Making Contract Labour Act More Worker Friendly

Q. Which Act regulates contract labour laws and what are highlights of this Act?

The Contract Labour Regulation and Abolition Act, 1970 defines a contract labourer as a worker hired by principal employer of an establishment through a contractor for execution of a specific job.

The Act makes certain welfare provisions like payment of minimum wages, certain health and sanitation facilities at the working place, provident fund benefits etc. for the benefit of contract labourers.

The Act applies to any establishment employing 20 or more workers on a contract basis on any day during the last one year. All contractors who employ or have employed 20 or more workers on any day of the preceding twelve months come within the purview of the Act.

It is mandatory for such establishments to get registered as principal employers. Besides these regulatory provisions, government may prohibit employment of contract labour in any establishment or in any process/operation depending upon whether the work is perennial in nature or the work is incidental for an establishment.

The Central Government on the recommendations of the Central Advisory Board has abolished contract labour system in a number of jobs in different industries and so far over 70 notifications have been issued.

Q. Why Contract Labour Regulation and Abolition Act, 1970 is considered under protective sometime?

The Act provides for government inspections to detect violations. Despite all these provisions, it has often been found that the la w is under- protective for various reasons:

As the contract labour is mostly in unorganised sector, it is hard for contract labourers to prove their identity as workers because the employer-employee relationship under the Act is blurred.

To circumvent labour laws various kinds of employment structures have been created since globalisation reducing permanent jobs into non-traditional part-time, casual and contractual forms of employment. This has weakened job security and collective bargaining of workers. According to the D.G., Labour Welfare “Contract Labour, by and large, is neither borne on pay roll or muster roll nor is paid wages directly.

The establishments, which outsource work to contractors, do not own any direct responsibility in regard to their labourers. Generally, the wage rates to be paid and observance of working conditions are stipulated in agreements but in practice they are not strictly adhered to.”It has also been observed in some developing countries that with contractualization of labour, social security of workers has suffered and workers are often terminated without benefits.

Q. What the action is being taken by the government to mitigate the problems arising regarding contractual labour?

The Central Government has decided to amend the Contract Labour Act and has appointed a Task Force to make suggestions in this regard.

The Act is being amended to ensure job security to workers and to check their exploitation. Conceding that outsourcing of labour has severely affected the workforce. With employers resorting to outsourcing methods to a larger extent, the practice has dealt a severe blow to employees as they get lower wages.

Before suggesting any amendments it would be incumbent upon the Task Force to examine that whatever little is ensured by the law is adhered to in practice. The Task Force would have to balance between the flexibility in labour markets necessary in a competitive world, employment generation and job protection and social security benefits to workers.