Understanding the Contract Labour Act

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In 1970, the Contract Labour (Regulation and Abolition) Act emerged in India. Its purpose is simple – to oversee employment, prevent mistreatment, and enhance working conditions for contract labourers.

Defining Contract Labour

When individuals are hired through a mediator to work for a business, they become contract labour. The Act defines a workman as a ‘contract labour’ if they are engaged in work through a contractor, with or without the knowledge of the principal employer.

The relationship between contract labour and direct labour differs. The principal employer pays the contractor, who, in turn, distributes wages among the labourers.

Diversity in Construction Work

The Building and other Construction Workers Act of 1996 highlights that a ‘building worker’ can be hired through a contractor for various tasks. These workers possess diverse skills and engage in activities
requiring manual labour in real estate and infrastructure.

Applicability of the Act

Who Does it Apply To?
The Contract Labour Act is relevant to:

  • Principal Employer: If an establishment employs 20 or more labourers (even for one day) as contract labour in the preceding 12 months.
  • Contractor: If the contractor employs 20 or more workmen on any day in the preceding 12 months.

Both the principal employer and contractor must register the establishment and apply for a license. Any changes must be reported to officials within 30 days.

When it Doesn’t Apply

The Contract Labour Act doesn’t apply when:

  • The work is seasonal or not performed for more than 60 days in a year.
  • The work is intermittent or not performed for more than 120 days in a year.

Responsibilities of Principal Employer and Contractor

The Act outlines joint and individual responsibilities for both parties:

  • Obtain License: Under the Contract Labour Act.
  • Issue Employment Card: To each workman.
  • Pay Wages: As determined by the government or Labour Commissioner on time.
  • Maintain Records: Including musters, notices, rules, and wages paid.
  • Provide Facilities: Such as canteen, restrooms, toilets, drinking water, and first aid.

Penal Provisions

Section-9 of the Contract Labour Act imposes penalties for non-compliance:

  • Failure to Register: If the principal employer fails to register, contract labour is considered direct workmen of the establishment.
  • Document Demands: Failure to produce demanded documents can result in imprisonment or a fine.
  • Violations: Convictions for violations may lead to imprisonment or fines, or both.

Understanding and adhering to the Contract Labour Act is essential for both employers and contractors to ensure fair and lawful employment practices.