UNDERSTANDING

CONTRACT LABOUR
(REGULATION &
ABOLITION) ACT, 1970:
An overview
 OUTLINE
• Introduction
• Objective
• Applicability of the Act
• Some Important definition
• Registration of Establishment
• Licensing of Contractors
• Prohibition of employment of contract labor in core activities
 OUTLINE
• Welfare & health of Contract Labour
• Responsibility for payment of wages
• Precautions while engaging contract labour
• Statutory payment/benefits w.r.t. contract labour
• Certain guidelines for engaging contract labour
• Obligation of Principal employer
• Obligation of Contractor
 INTRODUCTION
• Overview of the Contract Labour Regulation and Abolition Act
1970
• Historical background and context of the Act
• Importance of understanding the Act
 OBJECTIVE OF THE ACT
• The objective of the Act is to prevent exploitation of contract
labour and ensure facilitation of better conditions of work for
them.
 APPLICABILITY
Act applies to :-
• (a) every establishment in which twenty or more workmen are
employed or were employed on any day of the preceding twelve
months as contract labour;
• (b) every contractor who employees or who employed on any day
of the preceding twelve months twenty or more workmen
 SOME IMPORTANT
DEFINITION
“Appropriate Government”
•(i) in relation to an establishment in respect of which the appropriate
Government under the Industrial Disputes Act, 1947 is the Central
Government, the Central Government;
•(ii) in relation to any other establishment, the Government of the
State in which that other establishment is situate.
 SOME IMPORTANT
DEFINITION
“Contractor“
in relation to an establishment, means- a person who undertakes to
produce a given result for the establishment, other than a mere
supply of goods or articles of manufacture to such establishment,
through contract labour or who supplies contract labour for any
work of the establishment
 SOME IMPORTANT
DEFINITION
“Contract labour"
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
in or in connection with such work by or through a contractor,
with or without the knowledge of the principal employer.
 SOME IMPORTANT
DEFINITION
“Workman"
means any person employed in or in connection with the work of
any establishment to do any skilled, semi-skilled or un-skilled
manual, supervisory, technical or clerical work for hire or reward,
whether the terms of employment be express or implied, but does
not include any such person-
 SOME IMPORTANT
DEFINITION
• (A) who is employed mainly in a managerial or administrative
capacity; or
(B) who, being employed in a supervisory capacity draws wages
exceeding five hundred rupees per mensem .
• functions mainly of a managerial nature;
 DIFFERENCE
• (A) who is employed mainly in a managerial or administrative
capacity; or
(B) who, being employed in a supervisory capacity draws wages
exceeding five hundred rupees per mensem .
• functions mainly of a managerial nature;
 SOME IMPORTANT
DEFINITION
“Establishment"
any place where any industries, trade, business, manufacture or
occupation is carried on
 SOME IMPORTANT
DEFINITION
“Principal employer“
•in a factory, the owner or occupier of the factory and where
a person has been named as the manager of the factory
under the Factories Act, 1948, the person so named.
•in a mine, the owner or agent of the mine and where a
person has been named as the manager of the mine, the
person so named
•in any other establishment, any person responsible for the
supervision and control of the establishment.
 REGISTRATION OF
ESTABLISHMENT
• Every principal employer of an establishment to which this Act
applies shall have to make an application to the registering office
in the prescribed manner (Form 1) for registration of the
establishment.
 LICENSING OF
CONTRACTORS

• Contractor has to apply for a licence to Licensing Officer in Form

No.- II, along with Form - III
• Valid only for one year from the date it is granted or renewed.
• Is to be renewed before its invalidation.
 PROHIBITION OF EMPLOYMENT
OF CONTRACT LABOR IN CORE
ACTIVITIES
• The Act prohibits use of contract labour in certain core activities of
an establishment if the same has been specifically prohibited
through a notification of the Central or State Government.
Therefore, the principal employer and the contractor has to ensure
that they are not employing contract labour in any of the core
activities.
 WELFARE & HEALTH OF
CONTRACT LABOUR
• Duty of every contractor - Canteen, Rest-rooms, drinking
water, latrines, urinals, washing facilities and First-aid
facilities.
• Liability of principal employer - If the amenity is not
provided by the contractor.
• Principal employer may recover the amount from the
contractor by deduction of any amount payable or as a debt
payable by the contractor.
 RESPONSIBILITY FOR
PAYMENT OF WAGES
• Contractor shall be responsible for payment of wages to his
labour.
• If fails to make payment of wages, or makes short payment, then
the principal employer shall be liable to make payment of
wages in full or the unpaid balance due to the contract labour
employed by the contractor.
• PE can recover the amount so paid from the contractor either by
deduction from any amount payable to the contractor under any
contract or as a debt payable by the contractor.
 PRECAUTIONS WHILE
ENGAGING CONTRACT
LABOUR
• Prior to engaging a contractor labour, it is crucial for the
principal employer to register it with the authorities.
• PE should verify the licenses of the contractors. Thereafter,
the principal employers must execute contract with the
contractors with the terms of engagement.
 PRECAUTIONS WHILE
ENGAGING CONTRACT
LABOUR
• No contract labour should be made to work on the core areas
of the company.
• Principal employer should not exercise direct control
(including matters of payments, discipline and
removal/termination) and supervision over the contract
labours and that should be done by the contractors
 STATUTORY
PAYMENT/BENEFITS W.R.T.
CONTRACT LABOUR
• Payment of minimum wages as notified by the appropriate
government.
• Payment of bonus (if applicable).
• Terminal benefits(if applicable).
• ESIC benefits.
• PF contribution of self and employer.
 OBLIGATION OF
PRINCIPAL EMPLOYER

• Register of contractors Form XII

• Annual return Form XXV (on
or before 31st Jan)

• Notice of Commencement/ Form VII

Completion

• Maintaining of Notice board (bi lingual)

• Ensuring payment of wages through bank only.

 OBLIGATION OF
CONTRACTOR

• Renewal of license Form II

• Register of workman Form A
• Employment Card Form XIV
• Service Certificate Form XV
• Muster Roll Form D
• Wages register Form B
• Wage slip Form XIX
• Register of advances/fines/damage/loss Form C
• Attendance card
 CERTAIN GUIDELINES FOR
ENGAGING CONTRACT
LABOUR
• Principal employer must not interfere with the contractor for
engaging contract labour
• Wages should be disbursed by the contractor, principal
employer must only witness
• Contractor is liable to pay all statutory benefits such as
provident fund contributions, ESIC benefits, and observe
statutory working hours for its employees and maintain
records thereof
 CERTAIN GUIDELINES FOR
ENGAGING CONTRACT
LABOUR
• Contractor is responsible for proper maintenance of registers,
records and accounts for compliance with statutory
provisions/obligations .
• Principal employer should avoid managing the contract
labour.
THANK YOU