LABOUR LAWS IN INDIA

An Overview

Preamble to the Constitution of

India
The Constitution seeks to provide to the people of
India among others
Justice, social economic and political;
Liberty of thought, expression, belief, faith and
worship;
Equality of status and of opportunity and to
promote among them all fraternity assuring the
dignity of the individual and the unity of the
nation.
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 Preamble to the Constitution of
India
The Fundamental Rights;
Art. 14- Provides that the State shall not deny to
any person equality before the law;

Art. 19- Guarantees Right to Freedom of Speech

and Expression; To peaceable assembly; To form
associations or unions; To carry on any occupation,
trade or business.

Constitution of India

Art.23- Prohibits forced labour

Art.24- Prohibits employment of

children below age of 14 years in any
factory or mine or hazardous
employment

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 Constitution of India

The Directive Principles of State policy

Art.38-The State shall strive to promote the
welfare of the people
Art.39- It lays down equal pay for equal work;
protection of health of workers; measures
against abuse of child labour etc.
Art.41- It secures the Right to work; To
education; Social security in case of old age,
unemployment, sickness and disablement

Constitution of India

The Directive Principles of State policy

Art.42- Just and humane conditions of
work and maternity benefits;
Art.43- Securing living wage, Decent
working conditions;
Art-43-A- Workers Participation in
Management

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 Constitution of India

Authority to deal with Labour Matters

Labour, being placed in the concurrent
list of Indian Constitution, the authority
vests with both Central as well as the
State Governments to legislate
enactments

Categories of Labour legislations

Protective
Regulative
Social Security
Welfare
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 Protective Legislations

(To protect labour standards and improve the

working conditions)
Factories Act, 1948; Mines Act, 1952;
Plantation Labour Act, 1951; Payment of
Wages Act, 1936; Minimum Wages Act, 1948;
Employment of Children Act, 1938 ;Bonus Act,
1965; Contract Labour (R&A) Act, 1970

Regulative Legislations

(To regulate the relations between employers

and the employees and to provide for methods
and manner of settling industrial disputes.)

Industrial Disputes, Act, 1947; Trade

Unions Act, 1926; Industrial
Employment (SO) Act, 1946

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Social Security Legislations

(To provide social security benefits and certain

contingencies of life)
Workmens Compensation Act, 1923;
Employees Provident Fund Act, 1952;
Employees State Insurance Act, 1948;
Maternity Benefit Act, 1961, Payment of
Gratuity Act, 1972 etc

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Welfare Legislations
(To promote the general welfare of workers and
improve their living conditions)

Coal Mines Labour Welfare Funds Act,

1947, Mica Mines Labour Welfare
Funds Act, 1946; Iron Ore Mines
Labour Welfare Cess Act, 1961etc

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 CONTRACT LABOUR
(REGULATION AND ABOLITION)
ACT, 1970

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OBJECTIVES OF THE CONTRACT

LABOUR (R&A) ACT, 1970

It is an Act to regulate the employment of

contract labourers in certain
establishments

To provide for abolition of employment

of contract labour under certain
circumstances

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 MAIN FEATURES OF CONTRACT LABOUR
(R&A) ACT, 1970

Application of the Act and the Rules framed there-

under

Setting up of Central/State Boards for

administration of the provisions of the Act

Registration of establishment for engagement of

contract labourers

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MAIN FEATURES OF CONTRACT LABOUR

(R&A) ACT, 1970

Obtaining of licences by the contractors

Regulation of the engagement of contract labourers

and abolition under certain circumstances

Provision of welfare amenities for the contract

labourers

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 MAIN FEATURES OF CONTRACT
LABOUR (R&A) ACT, 1970
Disbursement of wages and responsibility of
principal employer
Appointment of Inspectors for
implementation of provisions of the Act
Maintenance of records /registers by the
principal employers and the contractors
Penalties and procedures
Power to frame rules by Central/State
Government

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VITAL SECTIONS OF THE CL(R&A) ACT

SECTION 7- (1) Every Principal employer of an

establishment to which this Act applies shall, within
such period as the appropriate government may, by
notification in the official gazette fix in this behalf
with respect to establishments generally or with
respect to any class of them, make an application to
the registering officer in the prescribed manner for
registration of the establishment:

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 VITAL SECTIONS OF THE CL(R&A) ACT

SECTION 7- contd.
Provided that the registering officer may entertain
any such application for registration after expiry of
the period fixed in this behalf, if the registering
officer is satisfied that the applicant was prevented
by sufficient cause from making the application in
time.

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VITAL SECTIONS OF THE CL(R&A) ACT

SECTION 10- Prohibition of employment of

contract labour-(1) Notwithstanding anything
contained in this Act, the appropriate government
may, after consultation with the Central Board or
as the case may be, State Board, prohibit by
notification in the official gazette, employment of
contract labour in any process, operation or other
work in any establishment.

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 VITAL SECTIONS OF THE CL(R&A) ACT

SECTION 10- contd.

2) Before issuing any notification under sub-section
(1) in relation to an establishment, the appropriate
government shall have regard to the conditions of
work and benefits provided for the contract labour
in that establishment and other relevant factors
such as -

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VITAL SECTIONS OF THE CL(R&A) ACT

Section 10-continued
Whether the process, operation or other work is
incidental to or necessary for the industry, trade,
business, manufacture or occupation that is carried
on the establishment.
Whether it is of perennial nature, that is to say,it is
of sufficient duration having regard to the nature
of industry, trade, business, manufacture or
occupation carried on in that establishment.
Whether it is done ordinarily through regular
workmen in that establishment or an establishment
similar thereto.
Whether it is sufficient to employ considerable
number of whole time workmen. 22

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 VITAL SECTIONS OF THE CL(R&A) ACT

SECTION 12- Licensing of contractors- (1) With

effect from such date as the appropriate
government may, by notification in the official
gazette, appoint, no contractor to whom this Act
applies, shall undertake or execute any work
through contract labour except under and in
accordance with a licence issued in that behalf by
the licensing officer

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VITAL SECTIONS OF THE CL(R&A) ACT

SECTION 12- contd.

.(2) Subject to the provisions of the Act, a licence
under sub-section (1) may contain such conditions
including in particular, conditions as to hours of
work, fixation of wages and other essential
amenities in respect of contract labour as the
appropriate government may deem fit to impose in
accordance with the rules, if any made under
Section 35 and shall be issued on payment of such
fees and on the deposit of such sum, if any, as
security for the due performance of the conditions
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as may be prescribed

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 VITAL SECTIONS OF THE CL(R&A) ACT

Sec.16 CANTEENS- (1) The appropriate

Government may make rules requiring that in every
establishment-
(a) to which this Act applies
(b) wherein work requiring employment of contract
labour is likely to continue for such period as may be
prescribed, and
(c) wherein contract labour numbering 100 or more
is ordinarily employed by contractor
One or more canteens shall be provided and
maintained by the contractor for the use of such
contract labour.
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VITAL SECTIONS OF THE CL(R&A) ACT

2) Without prejudice to the generality of the

foregoing power such rules may provide for-
(a) the date by which the canteens shall be
provided
(b) the number of canteens that shall be provided
and the standards in respect of construction,
accommodation, furniture and other equipments of
the canteens; and
(c) the foodstuffs which may be served therein and
the charges which may be made therefor 26

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 VITAL SECTIONS OF THE CL(R&A) ACT

Sec. 17- Rest Rooms (1) In every place where

contract labour is required to halt at night in
connection with the work of an establishment
(a) to which the Act applies
(b) In which work requiring employment of contract
labour is likely to continue for such period as may be
prescribed.

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VITAL SECTIONS OF THE CL(R&A) ACT

Sec. 17-contd.
There shall be provided and maintained by the
contractor for the use of the contract labour such
number of rest-rooms or such other suitable
alternative accommodation within such time as may
be prescribed.

(2) The rest rooms or the alternative accommodation

to be provided under sub-section (1) shall be
sufficiently lighted and ventilated and shall be
maintained in a clean and comfortable condition.

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 VITAL SECTIONS OF THE CL(R&A) ACT

Sec. 18 Other facilities It shall be the duty of

every contractor employing contract labour in
connection with the work of an establishment to
which this Act applies, to provide and maintain-
(a) a sufficient supply of wholesome drinking water
for the contract labour at convenient places.
(b) a sufficient number of latrines and urinals of the
prescribed types so situated to be convenient and
accessible to the contract labour in the
establishment; and
(c) washing facilities
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VITAL SECTIONS OF THE CL(R&A) ACT

Sec. 19 First-aid-facilities There shall be

provided and maintained by the contractor so as to
be readily accessible during all working hours a first-
aid box equipped with the prescribed contents at
every place where contract labour is employed by
him

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 VITAL SECTIONS OF THE CL(R&A) ACT

Sec.20 Liability of the principal employer in

certain cases (1) If any amenity required to be
provided under Section 16, section 17, Section 18 or
Section 19 for the benefit of the contract labour
employed in an establishment is not provided by the
contractor within the time prescribed therefor, such
amenity shall be provided by the principal employer
within such time as may be prescribed.
(2) All expenses incurred by the principal employer
in providing the amenity may be recovered by the
principal employer from the contractor either by
deduction from any amount payable to the
contractor under any contract or as a debt payable 31
by contractor

VITAL SECTIONS OF THE CL(R&A) ACT

Sec.21 Responsibility for payment of wages- (1)

A contractor shall be responsible for the payment
of wages to each worker employed by him as
contract labour and such wages shall be paid
before the expiry of such period as may be
prescribed

(2) Every principal employer shall nominate a

representative duly authorized by him to be
presented the time of disbursement of wages by the
contractor and it shall be the duty of such
representatives to certify the amounts paid as
wages in such manner as may be prescribed
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 VITAL SECTIONS OF THE CL(R&A) ACT
Sec.21 (contd.)
(3) It shall be the duty of the contractor to ensure the
disbursement of wages in the presence of the
authorised representative of the principal employer.

(4) In case the contractor fails to make payment of

wages within the prescribed period or makes short
payment, then the principal employer shall be liable to
make payment of wages in full or the unpaid balance
due, as the case may be to the contract labour
employed by the contractor and 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
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FORM XI
See Rule 32 (3)
Government of Bihar
Office of the Licensing Officer

License No.
Date Fee paid Rs.
Temporary License
Signature of the Licensing Officer
Expires On.,.

License is hereby granted to Under Section 12 (2) of the

Contract Labour (Regulation and Abolition) Act, 1970, subject to the conditions
specified in Annexure.
The license shall remain in force till
Date
Signature and seal of the Licensing Officer

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 ANNEXURE
The license is subject to the following conditions-:
(1) The license shall be non-transferable.
(2) The number of workmen employed as contractlabour I the establishment shall
not, on any day, exceed-
(3) Except as provided in the Rules the fees paid for the grant of the license shall be
non-refundable.
(4) The rates of wages payable to the workmen by the contractor shall not be less
than the rates prescribed for the Schedule of Employment under the Minimum
Wages Act, 1948, where applicable, and where the rates have been fixed by
agreement, settlement or awards, not less than the rates fixed.
(5) In case 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 on the same or similar kind of work provided that
in the case of any disagreement with regard to the type of work the same shall be
decided by the Commissioner of Labour, Bihar whose decision shall be final.
(6) In other cases the wage rates, holidays, hours of work and condi tions of service of
the workmen of the contractor shall be such as may be specified in this behalf by
the Commissioner of Labour, Bihar.

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JUDICIAL PRONOUNCEMENTS EVOLVING

THE LAW ON CONTRACT LABOUR
Contract labour can raise an industrial dispute under
the Industrial Disputes Act and on reference Tribunal
can adjudicate and direct for abolition as well as
absorption of contract labour by the Principal
Employer.
(The Standard Vacuum Refining Co. of India Ltd. Vs.
Their workmen 1960 S.C LLJ-11-1960 P238)

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 JUDICIAL PRONOUNCEMENTS EVOLVING
THE LAW ON CONTRACT LABOUR

Authority to abolish contract labour is vested

exclusively with the appropriate government which has
to take decision in accordance with S.10 of the
Contract Labour Act.
(Vegoils Pvt. Ltd. Vs. Their Workmen, 1972 SCR 673)

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JUDICIAL PRONOUNCEMENTS EVOLVING

THE LAW ON CONTRACT LABOUR
Judicial pronouncements-continued

Since there was no employer-employee relationship

between the Indian Oil Corporation Ltd.and the
concerned contract labour, the principal employer
(Indian oil in this case) cannot be directed to absorb
the contract labourers in their employment.
(Mathura Refinery Mazdoor Sangh Vs. Indian Oil
Corporation Ltd. 1992-80-FJR 77 & S.C)

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 JUDICIAL PRONOUNCEMENTS EVOLVING
THE LAW ON CONTRACT LABOUR
Judicial pronouncements-continued
On prohibition of the employment of contract
labour, the workmen of the contractors would not
automatically become the workmen of the principal
employer and they, nevertheless be afforded an
opportunity of being considered for fresh
recruitment as and when vacancies occur in the
area of operations in which contract system is
abolished.
(Association of Chemical workers Vs. Alaspurkar
1992-LAB. IC 25 S.C)
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JUDICIAL PRONOUNCEMENTS EVOLVING

THE LAW ON CONTRACT LABOUR
Judicial pronouncements-continued
On abolition of contract labour system under Sec.
10 of the Contract Labour Act, neither the Act nor
the Rules provide for direct absorption of the
contract labour by the principal employer and the
High Courts exercising power under Art. 226 of
the Constitution cannot give direction for its
absorption by the principal employer.
(Dena Nath Vs. National fertilisers Ltd. 1992 (1)
SCC 695)

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 JUDICIAL PRONOUNCEMENTS EVOLVING
THE LAW ON CONTRACT LABOUR
Judicial pronouncements-continued
The decision in Vegoils case was reiterated in BHEL
Workers Association Vs. Union of India (1985) and
Catering Cleaners of S.E Railway Vs. Union of
India
There is no obligation in the law to absorb the
contract labour upon abolition of the contract
labour system. Equity however demands
consideration of their cases for employment as and
when vacancies arise.
(R.K Panda Vs.SAIL 1995 FJR-140 S.C)
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JUDICIAL PRONOUNCEMENTS EVOLVING

THE LAW ON CONTRACT LABOUR
Judicial pronouncements-continued

While it is only the appropriate government and

not any court or industrial adjudicator which has
the authority to abolish genuine labour contracts,
in the case of sham or ungenuine contracts, the
workmen of the so-called contractors can raise an
industrial dispute for declaring that they were the
employees of the principal employer and for
claiming appropriate service conditions. Such a
dispute was not for abolition of contract labour
system and was not barred by Sec. 10.
(Gujarat Electricity Board Vs. Hind Mazdoor
Sabha- 1995 LLR 552 SC) 42

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 JUDICIAL PRONOUNCEMENTS EVOLVING
THE LAW ON CONTRACT LABOUR
Judicial pronouncements-continued
Upon abolition of contract labour system , the
contract labour would become the direct employee
of principal employer thereby establishing an
employer-employee relationship. This was the
legislative intent the clue to which can be found in
the matters connected therewith.Further, clue to
this intent can be found in the facilities provided
under the provisions for regulating contract labour
which implies right to life meaning thereby that
they cannot be left in the lurch on abolition.
(Air India Statutory Corpn. 1997)
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JUDICIAL PRONOUNCEMENTS EVOLVING

THE LAW ON CONTRACT LABOUR
Judicial pronouncements-continued
Where the Board was not registered as a principal
employer and the contractor was not a licensed
contractor under the Act, the inevitable conclusion
that is reached is to the effect that the so-called
contract system was a mere camouflage, smoke and
a screen and disguised in almost a transparent veil
which could easily be pierced and the real
contractual relationship between the Board on the
one hand and the employees on the other could be
easily visualised.
(Secretary, Haryana State Electricity Board Vs.
44
Suresh & Ors, 1999, SC)

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 JUDICIAL PRONOUNCEMENTS EVOLVING
THE LAW ON CONTRACT LABOUR
Judicial pronouncements-continued
Salient features of the larger bench decision dated
30.08.2001 of the Apex Court in the Case of SAIL
Vs. National Union Waterfront Workers :
The expression appropriate government under
CL (R&A) Act interpreted
The appropriate government is required to consult
Board before issuing notification.
Notification can only be issued in accordance with
Section 10 of the CL (R&A) Act
There cannot be master-servant relationship
between the contract labour and the principal
employer except in sham contract 45

JUDICIAL PRONOUNCEMENTS EVOLVING

THE LAW ON CONTRACT LABOUR
Judicial pronouncements-continued
There cannot be automatic absorption of
contract labour on abolition of contract labour
system in absence of appropriate notification
In case of a prohibition order if the employer
intends to employ regular workmen the erstwhile
contract labourers will have preference for
employment subject to medical fitness, age etc.
The appropriate court dealing with the demand
for permanency of contract labour will be the
industrial tribunal/labour court
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 RATIO DECIDED BY THE APEX COURT ON
ENGAGEMENT OF CONTRACT LABOUR IN
CANTEENS UNDER THE FACTORIES ACT
Judicial pronouncements-continued
There is no such absolute proposition in law that
the employer has to engage his own employees for
running the canteen activities.
It is the discretion of the employer to discharge his
statutory obligation.
The engagement of contract labour does not
establish employer-employee relationship
automatically u/s 46 of the Factories Act.
If the contract is a sham one then it may amount
to unfair labour practice by the employer and in
that event the demand for regularisation may be
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sustainable.

RATIO DECIDED BY THE APEX COURT ON

ENGAGEMENT OF CONTRACT LABOUR IN
CANTEENS UNDER THE FACTORIES ACT
Judicial pronouncements-contd.

In a recent decision (Mishra Dhatu Nigam Ltd. Vs.

M Venkataiah & Ors.-2003 III CLR 516) the
Supreme Court has held that the canteen workers
engaged through contractors are entitled for
regularisation of their services in as much as the
canteen are statutory canteens under Factories Act
and the workers engaged therein have been held to
be employees of the Principal Employer.

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RATIO DECIDED BY THE APEX COURT ON
ENGAGEMENT OF CONTRACT LABOUR IN
CANTEENS UNDER THE FACTORIES ACT
Judicial pronouncements-contd.

The Honble Supreme Court after hearing all

the counsels and considering the case laws cited
by them on the subject, has held that the
Appellants concerned (read Principal
Employer) indisputably are obliged to run the
respective canteens in their establishments on
account of the obligation cast upon them under
the mandatory provisions of the Factories Act,
1948 and the Rules made thereunder.
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THANK YOU

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