By-

Devashree Mansukh
Himgauri Mayekar
Chetana Mhatre
Mandar Mohadikar
Tanaji Nadekar
 Introduction
The Contract Labour Act came into picture in the
year 1970 and implemented in the year 1971

The Contract Labour Act was formulated so as to

improve the working and living conditions of the
contract labour

It applies to any company or contractor who

employs or employed 20 or more workmen on any
day in the preceding 12 months

The act extends to the whole of India

An Appropriate government (Central and State) is

appointed
 Background in brief
Contract labour remained ignored for a long time

Contract labours didnt have proper working and living

conditions

Wage and work were not proportionate

They were involved in the core activities of the factory

Anger started resulting in crimes

Establishment
1) any office or department of government or local authority
2) any place where industry, trade, business, manufacturing process
or occupation is carried on

Principal employer
1) HOD or head of office in case of government or local authorities
2) Owner or occupier or factory manager factory act 1948
3)In case of mine owner or agent of mine
4) in any other establishment person on role of supervisory or controlling
Contractor
means any person who undertakes to produce a given result for
the establishment other than a mere supply of goods or articles
of manufacture such establishment, through contract labour or
who supplies contract labour for any wok of establishment and
include a sub contractor.

workman
any person employed in or in connection with the work of any establishment to
do any skilled, semi skilled, unskilled, manual, supervisory, technical or clerical work for hire
Or reward whether the terms ofemployment be express or implied but
does not include any such person
1) managerial and administrative capacity staff
2) supervisory capacity staff with draws wages more than 500/- per menses
3) out worker (person working outside work premises)
 Sec6 Appointment
of registering
officer
Registration of Establishment Principal
Employer Employing 20 or more worker
Sec7 Registration
through the contractor or contractors
of certain
has to obtain Registration Certificate.
establishment
Check List
Registration of 1. Application in triplicate in Form- I in
establishment Sec8 Revocation case of offline mode
employing of registration in 2. Copy of challan according to no of
contract certain cases labourers
labour 3. Copy of Pan Card
4. Latest copy of agreement /work
order with contractor Time Line
Sec9 Effect of Non
Maximum Number of Days after
registration
complete application is submitted: 30
Days (As per notified at Sr. No. 227
under Right to Service Act, 2011)
Sec10 Prohibition
of employment of
contract labour
Process of Granting Registration of Principal employer

Application by the Principal

Employer in triplicate in Form-I in Registering Officer
case of offline mode along with of the area
fees (Sec-7 of CLRA Act)

Important forms for

Principal Employer
Acknowledgement to applicant
Form
I : Application of Registration
Form
II : Certificate of Registration
Grant of Registration Form
III : Register of Establishment
Certificate in Form II Form
VI-b : Notice of Commencement/
or rejection completion of contract work
Form VIII : Application for temporary
registration
Form IX : Temporary certificate

Application for Amendment of Grant of Amended

Registration Certificate, if any, Registration
within 30 days from the change. Certificate
 Sec 11
Appointment of
licensing officers Application for a License Any contractor
engaging 20 or more contract Workers is
required to get license.
Sec 12 licence of Check List
contractors 1. Application for License in Triplicate in
Form IV [Rule 7 (1)] in case offline mode 2.
Principal employer certificate (Form VI)
[Refer rule 7 (2)]
Licensing 3. Security deposit challan
of Sec 13 Grant 4. License fee challan
contractors licences 5. Work order/Agreement with principal
employer/Enlistment copy
6. PAN card copy
7. EPF Number Time Line Maximum Number
Sec 14 Revocation of Days after complete application is
suspension and submitted: 30 Days Refund of Security 60
amendment of licences days. (As per notified at Sr. No. 228 and 229
under Right to Service Act, 2011) Validity of
License One year from the date of issue

Sec 15 Appeal
Process of Granting License

Application in quadruplicate in
Form IV in case of offline mode Licensing Officer
along with Security, fees and of the area
Form V Important forms for
Contractor
Form
IV : Application of license
Acknowledgement to applicant Form
V : Certificate of Principal employer
Form
VI : License
Form
VI-a : Notice of Commencement/
Grant of License in completion of contract work
form VI or Refusal of
License after Form VII : Application for Renewal of
recording reasons license
Form X : Application for temporary
License
Application in triplicate in Form VII in Form XI : Temporary certificate
case of offline mode for renewal of
License, original License along with
Grant of Renewed
Fees before 60 days of the date on
which license expires
License
 Case Study : Food Corporation of India & Ors
Vs P.O.C.G.I.T. (2008) IILLJ 434 P H, (2008)
149 PLR 101
6 workers were illegally terminated by management corporation which was statutory body establishment under
the Food corporation of India Act, 1964.
on 29.11.1985 by Haryana govt.(Appropriate Govt.) issued Notification under CLRA act 1970 under which
prohibited employment of contract labour in 22 food storage depots.
Dhand Buffer go down, kurukshetra management corporation employed 6 worker as contract security guard
through contractor agreement in year 1986.
In 1988, employer registered establishment and contractor took licenses under CLRA Act 1970.
In 1989, Workers were terminated after expiry of contract.
Labour council order that re-instatement of worker without back log wages as at time of agreement principal
employer and contractor were not registered nor having license so that worker should be deemed considered
as permanent worker
 WELFARE & HEALTH OF CONTARCT LABOUR

Canteen (section 16) :

where contract lobour continues to work for period of 6 months.

100 or more contract laborers are employed by contractor.
standard of construction, accommodation., furniture & other
equipment should be maintained & also the foodstuffs served
and their charges should be fixed.
 Restrooms (section 17)

Place has to be provided where contract labour can halt if he has

to work at night.
Where contract labour continues work for period of 3 months.
Restroom should be lighted, ventilated & should in be clean &
comfortable condition.
 Other facilities (section 18)

Sufficient drinking water.

Sufficient number of latrines' & urinals.
washing facilities.

First Aid Facilities (section 19)

A first aid box equipped with the prescribed contents

at every place where the contract labour is
employed by the contractor.
 Liability of Principal Employer (section 20)

If any amenity for the benefit of contract labour employed in establishments is not
provided by contractor in prescribed time, then such amenity shall be provided by
principal employer.
All expenses incurred by principal employer in providing benefits to contract
labour may be recovered from contractor either by deduction from amount payable
to contractor or as debt payable by contractor.
 Responsibility for Payment of wages (section 21)

Petitioner: The Management of Cruickshank & Company Vs.

Respondent: The Appellate Authority under Payment of Gratuity Act
Dated : 20th November,2006.
In the court of Judicature at Madras
Bench : The Honorable Mr. P.D. Dinakaran & The Honorable Mr. Justice P.P.S.
Janarthana Raja
Issue : Whether the entitlement of contract labourers for gratuity can be
dislodged or denied on account of tussle between the principal employer, who
engaged the service of the contract labourers and the contractor, who employed
the contract labourers and when the claimants are engaged under contract
labour system, to what extent the principal employer is liable to pay the
gratuity.
Effect on Contract labours
Sectors in which Contract labours are working

Contract labours account for 34% of the total

workforce

Why industries indulge Contract labours?

Awareness about the Contract Labour Act is still found less in some
workers

Unawareness of worker becomes profit for employer which could be

less wage structure or easy retrenchment

A coin has two sides-

Positive effect- Gaining permanent employment
Negative effect- Completely loosing employment at times
Effects on Employer and Economy

Manesar car plant case, 2012

Exploitation of infrastructure and lives

Loss of production

Loss of several crore of rupees

GDP gets affected

Employees may lose their contractual employment too

Affects the Ease of Business in INDIA

Penalties and Procedure
(Section 22) : Obstruction
Whoever willfully neglects or refuses an inspector from
performing his prescribed duties or refuses inspection to any
facility, opposes for examination, inquiry or investigation
authorized by or under the Act in relation to an establishment
shall be punishable with imprisonment for a term which may
extend to 3 months or with fine up to Rs. 500 or both.

(Section 22) : Refusal To Give Documents

whoever willfully refuses to produce on demand of an inspector
any register or other document or prevent or attempt to prevent
appearing before or being examined by an inspector in
pursuance of his duties, shall be punishable with imprisonment
for a term extent up to 3 months or fine Rs. 500 or both .
(Section 23) : Neglecting Provision Of
Employment Of Contract Labours
Whoever neglect any provision of the Act or any rules of Act
prohibiting, restricting or regulating the employment of contract
labor or neglects any provision of a license granted under the
Act, liable for punishable with imprisonment up to 3 months or
fine of Rs.1000 or both.

(Section 24) : Other Offences

Whoever neglects any provision of the Act or any rule of Act for
which no other provision of penalty is mentioned in such
conditions the guilty would be punishable with imprisonment up
to 3 months or with fine of Rs.1000 or both.
(Section 25) : Offences By Companies
Where an offence under the Act has been committed by a company and it is
proved that the offence has been committed with the consent of any director,
manager, managing agent or any other officer of the company such individual
shall be liable and deemed to be guilty of that offence and shall be punished
accordingly.

(Section 26) : Cognizance of offences

No court shall take cognizance of any offence under this act except on
a complaint made by, or with the previous sanction in writing of the
inspector and no court inferior to that of a Presidency Magistrate or a
Magistrate of the first class shall try any offence punishable under this
act.
(Section 27) : Limitation of Prosecutions
No court shall take cognizance of an offence punishable under
this act unless the complaint there of is made within three
months from the date on which the alleged commission of
offence came to the knowledge of an inspector:
Provided that where the offence consists of disobeying a written
order made by the offence is alleged to have been committed .
 Case Study.
Nirmal Bhoglal vs. State of Jharkhand 2008 II LLJ 63 (Jharkhand
H.C)
The allegation against petitioner who was Managing Director of
the company is that he failed to submit half yearly return to
Licensing officer, even after issuance of show cause notice.
According to him Batliboi Ltd. Itself is liable. He prayed for
demolshing of order of information by Magistrate.

Held: Magistrate has not applied his mind before taking cognizance. The
order of cognizance is vitiated in law on the ground of non-application of
mind. Entire proceeding amounts to abuse of process of law. Application
is allowed.
Problems of Contract Labour

No job security
Delay in payment of wages
Exploitation by contractor
No bargaining power
Few social security benefits
Fewer unions
 Disadvantages of Contract Labour
Advantages of Contract Labour

Flexibility No job security

Cost effective Quality standards may not be adhered

No tax implications Lack of loyalty towards the organization

No legal action Higher attrition rate

Specialist expertise Lack of training availability

Permanent staff can concentrate on Core activities Liability of the contractor

Increased efficiency and productivity of the organization

Boost innovation
 International practices of Contract
Labour
Canada

Short term employment exists

No fixed procedure to hire workers
Medical health insurance and Canadian pension plan

Russia

Workers can be employed in any activity only for a maximum period of 5 years
No wage disparity

Source FICCI report

International practices of Contract
labour
Ghana

Contract workers can be employed only for maximum duration 6 months

Payment of wages- Minimum wages

USA

Temporary staffing agency

Temporary jobs converted to permanent jobs
Family medical leave act

Source FICCI report

Measures to address Contract labour
issues
Creating Central and State Contract labour boards
Contractors to be treated as separate establishment
A single point collection of social security contributions from the industry
Skills to be considered during wage fixation
20% above minimum wages

Source- AIOE-FICCI
Conclusion