Chapter 3(B) The Contract Labour Act, 1970 – CS Professional Labour Laws and Practice Notes is designed strictly as per the latest syllabus and exam pattern.
The Contract Labour Act, 1970 – CS Professional Labour Laws and Practice Study Material
Question 1.
Write short notes on the following:
‘Obligations of the principal employer’ under the Contract Labour (Regulation and Abolition) Act, 1970 (June 2009, 5 marks)
Answer:
- Under the Contract Labour (Regulation and Abolition) Act, 1970 a contractor is required to provide canteens, rest-rooms, latrines, drinking water, washing facilities and first aid facilities for the use of contract labour. (Section 16-19)
- If a contractor fails to provide the prescribed amenities, then the principal employer will be liable to provide such amenities. The principal employer can recover such expenses from the contractor. (Section 20)
- Besides, the contractor is required to pay wages and a duty is cast on him to ensure disbursement of wages in the presence of the authorised representative of the principal employer. An obligation is also cast on the principal employer to nominate a representative duly authorised by him to be present at the time of disbursement of wages.
- In case of failure on the part of the contractor to pay wages either in part or in full, the principal employer is liable to pay the same 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. (Section 21)
Question 2.
Write short notes on the following:
Prohibition of employment of contract labour under the Contract Labour (Regulation and Abolition) Act, 1970. (June 2010, 5 marks)
Answer:
- The steps which should be taken by an appropriate government before issuing a notification prohibiting employment of contract labour in any process, operation or other work are:
- They should appoint a committee to investigate the establishment under the order of abolition of contract labour
- It should follow the proper procedure laid under the Act.
- It should amend the act by incorporating a suitable provision or refer to industrial adjudicator the question of the direct employment of the contract workers of the ex-contractor in principal establishment, when the appropriate government abolishes the contract labour.
Question 3.
Write short notes on the following:
Licensing of contractors under the Contract Labour (Regulation and Abolition)Act, 1970. (Dec 2012, 5 marks)
Answer:
- According to the provisions, no contractor can undertake or execute any work through contract labour except under and in accordance with the license issued in that behalf by the licensing officer.
- Licence may contain conditions relating to:
- hours of work
- fixation of wages
- essential amenities in respect of contract labour.
- The license is issued on payment of prescribed fees.
- This license is non- transferable.
Question 4.
Write short notes on the following:
Responsibility of the contractor under the Contract Labour (Regulation and Abolition) Act, 1970. (June 2013, 5 marks)
Answer:
A workman shall be deemed to be employed as contract labour in or in connection with the work of the establishment when he is hired in or in connection with such work by, or through a contractor, with or without the knowledge of principal employer.
The various facilities to be provided relating to welfare and health of a contract labour are as under:
Canteen: The appropriate government may frame rules, wherein contract labour numbering 100 or more is employed by a contractor. Where such rules are framed it is the contractor who is under liability to provide a provision of canteen facilities for employees.
Rest Room: The contractor is under an obligation to provide rest room facility where the workers are required to stay at night. The rest room must be ventilated and properly lightened.
Some other facilities may include:
- Drinking water facility
- Washing facilities
- First Aid facilities
The primary liability of providing all these facilities is on contractor who employ the contract labour. On the failure of contractor to provide such facility, the principal employer becomes liable for providing such facility.
Question 5.
Write short notes on the following:
Provisions relating to health and welfare of contract labour under the Contract Labour (Regulation and Abolition) Act, 1970. (Dec 2013, 5 marks)
Answer:
The contractors are required to take certain specific measures for the welfare and health of contract labour under Section 16 to 19 of the Contract Labour (Regulation and, Abolition) Act, 1970
(i) Canteens: As per Section 16. the appropriate Government has powers to make rules requiring that in every establishment to which the Act applies and wherein contract labour numbering 100 or more is ordinarily employed by a contractor and the employment of the contract labour is likely to continue for such period as may be prescribed, one or more canteens shall be provided and maintained by the contractor for the use of such contract labour.
(ii) Rest rooms: Under Section 17(1) in every place where contract labour is required to halt at night in connection with the work of an establishment to which the Act applies and in which work requiring employment of contract labour is likely to continue for such period as may be prescribed, there shall be provided and maintained by the contractor for the use of the contract labour such number of rest rooms or such of the suitable alternative accommodation within such time as may be prescribed.
(iii) Other facilities : It shall be the duty of every contractor employing contract labour in connection with the work of an establishment to which the 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 conveniently situated and accessible to the contract labour; and
(c) washing facilities. (Section 18)
(iv) First Aid facilities : As per Section 19 the contractor is required to provide and maintain a first aid box equipped with the prescribed contents at every place, where contract labour is employed by him. The first aid box should be readily accessible during working hours.
Question 6.
Distinguish between the following:
‘Principal employer’ and ‘contractor’ under the Contract Labour (Regulation and Abolition) Act, 1970. (Dec 2011, 5 marks)
Answer:
Principal Employer:
- Section 2(1) (g) of the Contract Labour (Regulation & Abolition) Act, 1970 defines the term principal employer.
- The owner/ head of the factory/mine/department shall be considered as the‘principal employer’
- There are certain obligation which lies on the principal employer
- In case of failure on the part of the contractor to pay wages either in part or in full, the principle employer is liable to pay the same & recover the amount so paid from the contractor
Contractor:
- Section 2(1) (c) of the Act describes the term ‘contractor’
- Contractor means who works with contract labour or who supplies the contract labour for any work of the establishment
- The term contractor also includes sub-contractor
- A contractor is required to provide canteens, restrooms, drinking water, washing facilities & first aid facilities for the use of contract labour.
Question 7.
Distinguish between the following:
‘Principal employer’ and ‘contractor’ under the Contract Labour (Regulation and Abolition) Act, 1970. (Dec 2013, 5 marks)
Question 8.
Discuss the judicial activism in reference to Contract Labour Abolition Act, 1970. (Dec 2020, 6 marks)
Answer:
The object of the Contract Labour (Regulation and Abolition) Act, 1970 is to provide for regulation of the employment of Contract labour and its abolition under certain circumstances. The Courts took very active role in interpreting and favouring of the abolition of the Contract Labour and regulating the rights of the Contract Labour.
The First of it is the landmark judgement in Standard Vacuum Refining Company v. Its Workmen, [1960] 3 SCR 466 in which the Supreme Court had affirmed the direction of the Industrial Tribunal for the abolition of the contract system of labour. Further the judgement of the Supreme Court in this historic case said that contract labour should not be employed where
(a) the work is perennial and goes on from day to day;
(b) the work is necessary for the factory;
(c) the work is sufficient to employ a considerable number of whole-time workmen; and
(d) the work is being done in most concerns through regular workmen.
Further in Catering Cleaners of Southern Railway v. Union of India & Ors., AIR 1987 SC 777 the Supreme Court expressed in dismay with reference to contract labour engagement as follows: “Of late there has been a noticeable tendency on the part of big companies including public sector companies to get the work done through contractors rather than through their own departments”.
It is a matter of surprise that employment of contract labour is steadily on the increase in many organised sectors including the public sector, which one expects to function as a model employer.
In Gujarat Electricity Board v. Hind Mazdoor Sabha, Supreme Court has expressed its dismay “While parting with these matters, we cannot help expressing our dismay over the fact that even the undertakings in the public sector have been indulging in unfair labour practice by engaging contract labour when workmen can be employed directly even according to the tests laid down by Section 10 of the Act.
The only ostensible purpose in engaging the contract labour instead of the direct employees is the monetary advantage by reducing the expenditure. Apart from the fact that it is an unfair labour practice, it is also an economically short-sighted and unsound policy, both from the point of view of the undertaking concerned and the country as a whole.
From the above, it can be inferred that the courts are also of the view that the Contract Labour engagement shall be abolished over a period of time as it leads to the abuse of labour rights for the economic benefit of the employers and is used mainly to depart from the responsibilities being an employer towards the employees.
Question 9.
Discuss the Judicial activism in reference to The Contract Labour (Regulation and Abolition) Act, 1970. Also explain the jurisdiction of Industrial Tribunals to abolish Contract Labour. (Aug 2021, 6 marks)
Answer:
The Courts took very active role in interpreting and favouring of the abolition of the Contract Labour and regulating the rights of the Contract Labour.
The first of it is the landmark judgment in Standard Vacuum Refining Company vs. Its Workmen (1960) in which the Supreme Court had affirmed the direction of the Industrial Tribunal for the abolition of the Contract system of labour. Further, the judgment of the Supreme Court in this historic case said that the Contract labour should not be employed where-
- The work is perennial and goes on from day to day.
- The work is necessary for the factory.
- The work is sufficient to employ a considerable number of whole time workmen and
- The work is being done in most concerns through regular workmen.
Further in Catering Cleaners of Southern Railway vs. Union of India & Ors., AIR 1987 SC 777 the Supreme Court expressed in dismay with reference to contract labour engagement as follows:
“Of late there has been a noticeable tendency on the part of big companies including public sector companies to get the work done through contractors rather than through their own departments”.
“It is a matter of surprise that employment of contract labour is steadily on the increase in many organized sectors including the public sector which one expects to function as model employer”.
From the above, it can be inferred that the Courts are also of the view that the contract labour engagement shall be abolished over a period of time as it leads to the abuse of labour rights for the economic benefit of the employers and is used mainly to depart from the responsibilities being an employer towards the employees.
Jurisdiction of Industrial Tribunals to abolish Contract Labour:
It has been held by the Supreme Court in Vegolis Private Ltd. vs.The Workmen (1971) that after enforcement of the Contract Labour (Regulation and Abolition) Act, 1970, the sole jurisdiction for abolition of Contract labour in any particular operation vested with the appropriate Government and thereafter the Tribunals have no jurisdiction to abolish contract labour. Supreme Court cannot under Article 32 of the Constitution order for abolition of Contract Labour System in any establishment (1985).
Question 10.
Attempt the following stating the relevant legal provisions and case law, if any:
Is the principal employer liable to absorb contract labour where engagement of labour force through the contractor to do work of a perennial nature has been abolished? (June 2005, 3 marks)
Answer:
In the case of Steel Authority of India V/s National Union of Water Front Workers and Others, the Supreme Court interpreted Section 10 of the Contract Labour (Regulation and Abolition) Act, 1970 and opined that neither Section 10 of the Act nor other provisions of the Act whether expressly or by necessary implication provides for absorption of workmen being contract labour as regular one.
Hence, the court cannot direct the employer to absorb the workmen concerned in regular service after abolition of the contract labour. Thus, the order is not legally tenable.
Question 11.
Attempt of the following stating relevant legal provisions and case law, if any:
A contractor made short payment of wages to a worker employed by him as contract labour. The worker sought the amount due from the principal employer. Will he succeed? (Dec 2008, 4 marks)
Answer:
- Section 21 deals with the provisions relating to the payment of wages in case of contract labour:
- C ntractor will be primarily responsible for payment of wages to the contract labour.
- The liability to make payment by the principal employer shall arise in such asituation where the contractor fails to make payment or makes short payment.
- Principal employer should nominate an authorised representative who needs to bepresent at time of disbursement of wages by contractor.
Question 12.
Attempt the following stating relevant legal provisions and decided case law, if any:
Some contract labour was engaged by an organisation. There was subsequently prohibition of employment of contract labour in that category as a consequence of the notification issued by the Central Government. The employer did not absorb the contract labour and employ them on regular basis. The workmen challenged the action of the organisation. Will they succeed? (June 2010, 4 marks)
Answer:
No, the workmen will not succeed.
Question 13.
Mr. Bharat wants to set up an industrial establishment for collecting and manufacturing quarry products. He has been told that there is no significant difference between contract labour and employees. Is there any difference between two terms? He also wants to know whether contract labour can be employed for any nature of work? Will the contract employees automatically become the employees of the principal employer? (Dec 2019, 6 marks)
Answer:
According to the Contract Labour (Regulation and Abolition) Act, 1970 a “contract labour” is hired in or in connection with such work by or through a contractor and such hiring is with or without the knowledge of the principal employer.
“Contract labour” can be distinguished from employees in terms of employment relationship with the principal establishment and the method of wage payment. A workman is deemed to be a contract labour when he/she is hired in connection with the work or contract for service of an establishment by or through a contractor. They are indirect employees. Contract labour is neither borne on pay roll or muster roll or wages paid directly by the employer.
The landmark judgement in Standard Vacuum Refining Company v. Its Workmen, [1960] 3 SCR 466 in which the Supreme Court said that contract labour should not be employed where
(a) the work is perennial and goes on from day to day;
(b) the work is necessary for the factory;
(c) the work is sufficient to employ a considerable number of whole-time workmen; and
(d) the work is being done in most concerns through regular workmen.
It has been well settled by the various judgements of Apex Court & High Courts that the contractor’s employees will not automatically become the employees of the principal employer, even if the principal employer does not get registration and the contractor does not hold licence, though employing contract labour without obtaining registration or without obtaining licence is an offence under the Act.
RECENT CASE LAWS
1. Steel Authority of India V National Union of Water Front Workers and Others :
It was held by the Supreme Court that neither Section 10 of the Act nor any other provisions in the Act provides for automatic absorption of contract labour. The principal employer cannot be required to order absorption of contract labour working in the concerned establishment
2. Vegolis Private Ltd V The Workmen :
It was held in this case by the Supreme Court that the sole jurisdiction for abolition of contract labour in any particular operation vested with the appropriate Government and thereafter the Tribunals have no jurisdiction to abolish contract labour
The Contract Labour Act, 1970 Notes
Objective/ Rationale of the Act
- An Act 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 Act essentially applies to the principal employer of an establishment and the contractor who employed 20 or more workmen in preceding 12 months as the contract labourer.
- This Act strikes a balance between, providing minimum wages to contract workers through the licensing of contractors and holding the principle employers responsible for enforcement of law.
Who is a Contract Labour
- Section 2(1 )(b) of Contract Labour Act defines the term ‘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.
- “Contract labour” can be distinguished from employees in terms of employment relationship with the principal establishment and the method of wage payment.
- Contract labour is neither borne on pay roll or muster roll or wages paid directly to the employer.
Advisory Board
- Central Advisory Board
- Central Government shall constitute a board to be called the Central Advisory Contract Labour Board (Central Advisory Board)
- The Board shall advise the Central Government on such matters arising out of the administration of this Act and any other functions assigned under this Act.
- Composition of the Central Board: The Central Board shall consist of-
- Chairman to be appointed by the Central Government
- Chief Labour Commissioner ( Central), ex officio
- Members (>11, <17)
- State Advisory Board
- State Government shall constitute a board to be called the State Advisory Contract Labour Board (State Advisory Board)
- The Board shall advise the State Government on such matters arising out of the administration of this Act and any other functions assigned under this Act.
- State Board shall consist of–
- Chairman to be appointed by the State Government
- Labour Commissioner, ex officio
- Members (>9, <11) Obligations of Contractor under the Act
- Canteen: Where contract labour >100 by a contractor.
- Rest Room: Where the workers are required to stay at night. The rest room must be ventilated and properly lightened.
- Some other facilities:
- Drinking water facility
- Washing facilities
- First Aid facilities
- The primary liability of providing all these facilities is on contractor who employ the contract labour. On the failure of contractor to provide such facility, the principal employer becomes liable for providing such facility.
Obligations of Principal Employer under the Act
Under the Contract Labour (Regulation and Abolition) Act, 1970 a contractor is required to provide canteens, rest-rooms, drinking water, washing facilities and first aid facilities for the use of contract labour. If a contractor fails to provide the prescribed amenities, then the principal employer will be liable to provide such amenities. The principal employer can recover such expenses from the contractor.
The contractor is required to pay wages and a duty is cast on him to ensure disbursement of wages in the presence of the authorised representative of the principal employer. An obligation is also cast on the principal employer to nominate a representative duly authorised by him to be present at the time of disbursement of wages.
In case of failure on the part of the contractor to pay wages either in part or in full, the principal employer is liable to pay the same 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.