ASSIGNMENT ON CONTRACT LABOUR

Submitted By: Ankita Aggarwal (10/MBA/12) Hina Jhamb (10/MBA/23)

References and review of literature .Analysis 4.Hypothesis 3.Conclusion. 5.Introduction 2.CONTENTS 1.

persons who are hired. is compensated by the establishment. and also Labour Bureau. Committees. It is also prevalent in agricultural and allied operations and to some extent in the services sector. in turn. The condition of contract labour in India was studied by various Commissions. The Supreme Court of India in the case of Standard Vacuum Refinery Company Vs. Contract workmen are indirect employees. their workmen (1960-II-ILJ page 233) observed that contract labour should not be employed where: — (a) The work is perennial and must go on from day to day. 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. All these have found their condition to be appalling and exploitative in nature. Contract labour has to be employed for work which is specific and for definite duration. . lack of job security and poor economic conditions are the major characteristics of contract labour. before independence and after independence. casual nature of employment. considerations of social justice call for its abolition or regulation. Ministry of Labour.INTRODUCTION: The system of employing contract labour is prevalent in most industries in different occupations including skilled and semi skilled jobs. While economic factors like cost effectiveness may justify system of contract labour. supervised and remunerated by a contractor who. Inferior labour status.

(b) The work is incidental to and necessary for the work of the factory. . (c) The work is sufficient to employ considerable number of whole time workmen. and (d) The work is being done in most concerns through regular workmen.

HYPOTHESIS Use of contract labour in India’s manufacturing sector has found surprisingly high levels of contract workers being used – in some cases. the official record of industrial statistics. conducted across two major industrial states. Workers in West Bengal were also less likely to be paid the minimum wage than in Gujarat. West Bengal and Gujarat. as many as three times the official estimate. such as cement. iron and steel. where contract workers are largely recruited and controlled via trade unions. India’s Annual Survey of Industries. Many workers have no specific working hours or medical benefits. and few safety arrangements for hazardous work. rely on contract labour for as many of four out of every five workers. puts the share of contract labour in organised manufacturing at 15 to 26% across these . none of the contract workers surveyed received Employee's State Insurance (ESI). cotton textiles and jute. The study found that contract labour regulations were not effective. even in West Bengal. In Gujarat. The research. have very limited earned leave. The findings suggest that some of India’s key industries. Contract workers are recruited informally to established businesses via intermediaries. although in West Bengal up to one in four did. also found that that minimum wage and other contract labour laws are widely violated.

Contract labour regulation exists and should be enforced effectively. We found the share to be much higher 60 to 70% in our sample states. This may be because we undertook extensive field work in our sample states: most official estimates of contract labour are based on secondary data.states. Our study suggests the establishment of a vigilance committee. where it is likely that contract labour is being underreported by employers. involving representatives from the Labour Department of the Indian Government and the workers community. . to improve governance and transparency.

whose conditions have been found to be abysmal. The Contract Labour (Regulation and Abolition) Act. An establishment wherein work is of intermittent and seasonal nature will be covered by the Act if the work performed is more than 120 days and 60 days in a year respectively. APPLICATION: 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. resulted in the enactment of the Contract Labour (Regulation and Abolition) Act. 1970. The Act also applies to establishments of the Government and local authorities as well. 1970 was brought on the Statute Book to regulate the employment of Contract Labour in certain establishments and to provide for its abolition in certain circumstances and for matters connected therewith.ANALYSIS THE CONTRACT LABOUR ACT. 1970 AND ITS PURPOSES: The concern for providing legislative protection to this category of workers. . It does not apply to establishments where the work performed is of intermittent or seasonal nature.

latrines and urinals. the Principal Employer is liable to pay the same. washing facilities and first aid facilities and have been made obligatory. for maintenance of registers and records and for making rules for carrying . In cases of failure on the part of the contractor to provide these facilities. PANEL PROVISIONS: For contravention of the provisions of the Act or any rules made there under. In case of failure on the part of the contractor to pay wages either in part or in full. the punishment is imprisonment for a maximum term upto 3 months and a fine upto a maximum of Rs. the Principal Employer is liable to provide the same.1000/OTHER PROVISIONS: The Act makes provision for the appointment of Inspecting staff.WELFARE AND HEALTH OF CONTRACT LABOUR: The Act has laid down certain amenities to be provided by the contractor to the contract labour for establishment of Canteens and rest rooms . will be entitled to the same wages and service conditions as regular workmen as per the contract labour (Regulation and Abolition) Central Rules. The contract labour who performs same or similar kind of work as regular workmen. PAYMENT OF WAGES AND PROVISIONS: The contractor is required to pay wages and a duty is cast on him to ensure disbursement of wages in the presence of the authorised representative of the Principal Employer. and arrangements for sufficient supply of wholesome drinking water. 1971.

References are received for regularisation of the contract labour or abolition of the contract labour system on the ground of perennial nature of work/ ordinarily done through regular workmen etc. So far as the regularisation of the workers is concerned. privatisation and liberalisation. The requests for abolition of contract labour system are examined in consultation with the Central Advisory Contract Labour Board and notifications abolishing contract labour system in various establishments in different jobs have been issued. Writ Petitions are also being filed by Union/Workers seeking absorption where the contract labour system has been abolished or pleading that the contract is sham. either express or implied. officers of the CIRM have been appointed as Inspectors. it was felt. no such provision. exists in the Act.out the purpose of the Act. would generate employment growth. Such a measure. The GOM held a series of meetings in the . in March 2000 a GOM was constituted to examine the proposal of the Ministry to suitably amend the provisions of the Act with a view to facilitating outsourcing of activities to specialized firms having professional experience and expertise in the relevant area and at the same time to provide for a safety net to contract labour in such outsourced activities. These complaints are being investigated and remedial action taken in accordance with the provisions of the law by launching prosecutions if considered necessary. In the context of globalisation. In the central sphere. A number of complaints alleging violation of contract labour Act especially the notifications prohibiting the employment of contract labour are being received.

the same could not be finalized. Their view is that the employers should be given flexibility to determine the composition of the workforce for the industry to survive in the competitive environment. the employer’s organizations are vehemently opposed to it. better operational efficiency and high percentage of consumer satisfaction.years 2000. Further. While the trade unions have demanded that the Act should be amended to provide for automatic absorption of contract labour in the event of prohibition of employment of contract labour. for better time management. automization etc. contract labour should not be abolished in non-core activities of an establishment and should be allowed to be parcelled out to specialized agencies. After in-depth deliberations on the issues involved it was agreed that certain activities which form support services of an establishment be excluded from the application of Section 10 of the existing Act. and fall in employment. according to them. as for example. However. 2001 and 2003. The Government of Andhra Pradesh have amended the Contract Labour Act with a view to prohibiting employment of contract labour in the core activities of an establishment and to allow engagement of . According to them such a step would lead to capital-intensive measures like mechanization. which have grown rapidly. which provides for prohibition of employment of contract labour in certain circumstances. Some of the State Governments. in tune with the changing times. have proposed measures to liberalise the Act to spur the growth of industry. grant of exemption to Special Economic Zones and Export Oriented Units from the applicability of the Act to boost exports.

The Government of Goa has introduced a bill in the legislature to abolish contract labour in core activities of an establishment.In the wake of economic liberalization as well as the judgments of the courts. etc. cleaning works. CONCLUSION . proposals have been received from social partners to bring about amendments in the Contract Labour Act.contract labour in none-core activities of an establishment such as watch and ward. sanitation. Views of Employers’ Associations .

industries may go in for technological restructuring with less number of workers leading to reduction in employment. is not allowed to continue. • If the contract labour system. have to ensure payment of wages to contract labour as laid down under the law in force as also other basic amenities and social security benefits. from restricted domestic competition to international competitiveness. • Supportive or allied activities of an establishment like maintenance. Views of the Trade Unions • The Trade Unions are totally opposed to the idea of contracting of services and in jobs.• Since 1970 when the Contract Labour (Regulation and Abolition) Act was enacted the economy has undergone a sea-change. from an era of protectionism to liberalisation. house keeping should be out sourced and the Act should only provide for regulating the working conditions and wages. • The Principal Employer should. however. This helps improve productivity and service competitiveness. which is cost effective. Out sourcing will only lead to a type of employment founded on discrimination . • Work requiring specialised skillsunavailable within the establishment. • The Act should be made applicable only to the main and core activities of the establishment in so far as abolition of contract labour system are concerned. • The system of contract labour offers tremendous opportunities for employment and allows the employers flexibility to choose what is best for them.

• The Second National Labour Commission has been entrusted with the task of rationalization of labour laws and hence its report should be awaited. who form the largest section of the economy and make a major contribution to the country’s global success. etc. keeping in view the aforesaid views of the employers’ association and that of the trade unions. Since Gujarat and West Bengal are both heavily industrialized. The Government. and therefore representative of manufacturing across India. and that effective political action is needed to make sure that economic growth is more inclusive . It also suggests that India’s economic success is not improving the lives of contract and informal workers. this study has significant implications nationwide. at the moment.and exploitation of contract labour in regard to wages paid. The changes to be made in the law are still being worked out. has undertaken a thorough review of the Act. working conditions.

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