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PROJECT ON CONTRACT LABOUR
MANAGEMENT

STUDY OF ISSUING OF MORE NUMBER OF PASSES TO THE CONTRACT

LABOURS

CONTRACT LABOUR (REGULATION & ABOLITION) ACT, 1970

INTRODUCTION

The Contract Labour (Regulation and Abolition) Act, 1970 is a legislation to regulate the
employment of contract labour in certain establishments and to provide for its abolition in
certain circumstances and for matters connected therewith. The object of the Act is to
regulate and to improve the conditions of service of contract labour and not merely to
abolish contract labour itself. It is an Act for the welfare of the laborers whose conditions
of service are not at all satisfactory.

The Statements and Objects and Reasons for this enactment say:
The question of its abolition has been under the consideration of the government for a
long time. In the second five year plan, the Planning Commission made certain
recommendations, namely, undertaking of the studies to ascertain the extent of the
problem of contract labour, progressive abolition of system, and improvement of service
conditions of contract labour where the abolition was not possible.

The Act aims at the abolition of contract labour in respect of such categories as may be
notified by the appropriate government in the light of certain criteria that have been laid
down, and at regulating the service conditions of contract labour where abolition is not
possible. Under the Act, the provision and maintenance of certain basic welfare amenities
for contract labour, like drinking water and first aid facilities, and in certain cases rest
rooms and canteens have been made obligatory. Provisions have also been made to guard
against defaults in the matter of wage payment.

Temporary labour is employable in industry for work of a purely temporary nature or as a

temporary substitute of a permanent worker who is absent. Contract labour is usable only
in activities, which do not form the normal part of an industrys main functions. Both
these provisions of law are based on the need to prevent adventurous employers who tend
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to resort to these types of employment to deny permanency and other fringe benefits of
permanency to temporary and contract labour. Normally, resort to such labour is done in
the areas of house keeping and sanitation, pollution control, security services, canteen etc.
and the contractor gets these assignments done on an ongoing basis, but supervised by the
management. Similar is the case when time bound, penalty oriented jobs are being done
by an employer or when there is unstructured absenteeism deliberately resorted to by
permanent workers. In all these cases, it is seen that the quantum of work done by
contract labour is invariably more than that done by similarly employed permanent
workmen.

If use of contract labour is banned and strictly enforced, almost 80% of the industries,
especially public sector industrys job can be affected adversely. This is not because
managements are nasty or unfair, but the Act does not reckon with industrial
compulsions. Our laws relating to labour are based on social justice, not industrial justice
and equity. Because of this, they cannot be enforced and are rarely enforced. The fact of
the matter is that, in the context of todays high industrial wage costs, contract labour to
some extent is unavoidable and is a reality to be reckoned with. All that an industry
should attempt to do is to conform to the laws as much as possible, in order to avoid
embarrassing and expensive penal action by the enforcing authority.

CONTRACT LABOUR IN INDIA

INTRODUCTION

The system of employing contract labour is prevalent in most industries in different

occupations including skilled and semi skilled jobs. It is also prevalent in agricultural and
allied operations and to some extent in the services sector. A workman is deemed to be
employed as Contract Labour when he is hired in connection with the work of an
establishment by or through a contractor. Contract workmen are indirect employees;
persons who are hired, supervised and remunerated by a contractor who, in turn, is
compensated by the establishment. Contract labour has to be employed for work which is
specific and for definite duration. Inferior labour status, casual nature of employment,
lack of job security and poor economic conditions are the major characteristics of
contract labour. While economic factors like cost effectiveness may justify system of
contract labour, considerations of social justice call for its abolition or regulation.

APPLICATION

The Contract Labour (Regulation and Abolition) Act, 1970 and the Contract Labour
(Regulation and Abolition) Central Rules, 1971 came into force on 10.2.71.The
constitutional validity of the Act and the Central rules were challenged before the
Supreme Court in Gammon India Ltd. Vs. Union of India 1974-ILLJ- 480. The Supreme
Court upheld the constitutional validity of the Act & Rules and held that there is no
unreasonableness in the measure. The Act & Rules were enforced w.e.f. 21.03.1974.
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The Act applies to every establishment in which 20 or more workmen are employed or
were employed on any day on the preceding 12 months as contract labour and to every
contractor who employs or who employed on any day of the preceding 12 months 20 or
more workmen. It does not apply to establishments office till their successors are
appointed. The appointment of employer and employee members of the Board is under
process. Fifty meetings of the Central Advisory Contract Labour Board (CACLB) have
so far been held. The last meeting was held on 22nd November 2001.

HIGHLIGHTS CONTRACT LABOUR ACT, 1970

The contract labour system involves three parties. They are-

Principal Employer

Contractor

Contract Labourers

Objective:
To regulate the employment of contract labour in certain establishments and to provide
for its abolition in certain circumstances and for matters connected therewith.

Applicability:

If Central Government is the Appropriate Government-

Every establishment in which 20 or more workmen are employed or were employed on

any day of the preceding 12 months as contract labour.

If State Government is the Appropriate Government-

Every establishment in which 10 or more workmen are employed or were employed on

any day of the preceding 12 months as contract labour.

Appropriate Government is the same for the Industrial Disputes Act, 1947 and Contract
Labour (Regulation and Abolition) Act, 1970.

Obligations:

? Compliance of all the applicable labour laws

? Facing Absorption
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Registration and Licensing:

Registration is for the establishment i.e. the establishment employing 10 or more contract
labour has to get the registration done.

Licensing is for the contractor i.e. contractor employing 10 or more workmen in case of
IOCL has to get a labour license for every different task/work to be carried out.

Minimum Wages for Contract Labour:

The contractor is required to pay minimum 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 in turn the Principal Employer shall
deduct the said amount from the final the contractor. 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.

The data for minimum wages is as follows:

Category Amount (Rs.)

Skilled 109.54
Semi-skilled 93.30
Unskilled 91.80
Highly Skilled 141.22
Table 1

REGISTRATION OF ESTABLISHMENT & LICENCISNG OF CONTRACTOR

The establishments covered under the Act are required to be registered as principal
employers with the appropriate authorities. Every contractor is required to obtain a labour
license engaging more than 19 persons and not to undertake or execute any work through
contract labour except under and in accordance with the license issued in that behalf by
the licensing officer. The license granted is subject to such conditions as to hours of work,
fixation of wages and other essential amenities in respect of contract labour as laid down
in the rules.

WELFARE & HEALTH OF CONTRACTOR

The Act has laid down certain amenities to be provided by the contractor to the contract
labour for establishment of Canteens and rest rooms.

Arrangements for sufficient supply of wholesome drinking water, latrines and urinals,
washing facilities and first aid facilities and have been made obligatory.
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In cases of failure on the part of the contractor to provide these facilities, the Principal
Employer is liable to provide the same.
Following is the several welfare facilities for contract labours:
1. The facilities required to be provided under sec. 18 & 19 of the Act namely
sufficient supply of whole some drinking water, a sufficient number of urinals and
washing facilities and first aid facilities shall be provided by the contractor in the case
of the existing establishment within 7 days of the commencement of the employment of
contract labour item.

2. REST ROOM:-

? In every place wherein contract labour is required to halt at night in connection

with the working of the establishment to which the act applies and in which employment
contract labour is likely to continue for 3 months.
? Separate rooms shall be provided for women employees.

3. CANTEEN FACILITY:-

? In every establishment to which the Act applies & wherein work regarding the
employment of contract labour is likely to continue for 6 months & wherein contract
labour numbering 100 or more are ordinarily employed an adequate canteen facilities
shall be provided by the contractor for the use of such contract labour within 60 days of
the date of the coming case of the existing establishment and within 60 days of the
commencement of the employment of contract labour in the case of new establishment.
? The canteen shall be maintained by the contractor or Principal employer as the
case may be in an efficient manner.

? Equipment in Canteen:-

i. There shall be provided and maintained sufficient utensils, crockery, cutlery,

furnitures and any other equipment necessary for the efficient running of the canteen.
ii. The food stuff and other items to be served in the canteen shall be in conformity
with the normal habit of the contract labour.

4. FIRST AID BOX:-

In every establishment which comes within the scope of the Act there shall be provided &
maintained so as to be readily accessible during all working hours. First Aid boxes at
the rate of not less than one box for 150 Contract Labours or part thereof ordinarily
employed.

Equipments:-
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1. 6 small sized sterilized dressing.
2. 3 medium size sterilized dressing.
3. 3 large size sterilized dressing.
4. 1 snake bite lancet.
5. 1 pair scissor.
6. Ointment for burns.
7. A bottle of suitable surgical anti septic solution.

ADVANTAGES OF EMPLOYING CONTRACT LABOUR

Employment of Contract labour through the Contractors for some work may be casual,
temporary or even regular for a temporary period is very common in almost all the
industries in our country, be it a public sector or private sector enterprise. Even the
Government departments like Indian Railways, Post & Telegraphs, and P.W.D., PSUs.
etc. has also been engaging contract laborers for the purpose.

Contract Labour is necessary for the following reasons:

? It relieves the Principal Employer from the need for direct supervision and control
over the employees.

? It ensures speedy completion of assigned work with a higher output compared to

permanent workmen.

? It is comparatively cheaper with fewer liabilities.

? It is less problems related to industrial relations.

? It has flexibility in terms of period of work and amount of work as and when
needed.

PRINCIPLE EMPLOYEE

Principle employees are those people who have:-

CASE I
1. In relation to any office.
2. Department of the government.
3. Local authority.
4. The head of that office or Department.

CASE II
1. In a factory, the owner or occupier of the factory, where a person has been named
as the Manager of the factory under the Factory Act, 1948, the person so named.
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CASE III
1. In a mine, the owner or agent of the mine & where a person has been named as
the manager of the mine, the person so named

CASE IV
1. In any other establishment, any person responsible for the supervision and control
of the establishment.

Principal Employer must ensure:

? That the contractor, who is employing more than 10 persons, has a valid license,
issued by a competent authority.

? That a certificate in Form V to the contractor for obtaining license as provided

under section 12, is issued.

? That he / his nominee disburses payments of wages to the employed by him in

time and you have to depute a representative to be present and also sign the register as a
token.

? The principal employer should not have any direct supervision or contact with any
of his employees. Even leaves have to be sanctioned by the contractor.

? That the work assigned to the contract labour is not of a perennial or permanent
nature.

? Contract should not specify the number of persons required, but must quantify the
work.

? You should do no monetary transactions like advance / loan or in any other form.

? Maintenance of all types of records in respect of contract employee should not be

intervened by you.

? The principal employer should not issue any kind of job experience or working
certificates.

? Annual Return must be submitted to the prescribed authority in prescribed form.

Does AND Donts FOR PRINCIPAL EMPLOYER

Dos
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1. The Principal Employer should identify the jobs on which contract labour is to be
engaged.

2. The Principal Employer should engage contract labour only for limited purposes.

3. U / S 7 of the Contract Labour Act 1970, the establishment should be registered

and registration certificate should be obtained and updated.

4. Every Principal Employer should ensure that the contractor provides the
following welfare amenities (as applicable) to the contract labour, falling which the same
should be provided by the Principal Employer and the cost should be recovered from the
contractor :-

a. Canteen, furniture, food stuffs, rest rooms, drinking water, washing facilities,
first aid boxes and others.

5. Every Principal Employer should ensure the payment of wages to contract labour
in his representatives presence by the contractor, falling which the Principal Employer
should pay the wages and recover the same from contractor.

6. Every Principal Employer should maintain register of contractors and file annual
returns as prescribed.

7. Every Principal Employer should ensure through the contractor that contract
labour is paid same wages, holidays, hours of work and condition of services as are
applicable to workmen employed by the Principal Employer of the establishment on the
same or similar kind of work.

Donts

1. Principal Employer should not employ any Contract Labour if the establishment
is not registered in term of Section 7.

2. No Principal Employer should employ contract labour for the work if it is

incidental to or closely connected with the main activity of the industry and is of
permanent nature.

3. No Principal Employer should allow engagement of any contract labour by

contractor who is not having license for the purpose in terms of section of 12.

4. No Principal Employer should allow engagement of any Contract Labour for a

purpose other than that given in the Registration Certificate.

5. No Principal Employer should allow engagement of more contract workers that

the maximum number permitted under the registration.
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6. Principal Employer must not engage regular workmen on jobs which are same or
similar to those being performing by Contract Labour.

CONTRACT LABOUR

A Contract Labour is one who fulfills the following requirements:

1. If he is employed in or In connection with the work of an establishment.

2. If he is hired for the above work by or through a contractor whether with or

without knowledge of Principal Employer.

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 or in connection with such work or by or
through a contractor, with or without knowledge of the principal employer.

If he is a workman employed to do any skilled, semi skilled or Un skilled, Manual,

Supervisory, Technical or clerical work for hire or reward, whether the terms are express
or implied.

CONTRACTOR

Contractor in relation to an estab., means a person who undertakes to produce a given

detail for the estab., other than a mere supply of goods for articles of manufacture to such
estab., through contract labour or who supplies contract labour for any work of their
estab. And includes a sub contractors.

A supervisor excersing Managerial powers or drawing more than Rs.500 is neither a

Contract Labour nor an out worker is a work man.

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. A sub
contractor is also treated as a Contractor.

Note:
A person who undertakes to merely supply goods or articles of manufacture to an
establishment is not to be treated as a contractor.

CONTRACT LABOUR SYSTEM

CONTRACT
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ARC (Annual Rate Contract) ASC (Annual Service Contract) OTHERS

ARC In Annual Rate Contract, the rate of contract is fixed for a year. It consists of
maintenance, repairing etc.

ASC - Annual Service Contract, includes contract of all the services like
Canteen, mess, transportation and etc.

OTHERS - Others includes contract of short term contracts like repairing of Air
Conditions, Almirah and others.

1. Contract Cell gets the requirement from other department, on the basis of their
requirement; Contract Cell releases the tender and invites the bid.

2. Tender is prepared including Notice Inviting Tender (NIT).

3. Tender is prepared in both Hard Copy and Soft Copy.

4. This Notice Inviting Tender displayed by following procedures:

a. Tenders Up to 2 lake to 25 lakh

i. Website of the Indian Oil Tenders.
ii. Notice Board of Indian Oil itself and other PSUs. Also.

b. Tenders of more than 25 lakh to 100 lakh.

i. State level news paper.

c. Tenders more than 100 lakh.

i. National News Paper.

TENDERS DOCUMENT

1. Special condition of contract. (Technical).

2. Special Condition of contract. (Safety Related).

3. Special enclosure, if any.

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4. Schedule of rates.

5. One time acceptance.

6. Sales period.

7. Submission of tenders. (Depend on requirement)

8. Opening timing of tenders.

TYPES OF TENDERING

Single Bid
When materials specification is very clear and materials are not complicated technical
part and price part both are submitted together in one tender only.

Double Bid
For high value and complicated materials, two bid tendering system is followed. The
technical bid and price bids are submitted separately in two different sealed envelopes.
Technical bid is opened first for technical evaluation. After the technical evaluation price
bid is opened. Those parties who bid lowest will be selected.

QUOTATION OPENING
On receipts of quotation, purchase department open it on decided due date in presence of
two representative. One is from finance department and another from purchase
department. If estimated cost of materials is more than 5 Lakhs, vendors are allowed to
be present in the tender opening process otherwise not.

TECHNICAL EVALUATION OF OFFERS

After opening of quotation, the offers are sent for file technical evaluation to the
indenting department.

If user department verify the offers form the offers against the technical specification
specified in purchase Requisition. The user department specifies the Technical
Acceptability of the offers. The user department raises technical queries, which need to
be clarified by the vendors, and these queries are clarified through Purchase Department.
The Purchase Department acts as interface between the vendors and the user department.
The user department sometimes prepares the technical recommendations and Technical
Comparative Statement to justify his decision / recommendation.

COMMERCIAL EVALUATION OF OFFER

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After completion of technical evaluation, the purchase department carries out the
commercial evaluation of the commercial part of the offers. If Purchase department when
require any clarification on commercial part, they get clarification from the vendors and
confirmation of some Standard Clause, Agreed Terms & Conditions on commercial part
and General Purchase Conditions.