Evolution of Indian Labour Law

&
Contract-Labour-Regulation-
Abolition Act

Submitted By - Ranjeet Gangwar

Game of ‘Tripartite’ : Government Function, IR, Labour Law

Employee
Right

Labour Law

Govt. Employer
Regulation Right

Legislative Employee
Union

Industrial
Govt. Function
Relations
Tool to frame/ Start
your answer
Statutory Managem
Executive Judiciary Acts ent
Employee – Employer Unbalanced Relationship

Employee Employer
Need of Statutory Labour/ Employer/ Industrial Laws

Delivering Principles of Natural Justice

• On the basis of Latin phrase Roman ‘Audi Alteram Partem’ and ‘Nemo Judex in Parte
Sua’, Three rules got framed for delivering Natural Justice.
• Hearing Rule , Biasing Rule & Evidence Rule.

Protection of Fundamental Rights

• Indian Constitution (Chapter III, Art 12 to 35)

• Specific Articles 16, 19, 23 & 24

Maintain Dignity of Labour & Fraternity of Class (Directive Principle)

• Indian Constitution (Chapter IV, Art 36 to 51)

• Specific Articles 39, 41, 42,43 & 43A

Harmonious Industrial Relations & Compliance of ILO conventions

• Dispute Resolution, Wages fixation, Payment of Wages, Working Conditions, Social

Security
• Right to form Association & Union, Collective Bargaining, Equal opportunity, Prohibition
of Child Labour inline with ILO convention – 29, 87, 98,100, 105,111 & 138.
Evolution of Labour Law in India – Pre Independence Era

The industrial/labour legislations enacted by the British were primarily

intended to protect the interests of the British Employers.

Indian textile goods offered stiff competition to British textiles in the export
market and hence in order to make Indian labour costlier Britishers framed
Factories Act in 1883 under pressure on the British parliament by the textile
magnates of Manchester and Lancashire.

The real motivation was undoubtedly protectionist to British interests,

however impact of these measures was welfarist too.
Progressively, other acts got framed as Workmen Compensation Act -1923,
Trade Union Act 1926,

Trade Dispute Act -1929

Payment of Wages Act-1936
Standing Orders -1946 &
Industrial Dispute Act 1947
Evolution of Labour Law in India – Post Independence Era

Factory Act , Employee State Insurance & Minimum

wages Act – 1948
Employee Provident Fund-1952

Employment Exchange – 1959

Maternity Benefit Act -1961
Apprentice Act - 1961

Payment of Bonus Act-1965

Contract Labour Regulation Act-1970
Payment of Gratuity - 1972

Equal Remuneration Act-1976.

Bonded Labour System (Abolition) Act-1976
33. Child Labour (Prohibition & Regulation) Act-1986
How to Remember these Laws : Follow nature of laws

• Trade Unions Act, 1926

Laws related to Industrial Dispute • Industrial Employment Standing Order Act, 1946.
• Industrial Disputes Act, 1947.

• Workmen Compensation Act, 1923.

• Payment of Wages Act, 1936
Laws related to Wages
• Minimum Wages Act, 1948
• Payment of Bonus Act, 1965.

Laws related to Working Hours & Job • Factories Act, 1948.

Conditions • Contract Labour (Regulation & Abolition) Act, 1970.

Laws related to Equality and • Maternity Benefit Act, 1961

Empowerment of Women • Equal Remuneration Act, 1976.

• Employees’ State Insurance Act, 1948.

• Employees’ Provident Fund & Miscellaneous Provisions Act,
Laws related to Social Security
1952.
• Payment of Gratuity Act, 1972.
 Take-Away from Evolution of Law

Laws ensure
Important Laws for
‘Principle of Natural Laws were framed in
Labour Laws were Interview in their
Justice’ (Hearing- continuity of basic
framed with order : ID Act ,
Biasing-Evidence needs i.e.
inclination to Contract Labour
Rule), Fundamental Compensation/
workmen Regulation &
Rights (16, 19, 23 & wages to Dispute
perspective. Now Abolition (CLRA) Act,
24), Directive Resolution to Social
employer Standing Order,
Principles (39, 41, Security to Female
perspective is being Factory Law, Equal
42,43 & 43A) & ILO Work force welfare
incorporated under Remuneration,
conventions (29, 87, measures & ratified
reforms. Bonus Act, Minimum
98,100, 105,111 & ILO conventions.
Wages Act etc.
138)
Some Contract Labour Regulation & Abolition Act questions which were asked previously :
1. State whether the following statement is “True” or “False” :
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. (True)
2. Whose approval does the Registering Officer require in a case of revocation of a
particular establishment’s registration? (Single Choice)
(a) Commissioner of Labour
(b) Central Government
(c) State Government
(d) Appropriate Government
3. Which of the following measures are covered under contract labour regulation & abolition act? (Multiple Choice)
(a) Canteens
(b) Rest Rooms
(c) Creche
(d) Drinking Water
4. If contractor runs away, who is liable and how wages will be paid to contract manpower ?
5. What are the conditions wherein deployment of contract labour is prohibited under law ?
6. What is the role of Inspectors, Licensing officer and Registering Officers ?
7. What is Sham Contract ?
Contract Labour Regulation & Abolition Act :

This legislation regulates the

employment of contract labourers
in establishments and by
Objective contractors. The Rules for
implementing the provisions of the
Act vary from state to state.

An establishment which engages

20 or more persons or engaged on
any day of the preceding 12 Applicable
months as contract labourers
come under the purview of the (Sec 1)
legislation.
The legislation is also applicable to
contractors who employ workmen
as contract labourers, or who
employed on any day of the
preceding 12 months.
Exclusion Criteria of Scope :
 Less than 20 contract labour
(There could be state amendments e.g.. Gujarat & W. Bengal it is 10 as ‘Labour’ is in
concurrent list of constitution under schedule VII, Art 246)

 The work of intermittent or casual nature

If work performed for less than 120 days in the preceding 12 months or it’s seasonal

Authority of CLRA Acts :

Registration officer : Certificate of Registration – Obtained by Principal Employer
(Establishment registration under the act- Section 7

Licencing Officer : Licence of Contract - Obtained by Contractor, Section 12

Inspectors - power to enter at all reasonable hours any place where contract
labour takes place, for the purpose of verifying registers, records or notices, to
examine persons, to collect information, to seize or take copies of registers, records
of wages, or notices, and to exercise such other powers as is prescribed.
(Section - 28)
Major definitions to Understand (Section 2) :
"Principal employer”: in a factory is the owner or occupier of the factory and where a person has
been named as the manager of the factories under the Factories Act, 1948, such person is the
principal employer. In any other establishment any person responsible for the supervision and
control of the establishment.

"Workmen" means any person employed in or in connection with the work of any establishment to
do any skilled, semi-skilled, or unskilled manual, supervisory, technical or clerical work for hire or
reward whether the terms of employment be empress or implied but does not include any person :
(1) who is employed mainly in a managerial or administrative capacity,
(2) who, being employed in a supervisory capacity draws wages exceeding Rs.500/- per mensum
or exercises either by virtue of powers vested on him or by the nature of the duties attached to
the office functions which are of managerial nature
(3) who is an outworker to whom any article or materials are given out by or
on behalf of the principal employer for being processed.

"Contractor" : with relation to an establishment a contractor is a person who undertakes to do some

work for the establishment through contract labour, not being a mere supply of goods or articles of
manufacture to the establishment or one who supplies contract labour for any work of the
establishment and includes a sub-contractor.
Section 10 - Prohibition in employing contract labour :
 Law empowers appropriate government to prohibit contract labour in any process, operation or
other work in establishment through a notification. Before notification, the government has to
consult the contract labour advisory board.

 Contract Labour is prohibited in following conditions :

• Process/operation is incidental to, or necessary for the industry/

Incidental/ Core business/ manufacture or occupation carried on in that establishment
Jobs

• Job is of perennial nature

Perennial Jobs

• Job is ordinarily done through regular workers in that or other similar

Regular jobs
establishments

• Job demands to employ considerable number of full time workers

Considerable
Workers-Full Time
 Section 16, 17, 18 & 19 : Facilities to be provided to contract
labourers:
1. Rest rooms : In every establishment where contract labour required to halt at
night and where the work done by contract labour is likely to continue for 3
months or more the contractor has to provide rest rooms as may be required by
commissioner of labour

2. Canteen : Wherein one hundred or more contract labour are employed by a

contractor and wherein work done by such contract labour is likely to continue for
six months

Other Facilities covered :

3) Latrines and urinals

4) Drinking water

5) First aid facilities

(If these are not provided by contractor, Principal employer will provide these and
make deduction of same from contractor’s payment )
 Responsibility of Principal Employer
 Principal employer entitled to recover from the contractor for providing such
amenities or to make deductions from amount payable if any such need arises.
 To maintain a register of contractor in respect of every establishment

Responsibility of Contractor

 To maintain various registers : Muster Roll, Register of wages, Register of

Deductions, Register of Overtime, Register of Fines, Register of Advances, Wage
slip.

 To display an abstract of the act and Rules in English and Hindi and in the language
spoken by the Majority of workers in such forms as may be approved by
appropriate authority.

 To display notices showing rates of wages, hours of work, wage period, dates of
payment, names and addresses of the inspector and to send copy to the inspector.
How to ensure a Valid Contract Agreement before Court of Law:
Simple procedures which, if followed, these can save an employer from the Industrial tribunal or Sham
Contract condition :
1. Principal employer maintain certificate of registration.
2. Ensure that License is granted to the Contractor.
3. Ensure periodical renewal of above if any required.
4. Intimation notice about commencement / Completion of contract work.
5. Ensure employment card is issued to all the contract employees by the Contractor.
6. The principal employer should send Annual Return about the Contractors for the year ending Dec’ 31.
7. The principal employer should ensure that the Contractor is maintaining the register like Muster Roll,
Register of Wages, Register of Deductions, Register of overtime, Register of Fines, Register of Advances
& wage slips. If these papers are maintained, employer can easily prove that the contract is genuine and
valid.

Misnomer : Agreement with a contractor of labour on a valid stamp paper is not enough and valid unless
principal employer sends all above mentioned documents to appropriate authority and maintain their
records. Without these, only copy of an contract agreement will be considered as a camouflage or sham
contract before court of law.

Characteristics of Sham Contract:

(i) Evidence of direct supervision of contract employees by principal employer i.e. Assignment of jobs,
directing & supervising contract workmen including fixing their numbers, Leave approval, Planning Shift
rota etc.
(ii) Absence of Registration by the Principal Employer.
(iii) Absence of documents to show that there is a valid contract.
 Take-Away from CLRA Act

Sham Contract If
Section 7 & 12 : Facilities covered
direct supervision
Certificate of under CLRA act for
of contract
Section 10 : Registration – contract workmen
employees by
Conditions wherein Obtained by and statutory
principal employer,
Contract Labour is Principal Employer record keeping of
Absence of
prohibited under & Licence of different Registers
Registration by the
law Contract – by principal
Principal Employer
Obtained by employer as well as
& Absence of
Contractor by Contractor
statutory records