN, REST ROOMS, DRINKING WATER, LATRINES,URINALS, WASHING AND FIRST AID FACILITIES NOT PROVIDED BY THE CONTRACTOR THEN THESE SHALL BE PROVIDED BY THE PRINCIPAL EMPLOYER.

3. IF CONTRACTOR FAILS TO MAKE PAYEMENT OF WAGES OR MAKES SHORT PAYMENT THEN THE PRINCIPAL EMPLOYER IS LIABLE TO MAKE PAYMENT OF WAGES IN FULL OR THE UNPAID BALANCE DUE TO THE CONTRACT LABOUR AND RECOVER THE AMOUNT SO PAID FROM THE CONTRACTOR.

4. SHALL NOMINATE A REPRESENTATIVE TO BE PRESENT AT THE TIME OF DISBURSEMENT OF WAGES BY THE CONTRACTOR TO CONTRACT LABOUR. THE RFEPRESENTATIVE HAS TO CERTIFY THE AMOUNTS PAID AS WAGES.

6. SHALL MAINTAIN A REGISTER OF CONTRACTORS IN FORM XII.

7. SHALL SEND ANNUAL RETURN IN FORM XXV BEFORE FIFTEENTH FEBRUARY.

8. SHALL WITHIN FIFTEEN DAYS OF THE COMMENCEMENT OR COMPLETION OF EACH CONTRACT WORK UNDER EACH CONTRACTOR SUBMIT A RETURN IN FORM XXVI.

9. NOTICE SHOWING RATE OF WAGES, DATE OF PAYEMENT, NAME AND ADDRESS OF INSPECTOR SHALL BE DISPLAYED IN KANNADA AND ENGLISH.

10. SHALL FURNISH INFORMATION RELATING TO CONTRACT LABOUR TO THE INSPECTOR WHEN CALLED UPON TO FURNISH THE SAME.

OBLIGATIONS OF THE CONTRACTORS. 1. SHALL OBTAIN LICENCE

2. SHALL PROVIDE CANTEEN TO CONTRACT LABOUR WHOSE STRENGTH IS MORE THAN HUNDRED WHERE WORK IS LIKELY TO CONTINUE FOR SIX MONTHS.

3. SHALL PROVIDE REST ROOMS FOR NIGHT HALT WHERE WORK IS LIKELY TO CONTINUE FOR THREE MONTHS OR MORE.

4. SHALL PROVIDE DRINKING WATER .

5. SHALL PROVIDE LATRINES ONE PER TWENTY FIVE WORKERS.

6. SHALL PROVIDE URINALS ONE PER FIFTY WORKERS.

7. SHALL PROVIDE WASHING FACILITIES.

8. SHALL PROVIDE FIRST- AID FACILITIES UNDER CHARGE OF TRAINED PERSONS.

9. SHALL BE RESPONSIBLE FOR PAYMENT OF WAGES.

10. SHALL FIX WAGE PERIODS NOT EXCEEDING ONE MONTH.

11. SHALL PAY WAGES BEFORE THE EXPIRY OF SEVENTH DAY.

12. WAGES SHALL BE PAID ON A WORKING DAY AT THE WORK PREMISES AND DURING WORKING TIME AND FINAL PAYMENT BE MADE WITHIN FORTY EIGHT HOURS OF THE LAST WORKING DAY.

13. SHALL PAY WAGES TO WORKER ON THE SECOND WORKING DAY FROM THE DATE OF TERMINATION.

14. WAGES SHALL BE PAID IN CURRENCY.

15. NOTICE SHALL BE DISPLAYED SHOWING WAGE PERIOD AND PLACE AND TIME OF DISBURSEMENT OF WAGES.

16. DISBURSEMENT OF WAGES SHALL BE MADE IN THE PRESENCE OF THE REPRESENTATIVE OF PRINCIPAL EMPLOYER.

17. SHALL MAINTAIN REGISTER OF PERSONS EMPLOYED IN FORM XIII, MUSTER ROLL IN FORM XV, REGISTER OF WAGES IN FORM XVII, REGISTER OF DEDUCTION IN FORM XX, REGISTER OF FINES IN FORM XXI, REGISTER OF ADVANCE IN FORM XXII, REGISTER OF OT IN FORM XXIII.

18. SHALL ISSUE EMPLOYMENT CARD IN FORM XIV TO EACH WORKER WITHIN THREE DAYS OF EMPLOYMENT.

19. SHALL ISSUE WAGE SLIPS IN FORM XIX.

20.SHALL ISSUE SERVICE CERTIFICATE IN FORM XV TO TERMINATED WORKER.

21. SHALL DISPLAY ABSTRACT OF ACT AND RULES IN KANNADA AND ENGLISH.

22. SHALL DISPLAY NOTICE SHOWING RATE OF WAGES, NAME AND ADDRESS OF THE INSPECTOR, DATE OF PAYMENT OF WAGES IN ENGLISH AND KANNADA.

23. SHALL SEND HALF EARLY RETURN IN FORM XXIV AFTER THIRTY DAYS FROM CLOSE OF HALF YEAR I.E. JUNE AND DECEMBER.

24. ALL REGISTERS, RECORDS SHALL BE MAINTENED COMPLETE AND UP TO DATE AND SHALL BE KEPT AT THE WORK PLACE AND SHALL BE PRODUCED ON DEMAND BEFORE THE INSPECTOR AND ALL INFORMATION REGARDING CONTRACT LABOUR DEMANDED BY HIM SHALL BE FURNISHED TO HIM.

OTHER LAWS APPLICABLE TO CONTRACT LABOUR

1. THE CHILD LABOUR (PROHIBITION AND REGULATION ) ACT, 1986.

2. EMPLOYEE’S PROVIDENT FUND AND MISCELLANEOUS PROVISIONS ACT, 1952.

3. THE EMPLOYEE’S STATE INSURANCE ACT, 1948.

4. THE EQUAL REMUNERATION ACT, 1976.

5. THE FACTORIES ACT, 1948.

6. THE INDUSTRIAL DISPUTES ACT, 1947.

7. THE INTERSTATE MIGRANT WORKMEN (REGULATION OF EMPLOYMENT AND CONDITIONS OF SERVICE) ACT, 1979.

8. THE MATERNITY BENEFIT ACT, 1961.

9. THE MINIMUM WAGES ACT, 1948.

10. THE PAYMENT OF BONUS ACT, 1965.

11, THE PAYMENT OF GRATUITY ACT, 1972.

12. THE PAYMENT OF WAGES ACT , 1936.

13. THE WORKMEN’S COMPENSATION ACT, 1923.

JUDICIAL PRONOUNCEMENTS ON CONTRACT LABOUR:

1. Contract labour raising dispute before industrial tribunal relating to discharge on expiry of labour contract- such dispute – held not maintainable. ONGC Vs. N.SATYANARAYANA ( 2003) III LLJ 289(AP)

2. Lien sought by contract workers to engage them in future if company decided to engage contractor to do the work done by the said workers- held relief sought could not be granted. GUJARATH MAZDOOR PANCHAYAT Vs. CONCILIATION OFFICER.( 2002) II LLJ 70 ( GUJ)

3. Abolition of contract labour- no claim for absorption in regular establishment can be made till notification is published prohibiting engagement of contract labour.Sheikh Jahangir Ali Vs. Calcutta Port Trust ( 1999) II LLJ 381 ( CAL)

4. Persons employed to deliver chassis to buyer by an automobile manufacturing company – absorption of such contract workers as regular workers – nature of work intermittent and not continuous and perennial – employment on contract labour system held justified Venkatachalam Vs Ashok Leyland Ltd (1968) II LLJ 807 (MAD)

5. Only appropriate government can direct abolition of contract labour.Supdtg. Engineer, CPWD Vs T. Rajashekhar (2002) I LLJ 253 (AP)

6. The disputes relating to wages and bonus of contract worker of industrial canteen can be referred for adjudication as they are employees of the industry and not of the contractor. Indian Explosives Ltd Vs State of UP (1981) I LLJ 423 (ALL)

7. Industrial tribunal has jurisdiction to deal with dispute relating to contract labour – can decide whether contract is sham or genuine .State Bank of Tranvancore Punch Operators Association Vs P.O. Industrial Tribunal (2000) I LLJ 214(Ker).

8.No section of the CL (R and A ) Act – held – provides for automatic absorption of contract labour on issuance of said notification for abolition. Chetana Mazadoor Sangh, Bokaro Vs Union of India (2004) II LLJ 1137 ( Jhar )

9. Whether contract labourers engaged through contractor is a camouflage – industrial adjudicators are competent forums to adjudicate such disputes.R. K. Panda Vs SAIL ( 1997) III LLJ (Suppl) 1202 (SC)

10. Permanent employees praying for direction to management to stop calling for tender for engaging contract workers apprehending removal from service- held- petition premature.Workman Vs Commissioner , Hindu Religious and Charitable Endowments Board (2002) IV LLJ ( Suppl) 1323 (NOC) (MAD)

11. Prayer against principal employer to provide employment to contract laborers whose services were terminated by contractors consequent upon termination of contract- new agreement entered into with new contractor who has engaged fresh contract laborers – no direction can be granted by Writ Court to provide employment to the terminated contract workers.

Jet Airways ( India ) Ltd Vs Jet Airways Thozhilalar Sangam ( 2000) II LLJ 1033 ( Mad)

12. Contract labourers have right to be treated as employees of principal employer for the purposes of monetory benefits – No direct legal relationship need exist between Principal employer and employees of contractor. (1996) I LLJ 713 (BOM)

13. Company utilizing contract labour has to bear responsibility for payment of gratuity to contract labour and can recover from payments to be made to contractor.

Madras Fertilizer Ltd Vs Controlling Authority, PG Act (2003) I LLJ 854 ( Mad)

14. Legal consequence of Principal employer not obtaining registration or contractor not obtaining License – is not that contract labour could be deemed to be direct employees of principal employer.

Deenanath Vs National Fertilizers (1992) I LLJ 289 (SC)

15. High Court cannot compel Government to issue notification for prohibiting employment of contract labour.

Marathwada Vidyut Prakalp Vs. State of Maharashtra.(2003) I LLJ 595 (Bom)

16.On issuing notification prohibiting employment of contract labour – no automatic absorption is provided for.

Municipal Corporation of Greater Mumbai Vs K. U. Shramik Sangh (2002) II LLJ 544 (SC)

17. Once committee to study contract labour system was constituted, services of concerned contract labourers had to protected.

Rajender Lal Vs Union of India (2001) I LLJ 435 (Del)

18. Only employees working on the day of abolition entitled to be absorbed.

C.M Reddy Vs APSEB (1999) II LLJ 1350 ( AP)

19. Contract Labour has to approach Govt for abolition of contract Labout if contract is found to be genuine by Industrial Tribunal – such contract labourers are entitled to be absorbed as regular employees by principal employer if Govt issues notification prohibiting employment of contract labour.

Ramakrishnan Vs. Bharat Petroleum Corp. (1997) IILLJ 1101 (Mad)

20. Co-operative society in shoes of previous contractor – notification for abolition has to be acted upon even in case of workers being members of a co.operative society.

Kerala Food Corp of India Labourers Federation Vs. Union of India (1998) III LLJ ( suppl) 474 (Ker)

21. On abolition of contract labour the earstwhile contract workmen would become direct employees of the principal employer

Air India Statutory Corp. Vs. United Labour Union (1997) ILLJ 1151 (SC)

22. No specific provision made for automatic absorption of contract labour by principal employer on issuance of notification prohibiting employment of contract labour-By virtue of engagement of casual labour by contractor master and servant relation ship is not created between principal employer and casual labour. Issuances of notification prohibiting casual labour under industrial dispute brought before industrial court by contract labour, court to consider whether contract has been interposed in genuine contract or mere camouflage- if contract not genuine but mere camouflage, contract labour will have to be treated as employee of principal employer and should be directed to regularize services of contract labour subject to conditions that should be satisfied- if contract labour found to be genuine and on issuance of notification prohibiting engagement of contract labour contract labour shall be given preference if principal employer intends to employ regular workmen provided such casual labour found to be suitable and if necessary, by relaxing conditions as to maximum age. – case of Air India statutory Corp. is prospectively overruled.

SAIL Vs. National Union of Waterfront Workers (2001) II LLJ 1087(SC)

23. Contract workers claiming lay-off compensation against principal employer – maintainable

(1996) III LLJ (Suppl) 1115 (PH)

24. Application by contract labour under section 33 – C(2) of ID Act 1947 against principal employer – maintainable.

Uttaranchal Jala Vidyut Nigam Ltd Vs. PO, Labour Court, Dehradun ( 2004) III LLJ 533 ( Uttaranchal)

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