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Contract Labour and Their Legal Status in India




The practice of employing contract labour is prevalent in most of the industries in different occupation including skilled and semi skilled jobs. A workman shall be deemed to be employed as contract labour when he is hired in connection with the work of an establishment by or through a contractor. The various studies conducted by commissions, committees and Ministry of Labour shows that the situation has always been exploitative. The government has taken various initiatives to improve the situation of the contract.


The Contract Labour (Regulation and Abolition Act) 1970


The Government enacted the Contract Labour (Regulation and Abolition Act) 1970 seeking to regulate the employment of contract labour in certain establishments and to provide for its abolition under certain circumstances.


Objects, Purpose and Scope


The Contract Labour (Regulation and Abolition Act) 1970, regulates the employment of contract labour in certain establishments and to provide for its abolition in certain circumstances and for matters connected therewith. This act extends to whole of India.




The act applies to every establishment in which 20 or more workmen are employed or were employed on any day for the proceeding 12 months as contract labour and to every contractor who employs or employed on any day of the proceeding 12 months 20 or more workmen. It does not apply to those establishments in which work of only intermittent or casual nature is performed.


Appropriate Government


Appropriate government means Central Government in relation to an establishment in respect of which under the Industrial Dispute Act 1947, the Central Government is the Appropriate Government and in relation to any other establishment the State Government in which the establishment is situated.


Registration of Establishment and Licensing of Contractors


Every establishment covered by the act is required to be registered as principal employer with appropriate authorities. Every contractor is required to obtain a license and to undertake or execute any work through contract labour except under and in accordance with the license issued in that behalf by the licensing officer.


Welfare and Health of Contract labour


The Act laid down certain amenities to be provided by the contractor to the contract labour for canteen, rest room and provided to arrange for proper supply of drinking water, latrines and urinals, washing facilities and first aid facilities.


Payment of Wages


The contractor is required to pay wages and a duty is cast on him to ensure disbursement of wages in the presence of the authorized representative of the principal employer. In case of failure on the part of the contractor to pay wages either in part or in full, the principal employer is liable to pay the same. The contractor shall fix wages periods in respect of which wages shall be payable. No wages period shall exceed one month.


Maintenance of Records and Registers


Every principal employer and contractor shall maintain some prescribed registers and records as may be prescribed. The principal employer and contractor are also required to keep exhibited in such manner as prescribed within the premises of the establishment where the contract labours are employed, notices in the prescribed form containing particulars about the hour of the work, nature of duty and such other information as may be prescribed.


Penal Provisions


The penalty provided for violation of the provisions of the act and rules made there under, is the fine, which may extend to Rs. 1000/- or imprisonment for as term which may extends to three months or with both.




Apart from the regulatory measures provided under the act for the benefit of the contract labour, the Appropriate Government u/s 10 (1) of the Act is authorized, after consultation with the Central Board or State board as the case may be, to prohibit, by notification in the official gazette, employment of contract labour in any establishment in any process, operation or in any other work. Sec 10 (2) lays sown the sufficient guidelines for deciding upon or other work in any establishment.

The guidelines are mandatory in nature and are:

Conditions of work and benefits provided to the contract labour:

  1. Whether the work is of perennial nature.
  2. Whether the work is incidental or necessary for the working of an establishment.
  3. Whether the work is sufficient to employ a considerable number of whole time workmen.
  4. Whether the work is being done ordinarily through regular workmen in that establishment or similar establishment.
  5. The central govt. on the recommendation of central advisory contract labour board, have prohibited employment of contract labour in various operations/ category of jobs in various establishments.

Published by

CA Dhiraj Ramchandani
(CA, M. com)
Category Corporate Law   Report

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