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What is the Contract Labour Act? [PDF]

The Contract Labour (Regulation and Abolition) Act, 1970, was brought about to regulate employment, prevent exploitation, and improve working conditions for contract labour in India.

Contract Labour

Workers hired by or through a mediator to work for an establishment are referred to as contract labour. As per the act, “a workman will be deemed to be employed as a ‘contract labour’ in connection with the work of an establishment, when he/she is hired in connection with such work by or through a contractor, with/without the knowledge of the principal employer.”

Contract labour is different from direct labour as their relation with the establishment and the method of wage payment differs. The principal employer remunerates the contractor that hires the workmen, who further distributes the wages among the labourers.

The Building and other Construction Workers Act, 1996, states that a ‘building worker’ too is contract labour. They can be appointed to carry out skilled, unskilled, and other works. Coming to the construction workers, these contract labour usually have a diverse range of skillset and can be engaged in activities that require manual labour in the real estate as well as the infrastructure sector.

Applicability

The Contract Labour Act applies to:

  1. The principal employer of an establishment where 20 or more labourers are employed/appointed (even for one day) during the preceding 12 months as contract labour.
  2. The contractor who employs/employed 20 or more workmen on any day of the preceding 12 months.

The principal employer and the contractor have to register the establishment and apply for license, respectively. In case there is any change, it has to be reported to the concerned officials within 30 days.

The Contract Labour Act does not apply if:

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

Liabilities of the Principal Employer and Contractor

The Contract Labour Act lays down a few joint and individual responsibilities for the principal employer and the contractor:

  1. Obtain License under the Contract Labour Act.
  2. Issue employment card to each workman.
  3. Pay wages to the labourers as determined by the government or Labour Commissioner in time and the presence of an authority.
  4. Maintain musters and registers having abstract of the act, notices displayed, rules, and wages paid, etc.
  5. Provide basic facilities such as canteen, restrooms, toilets, drinking water, first aid, etc.
Liabilities of the principal employer and contractor
Liabilities of the Principal Employer and Contractor

Penal Provisions

Section-9 of the Contract Labour Act states that if the principal employer fails to register under the act, then the principal employer cannot appoint contract labour. In case they do so, the contract labour will be deemed as direct workmen of the establishment.

If the establishment fails to produce any document demanded by an inspector, the person-in-charge could face imprisonment for up to 3 months or a fine of Rs. 500, or both.

In case of violation of the act, the convict would be punished with imprisonment for up to 3 months or with a fine of up to Rs. 1000, or both.

What is the Contract Labour Act 1970?

The Contract Labour (Regulation and Abolition) Act, 1970, was brought about to regulate employment, prevent exploitation, and improve working conditions for contract labour.

In which activities contract labour is prohibited?

There is no prohibition of contract labour in any activities unless notified by the government.

Who is a contract labour in india?

As per the Contract Labour (Regulation and Abolition) Act, 1970, a workman will be deemed to be employed as a ‘contract labour’ in connection with the work of an establishment, when he/ she is hired in connection with such work by or through a contractor, with/  without the knowledge of the principal employer.

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