In this blog post, Subhalagna Choudhury, a student of Department of Law, University of Calcutta, who is currently pursuing a Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, writes about the penalties and procedure for non-compliance under the Contract Labour (Regulation and Abolition)  Act, 1970.

Introductory words

The Contract Labour (Regulation and Abolition Act), 1970 has been brought to the fore to “regulate the employment of contract labour in certain establishments and to provide for its abolition in certain circumstances and for matters connected therewith.” The main object of this Act is to prevent the exploitation of contract labour and to ensure as well as introduce better conditions of work. It should be well pointed out at first that there exists a fine line of difference between contract labor and direct labor. A workman who has been hired by a contractor for working in an establishment can be termed as a contract laborer. Here, ‘workman ‘, refers to any person employed in an establishment to carry out labor that may be skilled or unskilled, technical or clerical, manual or supervisory. However, this excludes people employed in managerial or administrative capacity or supervisory positions where the salary exceeds Rs 500/- per month. Contract workers are indirect employees regarding employment relationship and wages payment.  The Act essentially applies to the principal employer of an establishment and the contractor who employed 20 or more workmen even for one day, in the preceding twelve months as the contract laborer. The Act, however, does not pertain to seasonal employment or intermittent employment.  This Act makes an endeavor to create a balance between, providing minimum wages to contract workers through the licensing of contractors and holding the principle employers accountable for the enforcement of the law. It should be noted here, that the contractor’s license issued by the licensing authority is mandatory as otherwise, the contractor cannot undertake any work through contract labor (Section-12). The Central Government, as well as the State Governments, are required to set up advisory boards (functioning in consonance with the Act) which can constitute committees as they deem fit. In matters of conflicts arising on the administrative front, the advice of the boards can be sought.  One of the best parts of the Act is that it empowers the State and the Central Government to prohibit certain kinds of work through contract labor. This has been enunciated specifically to protect the human rights of the workers so that nothing is furnished at the cost of their lives. The Government for this purpose has the authority to issue a notification in the official Gazette to prohibit the employment of contract labor in any process or operation or work (section 10). The Act enumerates certain joint and several responsibilities on the principal employer and the contractor. It is the duty of the principal employer to ensure that the contractor adheres to the following liabilities (presented below in a concise form):

Liabilities:

• Pays the wages as determined by the Government or as fixed by the Commissioner of Labour. The payment of wages shall be disbursed through the contractor or his nominees, and a representative of the principal employer is required to sign the register as a token of having disbursed the salary.
• The work for which the labor is employed must not be of a perennial nature. Discipline at work is an area of supervision of the contractor, and thus, the workers shall not be subjected to the control of the principal employer.
• Fair wages are paid to the contract laborer even in their absence.

 Ensures that the following facilities are provided:

• Canteens in case 100 and more workers are employed by a contract for any work that is likely to last for six months or more.
• Restrooms for the workmen to halt at night if the work entrusted is likely to extend beyond three months.
• The required number of latrines and urinals that in all circumstances should be catered to men and women, separately.
• Drinking water.
• First aid.
• Registers and records about contract workers, abstracts of the Act, notices, etc.
• A mandatory employment card for the workers or employees.

Registration of Establishment:

Every principal employer of an establishment shall make an application for registration in triplicate in form no. 1 to the registering authority of the area. A receipt should be available that witnesses the payment of the prescribed fee in actuality. If the application is successful, the registering officer shall register the establishment subject to Rule 17-20 followed by the issuing of registration certificate in form II. If the establishment is not registered or the contractor is not licensed, or in both cases, the contract laborer shall be deemed by law, as direct workmen and the principal employer shall be liable for the wages, services and all kinds of facilities to him. For any given contravention, a penalty may be imposed up to a fine of Rs 100/- (maximum) along with three years of imprisonment or both.

Obligations and Penalties:

The Contract Labour (Regulation and Abolition Act), 1970 imposes certain obligations and penalties for non-compliance, respectively. In any event of the contractor failing to provide for the above facilities, the obligation is automatically transferred to the principal owner. While the principal employer may be offered some consolation in respect of the recovery of expenses, it would, however, be prudent to negotiate clearly and define the mutual rights and duties, before entering into any form of contract with the contractor. Conditions are likely to be imposed upon the contractor for compliance with the Contract Labour Act. In cases of large corporate houses, employing far more than 100 laborers, it would be wise to ensure that the contractor has previously in all other circumstances been working in consonance with the Act, has a valid license and has not been at default to labor payment. Diligence especially is required in those areas where due protection may not be provided to the principal employers.

This Act very particularly states the penalties for non-compliance in Chapter VI (Sections 23 and 24). It must be mentioned that an authorized inspector under this Act has been empowered to make an investigation, examination or inquiry with regard to an establishment. However, in case he is faced with an obstruction, then the person so concerned shall be subjected to an imprisonment for three years along with a fine that may extend to five hundred rupees or both. Such an obstruction also extends to the nonproduction of documents or registers on the demand of the inspector.

Whenever any provision of this Act is contravened (extending to provisions relating to license), it is implied that such an action has been acted against the regulation of contract labor. Hence, the person concerned shall be punishable with an imprisonment for a term that may extend to a maximum of three months or may be penalized with a fine up to one thousand rupees or both. In the case of continuing contravention, an additional fine of Rs one hundred for each day may be imposed during which such contravention continues. Section 24 deals with other general offenses of noncompliance under the act for which the person may be imprisoned for up to three months or with a fine that may extend up to one thousand rupees. It should be particularly noted here that if the offender is a company, then the company, as well as all the persons associated with such contravention, shall be responsible for the offense (jointly and severally). Provided that there is nothing to show that the company had contravened the provisions of the act without a prior knowledge and had been duly diligent in its conduct, the company and the liable persons associated shall be punished accordingly. This also includes negligence on the part of the director, manager, sub-manager, agent, etc. However, the cognizance of offense can only take place if there had been a previous complaint in writing concerning a particular issue of the contravention and that, such a complaint was made within three months from the date on which the alleged commission of the offense came to the knowledge of the inspector. The Presidency Magistrate or a Magistrate of the first class are empowered to try such cases.

Concluding words

The Contract Labour (Regulation and Abolition Act), 1970 has been time and again emphasized with an idea to improve the impoverished conditions of workers in India. This Act, not only advocates the rights of the workers but can also be treated as one embedded with core humanitarian principles. Because colonial and the rising Bourgeoisie had further deteriorated the economic conditions of the lower strata of the society, this Act can thus be regarded as a much progressive measure to uplift the state of workers and ensure justice to them in general.

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