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Analysis Of Contract Workers In Labour Law

Every industry and organisation rely on contract labourers, who also help the industrial economy, grow. However, contract labourers often face issues with their working conditions, the nature of their jobs, minimum pay rates or salary deference, welfare programmes, welfare programmes, and social security plans.

At this point in the era of globalisation and liberalisation, the use of contract labour is the biggest problem. The purpose of this article is to focus on an overview of the problems and difficulties with the contract labour system in India, the development of the current legal framework, regulation, and different loopholes under the Contract Labour Act [Regulation and Abolition]1970.

This essay also examines the distinction between contract labour and general labour, concerns and difficulties faced by contract labourers in various industries, the history of the contract labour Act, and the development of India's current legal system using the suggestions of several committees. The current study is based on the utilisation of secondary data from sources like publications, journals, libraries of websites, etc. This essay also examines how the courts have interpreted the Contract Labour Prohibition and Abolition Act of 1970.

According to the Contract Work [Regulated and Abolition] Act of 1970, a contract job performed by persons who fit into these categories requires a range of skills. Unskilled, skilled, qualified, and high categories make up the levels of qualification. A considerable formalised of the organised workforce is indicated by an increase in the usage of temporary agency workers, who are not directly employed by an employer but rather serve as intermediaries or contractors on short-term contracts.

In India, rules governing labour contracts are heavily influenced by the government, which is unusual in wealthy nations. According to the Industrial Employment (Standing Order) Act of 1946, employers are required to obtain government agency approval for all conditions, including the number of hours worked, paid time off, productivity goals, discipline policies, and worker categorization. The responsibility of the Central Council and state entities to prevent the publication of contractual work in the official journal, employment in the establishment or performance of other work, or participation in its conduct is also mentioned in the law.

Growth Of Contract Workers

In India, skilled to semi-skilled occupations are performed by contract workers in a variety of industries. Numerous Commissions, Committees, the Labour Bureau, the Ministry of Labour, etc. examined the status and situation of contract labour both before and after independence, and it was discovered that its main traits were the underprivileged economic circumstances of its employees, the ad hoc nature of their employment, the lack of job security, etc.

The Contract Labour [Regulation and Abolition] Act, 1970 was therefore passed by the legislature and entered into force on February 10, 1971. Its purpose was to regulate the proper operation of contract workers and prevent their exploitation at the hands of management.

The Contractual Labour [Regulation and Abolition] Act, of 1970 governs contractual employment in India. An establishment or business that contracts out more than 20 employees is subject to the Act. According to this law, a contractual worker is a person hired for a specific period by a contractor rather than an employer. A contractor is defined as a supplier of contractual labour to a major employer.

A person in charge of the business or establishment is known as the principal employer.

In the event that a factory, is the factory's owner, tenant, or manager. The Government: The head of the office or department or an officer informed by the government or local authority; a Mine: it is the owner or the manager of the mine.

As opposed to direct labour, contract labour has the following advantages:
There is no direct employment link between the PE and the employee and neither do the major employer directly hire the employee. Contractors are in charge of setting the terms of employment and hiring employees. A contractual worker's employment agreement is for a certain amount of time and a single duty, as opposed to a permanent employment agreement.

The Act calls for the establishment of Central and State Advisory Boards to provide guidance to the relevant government on issues related to the administration of the Act. A few notices from the Central Government forbid the use of contract labour in a variety of businesses and places where it is the appropriate government, including mines, the Food Corporation of India god owns, port trusts, and many more. In addition, a few Committees have been established by the Central Advisory Contract Labour Board to investigate whether or not the use of the contract labour system should be prohibited at certain companies.

The Contract Labour (Regulation and Abolition ) Act, of 1970 was created by the Indian Government with the primary goal of establishing social security, safety, health, and welfare measures, minimum wages, working conditions for contract labourers, job security, and relationships between contractors and contract labourers before the agreement between contractors and principal employers, among other things.

The practice of a contractor hiring workers under a contract for a set length of time is known as contract labour. Contract workers are considered indirect employees; they may be paid daily wages or receive daily pay at the end of each month. Hiring, managing, and paying contract labourers are all contractors' responsibilities.

Definition Of Contract Workers

Contract labour typically refers to employees that are hired for a specific job and a limited amount of time. The phrase is sometimes used in Third World Nations to describe a system where workers are hired by a middleman, the labour contractor, who then provides them to the employer for a charge. Such Workers frequently have various systems tying them to the contractor, which may limit their range of motion.

Objective Of Contract Workers

  1. To avoid contract labour being abused
  2. To offer suitable and liveable working circumstances
  3. To control how the advisory boards operate
  4. To develop the guidelines and standards governing the registration process for businesses using contract labour
  5. To outline the prerequisites and licensing process for contracts
  6. To set forth the punishment guidelines for offences against the Act

Necessary Amenities
The Primary Employer is accountable for making sure a factory has a general health and safety policy for the employees. The employer is responsible for maintaining sanitary conditions, proper ventilation and temperature, enough room, water sources, latrines, and urinals. Additionally, he or she is required to provide cr�ches, canteens, a first aid station, and facilities for washing and sitting. Similar necessary amenities are provided for construction employees under the 1996 Building and Other Construction Workers Act. Employers are required by the Building and Other Construction Workers Cess Act of 1996 to make contributions to the BOCW fund.

The Principal Employer is required to keep a register of contractors, a register to record the job completed, wages paid, receipts, etc., and registration of contractors. The employer is required to post a notification indicating where and when earnings are distributed, the rate of payments, and the number of hours worked during a pay period. A majority of the contract labourers must be able to understand the language in which these notices are posted inside the premises.

Problem Of Contract Workers
  1. Providing wages
    Each employee hired under contract labour must receive the required wages from the contractor before the allotted time period has passed. The major employer will be responsible for making the entire payment of wages due or the outstanding amount due if the contractor fails to make the payment within the specified time frame. The Commissioner of Labour will set the salaries.
  2. Health and Safety of Contract Workers
    According to Chapter 5 of the Act, it is the responsibility of the major employer to make sure that the contractor meets the requirements set forth by the relevant government in providing the following facilities. One or more canteens must be provided and kept up by the contractor for the benefit of any contract labourers that the contractor employs in quantities greater than one hundred.

    The contractor is responsible for providing and maintaining restrooms or other appropriate facilities that are adequately lit, ventilated, clean and comfortable for contract labourers working in establishments that require them to stop at night.

    Contractual factory workers are entitled to two things in accordance with the employer's obligations: (I) information about health and safety at work; and (ii) training on health and safety at work.

    Other amenities like drinking water, men's, and women's separate restrooms, washing facilities, first aid, etc.., are the responsibility of the contractor.
  3. Working Hours and Contractual Employee's Rights
    Contractual workers may only be required to work 48 hours per week and 9 hours per day. He or She is entitled to overtime pay that is double the regulated rate. The workers must be informed of the length of the workday. A contractual employee is entitled to annual leave with pay after working for 240 days or more, with one day off for every 20 days worked.
  4. Social Security
    Social Security under the Employees' State Insurance Act of 1948, contract employees are eligible for social security benefits if they earn up to Rs.15, 000 in monthly salary. In order to cover the employees, the employer must register with the Employee State Insurance (ESI) Corporation. Employers contribute 4.75% of the earnings owed to employees under the ESI plan and employees chip in 1.75% of their income.

    Employees who receive a daily wage of less than Rs. 137/- are free from making their portion of the contribution. The programme offers medical benefits, sickness benefits, maternity benefits, disability benefits, and dependent benefits to employees. Contractual Workers in the unorganised sector are eligible for benefits under the Unorganised Workers' Social Security Act of 2008, including the Janani Suraksha Yojana and Indira Gandhi National Old Age Pension. Yet, as registration under the Act is optional, it has not been fully put into effect.
  5. Retirement Advantages
    Contractual employees have the right to be provided fund benefits following retirement under the Worker's Provident Funds and Miscellaneous Provisions Act, 1952. If they worked for a single employer for five years, they have the right to gratuities under the Payment of Gratuity Act, of 1972.
  6. Additional Advantages
    If a worker has an injury while performing their job but is not covered by the ESI plan, they may be entitled to compensation under the Workmen's Compensation Act of 1923. Corresponding to this, under the Maternity Benefits Act of 1961, a female contractual worker who is not covered by ESI may request maternity leave (26 weeks for the birth of the first two children) with pay (provided she worked in an establishment for less than 80 days in a year prior to the date of her expected delivery).
Issues Of Contract Workers
Statement of the issues Minimum Wages, a lack of Social Security and Welfare Programmes, Significant differences between contract workers and general labourers in working conditions, the nature of the work performed by contract workers, the absence of skills and training programmes, and the socio-economic conditions of contract workers are all current issues not only in India but around the world.

Issues with Contract Workers encounter several issues in both the workplace and in society as a whole. Compared to regular labourers, contract workers are much less secure. The Government's top concern is the exploitation of contract workers in the workplace. Contract Labourer has minimal bargaining power, and social security and is often employed in a hazardous industry with fewer amenities and security.

The Contract Worker typically comes from the less privileged parts of society and will not receive the same perks as permanent employees. Because pay is based on output and task completion, workdays are frequently longer. Low rates of unionisation are found among contract workers.

Related Case Laws
In Olga Tellis v/s. Bombay Municipal Corporation, which dealt with slum and pavement residents in Bombay city, a five-judge Supreme Court bench once more defended the idea that the right to life also encompasses the right to subsistence.

Chief Justice Beg of the Supreme Court felt compelled to "turn to the preamble to find the object to the Act itself, to the legislative history of the Act, and to the socio-economic ethos and aspirations and needs of the times in which the Act was passed" in Bangalore Water Supply & Sewerage Board v/s A. Rajappa.

In Francis Coralie Mullin v/s Administrator, Union Territory Of Delhi, where it has been held by this court that the right of life guaranteed under this article is not confined merely to physical existence or to the use of any faculty or limb through which life is enjoyed or the soul communicates with the outside world but is also included within its scope and ambit the right to live with basic human dignity and the State cannot deprive anyone of this precious and invaluable right because no procedure by which such deprivation may be effected can ever be regarded as reasonable, fair and just.

Now, it is clear that the rights and benefits granted to workers employed by contractors under the provisions of the Contract Labour (Regulation Abolition) Act of 1970 and the Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act of 1979 are meant to protect the workers' fundamental human dignity. If the workers are denied any of these rights and benefits to which they are entitled under the provisions of these two pieces of social welfare legislation, they may take legal action.

Since there was no legislation, that addressed contract labour, the Contract Labour (Regulation and Abolition) Act, of 1970 was passed to stop the exploitation of contract labourers. Nonetheless, the legislature needs to take into account some of the Act's inadequacies and make the required adjustments. The Act should also be simplified simply for significant employers and contractors, as well as providing improved protections and facilities for contract labourers.

The Contract Labour (Regulation and Abolition) Act of 1970 failed to recognise the issues faced by contract workers. The social and economic status of the contract workers should require a complete change. It is important to give contract workers the attention they deserve by including them in social security and welfare programmes.

  1. https://
  4. K.D. Srivastava's commentaries on Contract Labour (Regulation and Abolition) Act,1970.
  5. Labour and Industrial Law Author by P.L. MALIK
Written By: P. Gokulapriya B.A.LLB., LLM.

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