In this article Angela Dsouza, pursuing Diploma in Entrepreneurship Administrative and Business Law from NUJS, Kolkata, critically analyses the contract labour Act 1970.

WHAT IS CONTRACT LABOUR?

The present day and age of extensive globalisation has resulted in people and corporates increasing their pace of production in order to maximise their profits. This has resulted in careful cost cutting by companies thus promoting contract labour.

Contract workers form a large part of the total workforce in India. Most of these workers are engaged in seasonal or occasional employment as and when they are called for. The primary sectors that mainly function through contract labour are loading and unloading of goods and materials; catering including canteen services; security services; civil and construction works; electrical/ air conditioning/ painting/ whitewashing; house-keeping services; computer maintenance, etc.

Contract labourers are usually recruited through contractors who work as a link between the actual employers and the workers. However, over time such contractors are indulging in large scale misuse and abuse of power. Workers are especially abused by being paid lesser wages than agreed upon, being forced into employment that is harmful to physical or mental health etc.

Ensuring the welfare of the labour sector in the nation is the prime responsibility of the Central Government. For this reason, the Central Government has enacted several legislations aimed at securing the welfare of the labour class. However, the rights conferred to contract workers by way of the Constitution and various other labour laws are generally poorly enforced. Although there are trade unions to secure the rights and welfare of the workers, they primarily cater to the vested interests of the trade union leaders. In SMEs, the situation is even worse; there is total anarchy and the workers are left all to themselves.

Therefore in order to secure the rights and address the welfare of contract labourers, the Government deemed it fit to pass the Contract Labour (Regulation and Abolition) Act 1970.

THE CONTRACT LABOUR (REGULATION AND ABOLITION) ACT 1970.

 

The Contract Labour (Regulation and Abolition) Act 1970 was enacted as a Central law aimed at regulating the conditions under which contract labourers work and also provide for the gradual abolition of the contract labour system as and when possible.

The Act was made applicable to all establishments operating all over the country and both the Central and state governments were authorised to enforce it in their respective jurisdictions.

The Act envisages the minimization of the exploitation of the labour class and improving the working conditions enjoyed by labourers employed on a contract basis.

OBJECTIVES OF THE ACT

 

The prime objective of the Contract Labour (Regulation and Abolition) Act is to prevent the exploitation of contract workers and to abolish the system of contract labour in cases where:

• The work is perennial in nature.
• The work is incidental or is necessary for the functioning of the establishment.
• The work is of such a nature that it can employ a considerable number of workmen full time.
• The work need not be done by contract workers and can be done by regular workmen.

APPLICABILITY OF THE ACT

 

 

The Act is applicable to every establishment wherein twenty or more workmen are employed or were employed on any day of the preceding twelve months as contract labor. The Act is also applicable to all those contractors who employ twenty or more contract laborers in any establishment belonging to a primary employer.

Accordingly, any organization that comes under the ambit of the Act should register itself as the principal employer by making an application to the registration officer who is appointed by the appropriate government. Further, it should be known that any establishment that does not register itself under the Act is barred from employing contract labor. Also, all contractors who are engaged in recruiting and providing contract labor are supposed to obtain a license for the same. Such license has certain conditions such as hours of work, fixation of wages and provision of certain essential amenities etc. subject to which the contractor can recruit contract laborers.

The principal employer is obliged under the CLA to ensure that wages have been paid to the contract labour in the presence of its (principal employer’s) authorized representative. If the contractor fails to pay wages to any worker, the principal employer has been made duty bound to pay the same.

It should be noted that the Act is not applicable to establishments that work on a seasonal basis i.e. if work is performed for less than 120 days a year, it would amount to seasonal employment and such establishment need not be registered under the Act.

ISSUES SURROUNDING THE ACT

 

Although the Act has aimed at providing at the welfare of contract workers and preventing their exploitation, there are several issues that cloud a clear understanding of the Act, thus hampering effective implementation. Some of these issues are:

 

• DOES THE ACT PROVIDE THE WORKERS UNDER IT THE RIGHT TO BE ABSORBED INTO THE MAINSTREAM WORKFORCE OF THE ESTABLISHMENT AFTER THE ABOLITION OF CONTRACT LABOUR?

 

As stated previously, although the Act aims at the regulation of contract labor, its end goal is the abolition of the same. This poses several questions as to the employment status and opportunities of those who are currently enjoying benefits under the Act. An abolition of contract labor would result in loss of employment which would be a far worse scenario than that of working as a contract worker.

This concern has, however, been addressed in almost every case that relates to contract labor. It has been clearly held that upon abolishment of contract labor, workers who were working in such capacity will directly get absorbed into the mainstream workforce of the establishment. It was further stated that loss of jobs would not be a possibility as this would be against the very aim of this Act i.e. to provide secure employment to the workers.

However in the case of RK Panda v. Steel Authority of India where the same issue was brought before the Supreme Court of India, it was held that the primary objective of the Act was to protect contract workers from exploitation. However the decision to absorb them in the workforce or terminate their employment is the sole discretion of the employer. Over time there have been several cases that have given varying opinions. However, most of them have maintained that the decision to absorb or terminate should be that of the employer alone.

• THE ISSUE AROUND ARTICLE 19 (1) (G) OF THE CONSTITUTION

 

The Act imposes certain duties on the owners of the establishments in the form of providing for basic amenities and needs of the contract workers. This was challenged on several grounds stating that since the workers are only temporary, expenditure of such an extent on them is redundant and therefore should not be mandated. It was contended that such compulsion amounted to violation of Article 19 (1) (g).

However, in the case of Gammon India Ltd and Ors v. Union of India it was held that it was the duty of the employer to provide the workers with the basic amenities in order to ensure the health and welfare of the workers. Expenditures incurred in the course of this are tax free and are in no way a form of wastage of money.

• ISSUE SURROUNDING THE EFFECTIVE IMPLEMENTATION OF THE ACT

 

The Act delegates the power of administration to the appropriate governments concerned. In the case of the Central Government, it is the Central Industrial Relations Machinery (CIRM) enforces the provisions of this Act as well as the rules framed there under. On the hand, in the state sphere, the labour department of the state government concerned does this work.

In order to ensure effective implementation of the Act, various authorities have been delegated with different enforcement powers. Further, the Central Government has issued almost 76 notifications under the Act prohibiting the employment of contract labour. However, despite these umpteen steps taken, there continues to be a blatant violation of the provisions of the Act.

First, the general labour law enforcement system is the country needs an overhaul. Presently, the system is so weak and ineffective that the implementation of existing and further policies is nearly impossible.

Second, there still continue to be a large number of establishments who employ contract labour but are yet not registered under the Act. The failure to implement the very first step towards the efficacious implementation of the Act naturally poses questions as to the effectiveness of the policy as a whole.

Third, as stated earlier, although there have been varying opinions on the same, there is no express mention of the status of workers upon the abolishment of contract labour. The current stand maintained by courts is that the decision to terminate or absorb is that of the employer. However, there is no statutory decision on the same yet.

CONCLUSION

 

One can agree to, without a doubt that the Contract Labour (Prohibition and Abolition) Act is a great endeavour on the part of the Central Government to further the interests and ensure the welfare of the working class. However, the drawbacks and loopholes in the Act leave much to be desired.

The need of the hour is a complete reformation of the Act so that it can be in tune with the current day and age. The drawbacks of the Act are only pulling it behind and preventing it from achieving its end goal. A thorough reform with a carefully chalked out plan will not only ensure the welfare of the workers but also enable the gradual and effective abolishment of contract labour in the long run.