MANAGEMENT OF CONTRACT LABOUR

1. Object of the act

This Act was promulgated with a view to regulate the employment of the Contract Labour in certain establishment and to provide for its abolition in certain circumstances and matters connected with.

2. Applicability
This Act applies to the whole of India and came into force from 7th Sept, 1970. It applies to every establishment in which 20 or more workmen are employed or were employed on any day of the preceding 12 months as Contract Labour. It also applies to every contractor who employs or employed on any day of the preceding 12 months, 20 or more workmen as Contract Labour. This Act does not apply to an establishment in which work only of intermittent or casual nature is performed. CLARIFICATION:- if a question arises whether the work performed in an establishment is of intermittent or casual nature, the Appropriate Govt. shall decide the question after consulting the Central Board or as the case may be State Board and its decision shall be final. NOTE:- in case of ONGC it is specified that the Central Govt. is the Appropriate Govt. It is further clarified that work performed in an establishment shall not be deemed to be or intermittent nature: a) if it is performed for more than 120 days in the preceding 12 months b) if it is of a seasonal character and it is performed for more than 60 days in a year.

3. Definitions
The important definitions as under: Sec2(1)(b): 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 or in connection with such work by or through a contractor, with or without knowledge of the Principal Employer. Sec2(1)(c): Contractor- In relation to an establishment, it 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 and includes a subcontractor. Sec2(1)(e): Establishment- it means any office or department of the Govt or any place where any industry, trade, business, manufacture, or occupation is carried on.

Sec2(1)(g): Principal Employer- i) it means, in relation to any office or department of the Govt or local Authority, the head of that office or department or such other officer as the Govt or the local Authority, as the case may be, may specify in this behalf. ii) 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(63 of 1948) the person so named. iii) 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. iv) in any other establishment, any person responsible for the supervision and control of the establishment. NOTE: in case of ONGC, action is required for nominating principal employer in accordance with the provisions of clauses II, III and IV above, applicable to the establishment. Sec2(1)(i): Workman- it means any person employed in or in connection with the work of an establishment to do skilled/ semi-skilled/unskilled manual, supervisory, technical, or clerical work for hire or reward, but does not include any person employed in managerial capacity drawing wages exceeding Rs. 500/- p.m or an out worker. The term of employment may be express or implied.

4. Registration
The Act makes it compulsory to register the name of the establishment with the Registering Authority. Application for registration is to be submitted in Triplicate along with the prescribed registration fee, in Form-I(rule-17)(1)- (proforma-A) within the prescribed time. On receipt of the application in the prescribed proforma the Registering Authority, i.e., RLC/ALC/LEO of the Central Govt would issue a certificate of Registration in the prescribed proforma. The Registering Authority can revoke the registration, after giving the Principal Employer reasonable opportunity to be heard, and after being satisfied that the registration of the establishment has become useless or ineffective or has been obtained by misrepresentation or suppression of any material fact.

5. Effects of Non-Registration
Where the Principal Employer fails to register within the prescribed period or where such a registration is revoked, the principal employer of such an establishment is debarred from employing contract labour in the establishment after the period fixed for registration expires or after the date of revocation of registration. NOTE:-The Honble Supreme Court in the case of Air India Statutory Corporation has held that in the event of non-registration by the establishment, the liability of all the contractors and workers will rest in the hands of the Principal Employer. Therefore registration is to be ensured. The role of the Principal Employer has been enumerated in Chapter III.

6. Prohibition of Contract-Labour
The Appropriate Govt. can in consultation with the Central/State Board issue a notification prohibiting engagement of contract labour in any process, operation or any other work in any establishment. However, before issuing such a notification the Appropriate Govt. is bound to have regard to not only to the conditions of work and benefits provided for the contract labour in a particular establishment but also relevant factors, such as: a) Whether the process, operation or other work is incidental to. Or necessary for Industry, Trade, Business, manufacture or occupation that is carried on in the establishment. b) Whether it is of perennial nature, i.e., to say it is of sufficient duration having regard to the nature of Industry, Trade, Business, manufacture or occupation that is carried on in that establishment. c) Whether it is done ordinarily through regular workmen in that establishment similar thereto. d) Whether it is sufficient to employ considerable number of whole-time workmen. Explanation: If a question arises whether any process or operation or the work is of perennial nature, the decision of the Appropriate Govt. shall be final. NOTE:- It is necessary that while taking decision regarding out-sourcing the job, the above provisions are required to be considered.

7. Licensing
The Act prohibits every contractor to whom this act applies to undertake or execute any work through contract labour except under and in accordance with the license issued by the Licensing Authority. The contractor is to submit his application in prescribed proforma accompanied with a certificate from the Principal Employer in Form-V Rule-21(2)-(Proforma-B) and security deposit and on payment of prescribed fees. NOTE:- The Honble Supreme Court in case of the Air India Statutory Corporation vs. Others has held that in the event of non-obtaining of license by the contractor the liability of all the contractors and workers would rest with the Principal Employer. Therefore, before commencement of work of job contract, it is to be ensured that the contractor has licence for the job to be carried out as per the terms of the job contract.

8. Revocation of licence
The licensing Authority, if he is satisfied, that the licence has been obtained by misrepresentation or suppression of any material or the holder of the licence has, without reasonable cause, failed to comply or contravened the provisions of the Act, revoke or suspend the license and forfeit the sum of surety. Any appeal against the above revoking or suspension of license has to be made within 30 days.

9. Welfare and Health

The Act provides for certain welfare and health facilities like canteen, rest rooms, first aid etc. To be provided by the contractor. In the event of non-compliance by the contractor of these provisions the Principal Employer has to provide the same and the expenditure incurred thereon can be recovered under law from the contractor. NOTE:- The details have been enumerated in Responsibilities of the Contractor. 10. Payment of wages The Act provides that the contractor will be responsible for payment of wages. However, such payments are to be disbursed in presence of the authorized representative of the Principal Employer (Rule 72) In case of failure by the contractor to pay wages or short payment made by him, the Principal Employer will be liable to make the payment of wages in full or unpaid balance and deduct/recover same from the contractor. NOTE:- Under Rule 73- authorized representative of the Principal Employer shall record under his Signature a certificate on the register of wages as under: Certified that the amount shown in Column No.__________ has been paid to the workman concerned in the presence on_________ at ___________. 11. Registers and Records As per the central rules the following records/registers are to be maintained: a) BY PRINCIPAL EMPLOYER: 1) Register of contractors(Under Rules-74) Form XII- (Proforma-C) 2) Display Notice showing rates of wages, hours of work, wage periods, dates of payment of wages, names and address of Inspectors(Rule-81) 3) Submit notice of commencement or completion of work within 15 days in Form- VI-B(Rule-81(3)-(Proforma-D) 4) Submit annual return in Form-XXV- by Feb.,15(Rule-82(2) (Proforma-E) b) BY CONTRACTOR: 1) Maintain a register of workmen as per Form-XIII. 2) Issue Employment Cards and service certificate 3) Maintain Muster Roll, Registers of wages, fines and deductions, advances and over time. 4) Issue Notice showing rate of wages, hours of work, wage periods, date of payment and address of Inspectors; Submit half yearly returns in FormXXIV 5) Submit notice of commencement or completion of work within 15 days in Form-VI-A (Rule-25(2)(VIII) NOTE: Non-Compliance of display of notice, maintenance of registers, sending returns, reports is a ground for prosecution. Therefore, the Principal Employers need to be particular to ensure full compliance by ONGC and also advise the contractors accordingly.