Professional Documents
Culture Documents
The Minimum Wages Act was passed in 1948 and it came into force on 15th
March, 1948. The National Commission on Labour has described the passing
of the Act as landmark in the history of labour legislation in the country. The
philosophy of the Minimum Wages Act and its significance in the context of
conditions in India, has been explained by the Supreme Court
in Unichoyi v. State of Kerala (A.I.R. 1962 SC 12), as follows:
IMPORTANT DEFINITIONS
“Employee” means any person who is employed for hire or reward to do any
work, skilled or unskilled, manual or clerical in a scheduled employment in
respect of which minimum rates of wages have been fixed; and includes an
outworker to whom any articles or materials are given out by another person
to be made up, cleaned, washed, altered, ornamented, finished, repaired,
adapted or otherwise processed for sale purpose of the trade or business of
that other person where the processs is to be carried out either in the home
of the out-worker or in some other premises, net being premises under the
control and management of that person; and also includes an employee
declared to be an employee by the appropriate Government; but does not
include any member of Armed Forces of the Union.
(iv) in any other case where there is carried on any scheduled employment in
respect of which minimum rates of wages have been fixed under this Act,
any person responsible to the owner of the supervision and control of the
employees or for the payment of wages.
The definitions of “employees” and “employer” are quite wide. Person who
engages workers through another like a contractor would also be an
employer (1998 LLJ I Bom. 629). It was held in Nathu Ram Shukla v. State of
Madhya Pradesh A.I.R. 1960 M.P. 174 that if minimum wages have not been
fixed for any branch of work of any scheduled employment, the person
employing workers in such branch is not an employer with the meaning of the
Act. Similarly, in case of Loknath Nathu Lal v. State of Madhya Pradesh A.I.R.
1960 M.P. 181 an out-worker who prepared goods at his residence, and then
supplied them to his employer was held as employee for the purpose of this
Act.
Note: The schedule is divided into two parts namely, Part I and Part II. When
originally enacted Part I of Schedule had 12 entries. Part II relates to
employment in agriculture. It was realised that it would be necessary to fix
minimum wages in many more employments to be identified in course of
time. Accordingly, powers were given to appropriate Government to add
employments to the Schedule by following the procedure laid down in
Section 21 of the Act. As a result, the State Government and Central
Government have made several additions to the Schedule and it differs from
State to State.
Wages [Section 2(h)]
(b) any other amenity or any service excluded by general or social order of
the appropriate Government;
(iv) any sum paid to the person employed to defray special expenses
entailed on him by the nature of his employment;
Section 3 lays down that the ‘appropriate Government’ shall fix the minimum
rates of wages, payable to employees in an employment specified in Part I
and Part ii of the Schedule, and in an employment added to either part by
notification under Section 27. In case of the employments specified in Part II
of the Schedule, the minimum rates of wages may not be fixed for the entire
State. Parts of the State may be left out altogether. In the case of an
employment specified in Part I, the minimum rates of wages must be fixed for
the entire State, no parts of the State being omitted. The rates to be fixed
need not be uniform. Different rates can be fixed for different zones or
localities: [Basti Ram v. State of A.P. A.I.R. 1969, (A.P.) 227].
Notwithstanding the provisions of Section 3(1)(a), the “appropriate
Government” may not fix minimum rates of wages in respect of any
scheduled employment in which less than 1000 employees in the whole State
are engaged. But when it comes to its knowledge after a finding that this
number has increased to 1,000 or more in such employment, it shall fix
minimum wage rate.
(c) a “Guaranteed Time Rate” for those employed in piece work for the
purpose of securing to such employees a minimum rate of wages on a time
work basis; (This is intended to meet a situation where operation of minimum
piece rates fixed by the appropriate Government may result in a worker
earning less than the minimum wage), and
(d) a “Over Time Rate” i.e. minimum rate whether a time rate or a piece rate
to apply in substitution for the minimum rate which would otherwise be
applicable in respect of overtime work done by employee.
Section 3(3) provides that different minimum rates of wages may be fixed for
–
Further, minimum rates of wages may be fixed by any one or more of the
following wage periods, namely:
and where such rates are fixed by the day or by the month, the manner of
calculating wages for month or for a day as the case may be, may be
indicated.
However, where wage period has been fixed in accordance with the
Payment of Wages Act, 1986 vide Section 4 thereof, minimum wages shall be
fixed in accordance therewith [Section 3(3)].
(ii) a basic rate of wages or without the cost of living allowance and the cash
value of the concession in respect of supplies of essential commodities at
concessional rates where so authorized; or
(iii) an all inclusive rate allowing for the basic rate, the cost of living allowance
and the cash value of the concessions, if any.
The cost of living allowance and the cash value of the concessions in respect
of supplies essential commodities at concessional rates shall be computed by
the competent authority at such intervals and in accordance with such
directions specified or given by the appropriate Government.
The wage rates shall come into force from such date as may be specified in
the notification. If no date is specified, wage rates shall come into force on
the expiry of three months from the date of the issue of the notification.
Note: It was held in Edward Mills Co. v. State of Ajmer (1955) A.I.R. SC, that
Committee appointed under
ADVISORY BOARD
Section 8 of the Act provides that the Central Government shall appoint a
Central Advisory Board for the purpose of advising the Central Government
and State Governments in the matters of fixation and revision of minimum
rates of wages and other matters under the Minimum Wages Act and for
coordinating work of the advisory boards. The Central Advisory Board shall
consist of persons to be nominated by the Central Government representing
employers and employees in the scheduled employment who shall be equal
in number and independent persons not exceeding 1/3rd of its total number
of members, one of such independent persons shall be appointed as the
Chairman of the Board by Central Government.
Section 11 of the Act provides that minimum wages payable under the Act
shall be paid in cash. But where it has been the custom to pay wages wholly
or partly in kind, the appropriate Government, on being satisfied, may
approve and authorize such payments. Such Government can also authorize
for supply of essential commodities at concessional rates. Where payment is
to be made in kind, the cash value of the wages in kind or in the shape of
essential commodities on concessions shall be estimated in the prescribed
manner.
Payment of less than the minimum rates of wages notified by the appropriate
Government is an offence. Section 12 clearly lays down that the employer
shall pay to every employee engaged in a scheduled employment under
him such wages at a rate not less than the minimum rate of wages fixed by
the appropriate Government under Section 5 for that class of employment
without deduction except as may be authorized, within such time and
subject to such conditions, as may be prescribed.
Fixing of minimum rates of wages without reference to working hours may not
achieve the purpose for which wages are fixed. Thus, by virtue of Section 13
the appropriate Government may –
(a) fix the number of work which shall constitute a normal working day,
inclusive of one or more specified intervals;
(b) provide for a day of rest in every period of seven days which shall be
allowed to all employees or to any specified class of employees and for the
payment of remuneration in respect of such day of rest;
(c) provide for payment of work on a day of rest at a rate not less than the
overtime rate.
The above stated provision shall apply to following classes of employees only
to such extent and subject to such conditions as may be prescribed:
(d) Employees engaged in any work which for technical reasons, has to be
completed before the duty is over;
(e) Employees engaged in any work which could not be carried on except at
times dependent on the irregular action of natural forces.
Where the rate of wages has been fixed under the Act by the day for an
employee and if he works on any day on which he employed for a period
less than the requisite number of hours constituting a normal working day, he
shall be entitled to receive wages for that day as if he had worked for a full
working day.
Provided that he shall not receive wages for full normal working day –
(i) if his failure to work is caused by his unwillingness to work and not by
omission of the employer to provide him with work, and
Apart from the payment of the minimum wages, the employer is required
under Section 18 to maintain registers and records giving such particulars of
employees under his employment, the work performed by them, the receipts
given by them and such other particulars as may be prescribed. Every
employee is required also to exhibit notices, in the prescribed form containing
particulars in the place of work. He is also required to maintain wage books
or wage-slips as may be prescribed by the appropriate Government and the
entries made therein will have to be authenticated by the employer or his
agent in the manner prescribed by the appropriate Government.
Under Section 20(1) of the Act, the appropriate Government, may appoint
any of the following as an authority to hear and decide for any specified
area any claims arising out of payment of less than the minimum rate of
wages or in respect of the payment of remuneration for the days of rest or of
wages at the rate of overtime work:
(c) any officer of the State Government not below the rank of Labour
Commissioner; or
(d) any other officer with experience as a Judge of a Civil Court or as the
Stipendiary Magistrate.
The authority so appointed shall have jurisdiction to hear and decide claim
arising out of payment of less than the minimum rates of wages or in respect
of the payment remuneration for days of rest or for work done on such days
or for payment of overtime.
The provisions of Section 20(1) are attracted only if there exists a disputed
between the employer and the employee as to the rates of wages. Where
no such dispute exists between the employer and employees and the only
question is whether a particular payment at the agreed rate in respect of
minimum wages, overtime or work on off days is due to an employee or not,
the appropriate remedy is provided by the Payment of Wages Act, 1936.
Section 22 of the Act provides that any employer who (a) pays to any
employee less than the minimum rates of wages fixed for that employee’s
class of work or less than the amount due to him under the provisions of this
Act or contravenes any rule or order made under Section 13, shall be
punishable with imprisonment for a term which may extend to six months or
with fine which may extend to five hundred rupees or with both.
While imposing any fine for an offence under this section the court shall take
into consideration the amount of any compensation already awarded
against the accused in any proceedings taken under section 20.
It is further stipulated under Section 22A of the Act that any employer who
contravenes any provision of this Act or of any rule or order made thereunder
shall if no other penalty is provided for such contravention by this Act be
punishable with fine which may extend to five hundred rupees.
The establishment must ensure following compliances under the Act. These
compliances are not exhaustive but illustrative.
What is the object of the Payment of Wages Act, 1936?: The main object
of the Act is to avoid unnecessary delay in the payment of wages and
to prevent unauthorized deductions from the wages.
a. in factories;
b. upon railways;
c. in other establishments specified in sub-clauses (a) to (g) of
section 2(ii) of the Act.
The Act empowers the State Government to extend its provisions to the
persons employed in anyestablishments over and above the aforesaid
establishments. {Section 1}
Are all wages covered or protected by the Act?: Wages averaging less
than Rs. 18000.00 per month only are covered or protected by the Act
with effect from 11th September 2005. {Section 1(6)}
Can any employer fix a period longer than one month for paying wages
to a person employed by him?: The period to be fixed for paying wages
to an employed person must not exceed one month. That means, an
employer can choose to pay wages to a person employed by him for a
period of every week or every fortnight, but not for a period of every two
months or every three months, {Section 4}
What is the provision of the Act regarding deductions from the wages
payable to an employed person?: The Act prohibits all kinds of
deductions except those which are authorized by or under the Act.
{Section 7}
What are the provisions of the Act regarding the imposition of fines on
the employed person?:
What is the procedure prescribed for the imposition of fine and for
making deductions for damage or loss?: Any person desiring to impose a
fine on an employed person or to make a deduction for damage or loss
shall explain personally or in writing to the said person the act or
omission, or damage or loss in respect of which the fine or deduction is
proposed to be imposed, and the amount of fine or deduction, which it
is proposed to impose, and shall hear his explanation in the presence of
at least one other person, or obtain it in writing. {Subsection 8(3), 10(1-A)
& Rule 15}
Apart from the employer himself, who else is responsible for the payment
to the persons employed by him of wages required to be paid under the
Act?:
Can the employer also prefer an appeal against the order of the
Authority?: If the employer is aggrieved by the order of the Authority, he
also can, within 30 days of the date of order, prefer an appeal to the
Appellate Court if the amount ordered to be paid by him is more than
Rs. 300.00 or the order imposes on him a financial liability of more than
Rs. 1000.00
Is it competent for the Authority under the Act to examine the justifiability
of an order of suspension?: If an order of suspension has been passed by
an officer competent to pass it, the authority under the Act cannot
examine its validity to see as to whether it was justified in law or not.
Can the Authority under the Payment of Wages Act decide the question
of the status of an employed person?: The Authority under the Payment
of Wages Act is a Court of summary jurisdiction having powers to deal
with the simple matter of delay in payment of wages or deduction from
wages. It is not within the competence of the Authority to decide the
question of the status of an employed person, i.e., whether he is a Mistry
or Veldar. The matter is a complicated question of law as also of fact.
Can any employed person relinquish his rights under the Act?: An
employed person is prohibited from contracting out of the Act, i.e. from
giving up any right conferred upon him by the Act, and any contract or
agreement made by him relinquishing such rights is null and void.
{Section 23}
Form No. VI and Rule 24 regarding the display of the abstract of this Act
has been deleted byGovernment of Maharashtra vide notification date
30-Mar-2001 MGG Pt. I-L. Ext. date 30-Mar-2001 P. 213
Minimum Wages Act, 1948: Wage Fixing Method, Issues and Next Steps
How is minimum wage decided under the Minimum Wages Act, 1948? What
are key problems of this act apart from being very old? What may be next
steps of the central government towards addressing these problems?
In the Minimum Wages Act, 1948 the minimum wages are fixed or revised via
two methods as follows:
Committee Method: A committee or a Sub-Committee is set up to give
advice or make an enquiry.
Notification Method: The government body responsible for it publishes the
proposal and an official date in the Official Gazette.
The revision of the Minimum Wages is made on the basis of the ‘Cost of Living
Index’. There are different norms for deciding the minimum wages which vary
from industry to industry. The wages are set by the state, a part of the state, a
class or classes, and mode of employment. A wage board is constituted to
help in fixation of the minimum wages. The Central and State Governments
are empowered to fix as well as revise the minimum wages. For scheduled
employments, the state governments fix the minimum wages. The central
government fixes a National Floor Level Minimum Wage which is usually lower
than the minimum wages of most states.
Minimum wages are fixed on a monthly, hourly, daily basis as per the piece
rate, monthly rate and the hourly rate. A Central as well as Regional Advisory
Board comprising of government bodies, representatives of employers, trade
unions.
As per the methods used to determine the minimum wage husband, wife
and two children are considered as three units and on the basis of units,
minimum wages are decided for agriculture and non-agricultural workers.
Apart from the fact, the current method is very old and obsolete now, the
following are some of the major issues in this field:
Huge Unemployment:
There is a lot of unemployment in India which has many forms. Usually,
workers do not have strong voices to channel their [problems to the higher
authorities and hence end up working for lower wages out of desperation.
Lack of Awareness and Knowledge of Rights:
The lack of knowledge about the policies for workers is one of the major
problems which lead to exploitation of workers and the inability to get even
the minimum wages
Jurisdiction Overlaps:
The government has defined a ‘minimum wage’, ‘living wage’, ‘fair wage’
which have vague definitions with some overlaps. This leads to issues related
to execution of the policy.
As per the Minimum Wage Code, the wage disparity in various sectors is
expected to be removed. Also, there has been a word that the government
may double the minimum wages to a revised amount of around Rs 18,000.
This will lead to better wages for workers. Apart from these policy level
changes the government should proactively engage itself in making sure that
they reach the poorest of the poor and the most disadvantaged sections of
the society through awareness campaigns and activities. Private
organisations should be included in so that they also advertise the rights of
the workers. Some rules which make it mandatory for each company working
in an industry included in the Minimum wages Act, 1948 should make sure
that they provide minimum wages as well as make their workers more aware.
2.Arbitration:
Labour Court:
Under Section 7 of the Industrial Disputes Act, 1947, the
appropriate Government by notifying in the official
Gazette, may constitute Labour Court for adjudication
of the industrial disputes The labour court consists of
one independent person who is the presiding officer or
has been a judge of a High Court, or has been a
district judge or additional district judge for not less
than 3 years, or has been a presiding officer of a labour
court for not less than 5 years. The labour court deals
with the matters specified in the second schedule of
the Industrial Disputes Act, 1947.
These relate to:
1. The properiety or legality of an employer to pass an
order under the standing orders.
2. The application and interpretation of standing
orders.
3. Discharge or dismissal of workers including
reinstatement or grant of relief to workmen wrongfully
dismissed.
4. Withdrawal of any statutory concession or privilege.
5. Illegality or otherwise of a strike or lockout.
6. All matters other than those reserved for industrial
tribunals.
Industrial Tribunal:
Under Section 7A of the Act, the appropriate
Government may constitute one or more Industrial
tribunals for the adjudication of industrial disputes.
Compared to labour court, industrial tribunals have a
wider jurisdiction. An industrial tribunal is also
constituted for a limited period for a particular dispute
on an adhoc basis.
The matters that come within the jurisdiction of an
industrial tribunal include the following:
1. Wages, including the period and mode of payment.
2. Compensatory and other allowances.
3. Hours of work and rest periods.
4. Leave with wages and holidays.
5. Bonus, profit sharing, provident fund, and gratuity.
6. Classification by grades.
7. Rules of discipline.
8. Rationalisation.
9. Retrenchment of employees and closure of an
establishment or undertaking.
10. Any other matter that can be prescribed.
National Tribunal:
This is the third one man adjudicatory body appointed
by the Central Govern¬ment by notification in the
Official Gazette for the adjudication of industrial
disputes of national importance. The central
Government may, if it thinks fit, appoint two persons as
assessors to advise the National Tribunal. When a
national tribunal has been referred to, no labour court
or industrial tribunal shall have any jurisdiction to
adjudicate upon such matter.
The main highlights revealed are gleaned as follows:
1. That referring of disputes conciliation machinery is a
common practice is well indicated by a large number
of disputes taken for conciliation.
2. On average, around one-third of the disputes
referred for conciliation failed. Of these, about 60 to 90
per cent of cases were referred to adjudication. Only
one per cent of the cases were referred for arbitration.
These underline the ineffectiveness of conciliation
machinery in settling industrial disputes. Thus, the
existing machinery for the settlement of industrial
disputes, as provided under the Industrial Disputes Act,
1947, needs to be strengthened.
3. Adjudication has proved the most popular way of
settling industrial disputes in India. This is because
adjudication is the last recourse for disputing parties to
settle their disputes.
Here it is noteworthy that the data given in the Table
25.7 is incomplete in the sense that in no year did all
the States and Union Territories send all the information.
For example in some years as many as 12 States and
Union Territories did not furnish information to the Union
Ministry of labour, as can be verified from the latter’s
annual reports for the years decrease in the number of
disputes taken for conciliation from 47,788 in 19801 in
981 is explained by the same reason, i.e. non-
furnishment of information on dispute conciliation by all
States and Union Territories.
Finally, following are a few suggestions to make the
settlement machinery more effective:
1. The trained and experienced officers who are well
acquainted with the problems of industrial workers
should be entrusted with the responsibility of dealing
with conciliation machinery Political and administrative
interference should not be allowed to cloud the
functioning of conciliation machinery.
2. One way to strengthen the adjudication machinery
is to substitute it by setting up Industrial Relations
Commissions (IRCs), both at the Central and the State
level, on the lines suggested by the National
Commission on Labour. The IRC should also be
empowered to oversee the working of the conciliation
machinery.
3. In order to make arbitration fair, the arbitrator
chosen for settling disputes be mutually acceptable to
both the union and the management. This can be
facilitated if the government prepares the panel of
experienced arbitrators at the national and the state
levels so that arbitrators are chosen from the panel, as
and when required.
4. The government should refrain from actively
intervening in the matters of industrial disputes unless it
is must for her to intervene in the disputes.
Ans. Neither the term “Contract Labour” nor the term “outsourcing” has been
defined under Contract Labour Act.The intention of ultimate net result of
both the terms appears to be same. Term “outsourcing” has been coined
very intelligently to create confusion between the two. “Contract Labour” is a
term which is applied to man power engaged by somebody else to produce
a given result to principal employer where this man power has no direct
relationship of employer-employee with the principal employer. This includes
the simple supply of manpower to principal employer by contractor where
contractor is not involved in specified activity. “Outsourcing” conveys more
or less same meaning. When an employer engages somebody else to deliver
a specified result where employer is not involved with the man power
engagement or supervision or control activity over such man power. If any
activity which is outsourced to someone and carried outside the premises of
the principal employer, such manpower engaged will not be termed as
“workman” under Contract Labour Act. It is not the nomenclature of the term
but the real intent to decide when it is a Contract Labour or outsourcing. It
can also be said like contract labour reflect manpower where as outsourcing
reflects the job or the activity. Bombay High Court in the case of Sudhir
Kondiram Jadhav (2002 I CLR 97) has held that workers employed by
agencies will be the Contract Labour under the Act.
Ans. When the jobs and services are outsourced and are carried out in some
other premises not being premises under controlled and management of the
principal employer, Contract Labour Act will not apply. For all other jobs and
services outsourced which are carried out in the premises of the principal
employer will be covered under the Contract Labour Act.
Ans. Neither the “perennial” nor the “permanent” term has defined under
the Act. The word Important Clarifications On Contract Labour “perennial”
has been used under sec. 10(2)(b) where it is said that if the job exists for
sufficient duration will be considered as of “perennial” nature. The act no
where prohibits engagement of contract labour on any job or activity or
service unless it is prohibited by the Appropriate Govt. under the provisions of
the Act. Andhra Pradesh State Govt. has amended the CL Act in 2003 and
clarified the jobs / activities on which contract labour can be deployed but
no other state has moved in this direction to bring clarity on this point. At
present contract labour can be engaged on any permanent nature of job in
strict legal sense but yes, it should be avoided as this may become a basis for
the state Govt. to prohibit employment of contract labour on that particular
job / activity / service in the industry.
Q. What is the best ratio between permanent and contact labour? Can we
engage 100% contract labour?
Ans. There is no guide line provided under the Act about this ratio. The
concept of engagement of contract labour or giving job on contract basis
originated to get the things done in a given time frame to be paid on the
basis of net result and not on the number of manpower involved and this can
always be applied to those areas of the industry where activities are such
that they do not require full time workers for the major portion of the working
hours or any sudden increase of volume of work which needs to be
accomplished in a specified time. So 100% contract labour can’t be
engaged unless the whole industry is leased out to someone else, who
ultimately becomes the principal employer for the manpower engaged by
him. In my view ideal ratio of contract labour, to keep the healthy industrial
relations should be around 70/30 (70% to be engaged by principal employer
and 30% through contract labour).
Q. Can we have different wages and other terms for permanent employees
and contract labour doing the same or similar job?
Ans. Though, rules framed under Contract Labour Act by Central Govt. as
well as State Govts. carry a condition [central rule 25 (2) (v)(a) & (b)] that
where the workmen employed by the contractor perform the same or similar
kind of work as the workmen directly employed by the principal employer of
the establishment, the wage rates, holidays, hours of work and other
conditions of service of the workmen of the contractor shall be the same as
applicable to the workmen directly employed by principal employer of this
establishment on the same or similar kind of work but if, there is an
disagreement with regard to the type of work, shall be decided by the
concerned labour commissioner. But recently Supreme Court in the case of
U.P. Rajya Vidyut Utpadan Board case (2010 LLR 453) has clarified that nature
of work, duties and responsibilities, attached to the job of permanent
workmen and contract labour are relevant in comparing and evaluating as
to whether the workmen employed through contractor perform the same or
similar kind of work as the workmen directly employed by the principal
employer. Degree of skills and various dimensions of a giving job have to be
gone into to reach a conclusion that nature of duties of the workmen in two
categories are on par or otherwise. Often the difference may of a degree. It
is well settled that nature of work can’t be judged by mere volume of work;
there may be qualitative difference as regards reliability and responsibility.
However, Madhya Pradesh High Court in the case of Steel Authority of India
Ltd. case ( 2007 LLR 79) has held that the workers through contractor under
CL Act will be entitled to equal wages which were being paid to regular
employees.
Q. Can we transfer casuals/temporaries on the rolls of contractor?
Ans. As principal employer one should not do it. Transfer from the rolls of
principal employer the rolls of contractor establishes that contract is sham
and camouflage and the real control and supervision is of principal
employer. Even if one wants to do this, better way would be to first clear full
and final accounts, severe the relationship of principal employer and casual
/temporary workmen by proper documentation. Then contractor can
engage / employ such casual / temporary workmen on his rolls. In this whole
process documentation is the key to establish whether the arrangements are
genuine or fake.
Q. Liability of principal employer for injury, illness, disability, death etc. Ans.
Principal Employer is fully responsible in case of injury, illness, disability or
death unless the contract labour is covered under ESI with his contractor
employer.
Q. Can and should the employer has a say in the number and selection of
contract labour?
Ans. No! Once the job / services / activities are allocated to a contractor
under proper agreement, principal employer should not have a say in
number and selection of contract workmen, at least on documents. If the
principal employer is selecting the contract labour, appointing them under
the name of contractor, it is sufficient to establish the relationship employer-
employee between the principal employer and the so called contract
labour.
Ans. Yes! It is very much desirable. Issue of employment card / identity card is
an obligation under the provisions of contract labour act and rules.
Employment card / Gate pass / indentity card should be issued by and under
the seal of contractor because he is their employer. Management of
principal employer should not involve themselves in this activity.
Q. Each contractor engaging less than 20 but together they engage more
than 20. Will the provisions of registration, licensing and other statutory
provisions apply?
Ans. Even if the license of the contractor is not renewed but continues to
work, contractor labour can’t claim permanency with the principal employer
merely on this ground. However contractor can be prosecuted for the
violation of the provisions of the act for not getting his license renewed.
Karnataka High Court in the case of Steel Authority of India Ltd. (1990) 64 FLR
573 has held that licensing is only a regulatory measure and it does not
create any privilege. Bombay High Court in the case of General Labour Union
(Red Flag) has held that the employees engaged by a contractor to run a
canteen for a company does not become employees of the company if the
contractor fails to register the contract with the appropriate authorities.
Supreme Court in the case of Deena Nath (1992 LLR 46) has held that
consequence on non compliance with the provisions related to registration
and license is penal. Punjab & Haryana High Court in the case of Food
Corporation of India (2008 LLR 391) has held that when the contractor does
not possess valid license only penal provisions would be attracted and it is no
where provided that such contract labour would become the employees of
principal employer.
Ans. The situation where contractor in changing but contract labour remain
same may be viewed against the principal employer as it reflects against the
spirit of the act unless the shift of labour from one contractor to other is
properly documented. This may lead to declaration of sham contract.
Supreme Court in R.K. Panda case (1994 LLR 634) has held that workers
working under different contractor for last 10 years will be absorbed by the
principal employer.
Q. Contract terminated due to unsatisfactory performance of the contractor,
contractor leaves – can contract labour claim permanency? What should
employer do?
Ans. No! In this situation contract labour can’t claim permanency in the
organization. The moment, contract is terminated, the workers employed by
such contractor looses the right to enter into the premises of the principal
employer to work as it is the responsibility of the contractor to either keep
such labour under his employment or clear their accounts. If principal
employer allows such contract labour to work in the premises without any tag
/ identification, in all probabilities such contract labour will be deemed as the
workmen of the principal employer.
Ans. No! Principal employer should not become a party to such a settlement
executed between the contractor and his workman. It is a mutual matter
between the contractor as employer and his workman.
Q. When contractor runs away leaving his workforce and supervisor, how to
manage work and labor and who is to handle pending conciliation
reference?
Ans. Yes! Management can challenge the decision of the Appropriate Govt.
regarding abolition of jobs in High Court through writ.
Q. Should contractor and contract labour be rotated? Why? How often? Ans.
Rotating contract labour and contractor for the same job / activity / service
may be held as unfair labour practice unless there are sound reasons and
proper documentation exists in favour of principal employer as bonafide
action.
Q. How to reduce number of contract labour?
Ans. First, by identifying the jobs / activities / service which are regular and
perennial in nature and organization requires constant labour. Secondly
replace such contract labour by regular workmen by the company. Q.
Contract labour demanding permanency – How to handle?
Ans. Ensure that your engagement of contract labour system in the
organization is genuine. All documentation including appointment,
supervision and control should be sufficient to establish that contract is not
sham. I suggest to seek expert advice and avail such services as this is very
sensitive issue.
Ans. Yes! Their claim may be legally valid as it is already provided in the Act
that contract labour is entitled for equal wage, benefits and facilities doing
the same or similar kind of work as employees of principal employer.
Q. Is Minimum Wages Act applicable to contract labour?
Ans. Yes! Rules framed under Contract Labour Act by Central Govt. as well
as State Govts. carry a condition [central rule 25 (2) (iv)] that rates of wages
payable to the workman by the contractor shall not be less than the rates
prescribed under the Minimum Wages Act for such employment where
applicable and where the rates have been fixed by agreement, settlement
or award not less than the rates so fixed. Moreover all State Govts. have
included the category of Contract Labour under their respective MW
notifications.
Q. What is the liability of Principal Employer in the case of sub-contracting?
Ans. Same - as in the case of contractor. Because, as per the provisions of the
Act sub contractor is covered in the definition of the contractor.
Q. Implications and liabilities of temporary/casual/probationer
employees/trainees? Is there any maximum duration? Relevance of 180/240
days? Implication of breaks?
Ans. Contract Labour Act does not provide any where the status of workman
as temporary / casual / probationer / trainee. It is for the contractor to
employ his workman in his organization as he wants. It is no where going to
affect the principal employer.
29. What changes are likely to be made in the contract labour Act as a part
of Labour Law reforms?
Ans. Industrial Disputes Act has already being amended recently with
reference to definition to workman, introduction of grievance redressal
committee, right of workman to approach labour court directly in case of
individual dispute etc. Govt. is also considering amending Contract Labour
Act which is in terms of providing clear cut equal benefits and wages to
contract labour with regular workman but such considerations are at very
preliminary stage and no one knows whether it takes shape or not
A. Section 29 of the Factories Act deals with lifting machines and lifting
tackles which are defined under explanation. In our opinion hand driven
lifting equipment does not require certification.
A. Under the Factories Act, definition of “worker” is clearly given. For the
purpose of calculation of employment strength, officers and executives etc.
have to be taken into account.
A. The term “factory” is defined in Section 2(m) of the Factories Act, 1948. It
means that in any premises if 10 or more workers are engaged in a
manufacturing process with aid of power or if 20 or more workers are
engaged in the manufacturing process without aid of power such premises
will be covered under the Factories, 1948
A. The child below 14 years of age is not allowed to work in any factory.
A.The women are allowed to work in any factory except between the hours
of 7 pm to 6 am i.e. women are not allowed to work during night time.
However, there are certain operations/processes, which are considered
hazardous. In such operations/processes women are not allowed to work.
A. No adult worker is allowed to work in a factory for more than 9 hours in any
day.
A. The Factories Act and the rules framed thereunder are enforced by
respective states/UTs. through the office of Chief Inspector of Factories under
the Labour Department of the State Government/UTs.