Contract Labour (Regulation and Abolition) Act, 1970



Purpose of the Act is to regulate employment of contract labour and to provide for abolition of contract labour in certain cases.


Establishment to which Act applies - The Act is applicable to every establishment in which 20 or more workmen are employed as contract labour or were so employed anytime during last 12 months. [section 1(3)(a)] . ct will not apply to establishment where work of an intermittent or casual nature is performed. [section 1(5)(a)].


'Establishment' means any office or department of Government or a local authority or any place where any industry, trade, business, manufacturing or occupation is going on. [section 2(1)(e)]. - - Every such establishment is required to get itself registered under the Act. [section 7].


Manager or occupier of factory or head of department of Government/local authority is termed as 'Principal Employer'. [section 2(1)(g)].


Principal Employer should maintain register of contractors in prescribed form. [section 29]. He is required to ensure that contractor makes adequate provision for canteen, rest rooms, supply of drinking water, latrines, urinals, wash rooms etc. to contract labour. If contractor fails to do so within prescribed time, the Principal Employer shall provide the amenities. can recover from contractor the cost incurred by him in providing these amenities. [section 20].


Contract Labour - A workman is deemed to be employed as 'contract labour' in or in relation to work of the establishment, if he is hired for such work by or through a contractor, with or without knowledge of principal employer. [section 2(1)(b)].


Contractor - The Act applies to every contractor who employs 20 or more workmen. [section 1(3)(b)]. The contractor sill be licensed. [section 12]. Contractor is required to maintain muster roll and register of wages. [section 29]. - - He is required to follow other provisions as my be contained in Rules made by Appropriate Government. Contractor is required to pay wages to workmen on time, in presence of authorised representative of principal employer. [section 21]. - - He should issue wage slips to workman and obtain signature or thumb impression on wage register. - - if contractor fails to make payment of wages, Principal Employer is liable to make payment of wages to contract labour. He can recover this amount from contractor. [section 21(4)].


Contractor is required to provide canteen facilities, first-aid, rest rooms, drinking water, latrines and washing facilities, as per rules made by State Government. [sections 16 and 17].


Controlling authority - Control over contract labour will be exercised by 'Appropriate Government'. - - Appropriate Government means * Central Government in case of railways, docks, IFCI, ESIC, LIC, ONGC, UTI, Airport Authority, industry carried on by or under authority of Central Government * State Government in case of other industrial disputes [section 2(1)(a)]. - - Appropriate Government can make rules. It will appoint inspecting staff to ensure that the provisions of Act are being followed. [section 28].


Other laws applicable to contract labour - Besides Contract Labour (Regulation and Abolition) Act, various other Acts are applicable to contract labour - (a) Factories Act - The Act makes no distinction between persons directly employed and employed through contractor (b) Employees Provident Funds Act (c) ESIC (d) Payment of Wages Act (e) Minimum Wages Act (f) Industrial Disputes Act (g) Workmen's Compensation Act.


Prohibition of employment of contract labour - Appropriate Government can prohibit employment of contract labour in any process, operation or work in any establishment, by issuing a notification. Such order can be issued after consultation with Advisory Board. [section 10(1)]. Before issuing such order in respect of any establishment, Government will consider aspects of conditions of work and benefits provided to contract labour, whether process operation or work is incidental or necessary for the industry/trade/business, perennial nature, whether it is done ordinarily through regular workmen in other similar establishment. [section 10(2)].


In Steel Authority of India v. National Union Water Front 2001(5) SCALE 626 = 2001 LLR 961 = AIR 2001 SC 3527 = JT 2001(5) SC 602 = 2001 III CLR 349 = (2001) 7 SCC 1 = 2001 LLN 135 = 2001 AIR SCW 3574 (SC 5 member Constitution bench), it was held that Central / State Government can issue notification u/s 10 abolishing contract labour only after following prescribed procedure regarding consultation etc. It was also held that even if such a notification is issued, the employees with contractor will not be automatically absorbed in the employment of the company, if the contact was genuine. However, company will give preference to them. However, if the contract was not genuine but a mere camouflage, the so called contract labour will have to be treated as employees of principal employer.