NATIONAL LAW INSTITUTE UNIVERSITY

Kerwa Dam Road, Madhya Pradesh, 462044, India

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LABOUR and INDUSTRIAL LAW- II

MID-TERM PROJECT (IX SEMESTER)

Wage parity for contract labourers in light of Subansiri Lower HE Project

Contract Basis Workers Union & Ors. V. National Hydroelectric Power
Corporation & Ors. 2020 LLR 855

SUBMITTED BY- SUBMITTED TO-

Ankit Shrivastava Prof. Mahendra Soni

(2017 B.A. LLB. 110) Associate Professor

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ACKNOWLEDGEMENT

I would like to take this opportunity to convey my gratitude towards the faculty for Labour Law at
National Law Institute University, Associate Professor Mahendra Soni. The topic that I chose for
this project is one which enjoys significant importance in the current landscape of labour law. Due
credits to library staff.
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TABLE OF CONTENTS

RESEARCH METHODOLOGY......................................................................................................2

STATEMENT OF PROBLEM.........................................................................................................2

MODE OF CITATION AND METHOD OF WRITING...............................................................2

REVIEW OF LITERATURE...........................................................................................................3

I. LIST OF CASES.........................................................................................................................3

II. LIST OF STATUTES...................................................................................................................3

INTRODUCTION..............................................................................................................................3

SITUATION OF CONTRACT LABOURERS IN INDIA.............................................................5

I. THE CONTRACT LABOUR (REGULATION & ABOLITION) ACT 1970....................................5

BRIEF ANALYSIS OF THE JUDGMENT.....................................................................................7

BIBLIOGRAPHY............................................................................................................................10

I. ARTICLES & RESEARCH PAPERS.........................................................................................10

II. MISCELLANEOUS...................................................................................................................10
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RESEARCH METHODOLOGY

This project has been made by using the doctrinal methodology of research, studying existing case
laws, related cases and authoritative materials.

STATEMENT OF PROBLEM

The situation of contract labourers in India is worrisome. Swathes of workers get pushed into the
unorganised workforce on a daily basis. The least the state can do is ensure wage parity for them.

MODE OF CITATION AND METHOD OF WRITING

The researcher has used a uniform method of citation. Additionally, the researcher has followed a
descriptive and analytical form of writing.

REVIEW OF LITERATURE

I. LIST OF CASES
i. Borello & Sons, Inc. v. Department of Industrial Relations
ii. Dhrangadhara Chemical Works v. State of Saurashtra
iii. Dynamex Operations West, Inc. v. Superior Court of Los Angeles
iv. Ram Singh and Ors. v. Union Territory, Chandigarh and Ors

II. LIST OF STATUTES

i. The Contract Labour (Regulation and Abolition) Central Rules, 1971
ii. The Code on Social Security, 2019
iii. The Directive of the European Parliament and of the Council on Transparent and Predictable
Working Conditions
iv. The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
v. The Maternity Benefit Act, 1961 (Act No. 53 of 1961)
vi. The Unemployment Insurance Code
vii. Unorganised Workers’ Social Security, 2008
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INTRODUCTION

One of the most severe forms of unorganized Labour is contract Labour. Workers may be employed
on a contract basis through a contractor under the contract Labour system. When a worker is hired
in or in connection with such employment by or through a contractor, with or without the
knowledge of the major employer, he is considered to be employed as "contract Labour" or in
connection with the work of an establishment. Contractors hire personnel (contract Labour) to
undertake work on the premises of the employer, known as the principal employer, but they are not
considered to be the principal employer's workers. Contract workers do a wide range of activities,
from security to sweeping and catering, and the number of tasks they perform is continually
expanding. It has long been believed, and correctly so, that executing a contract work through a
contractor who deploys contract Labour deprives the Labour of its appropriate compensation and
Labour class privileges.

The contract worker is paid on a daily basis, or his or her wages are aggregated and
paid at the end of the month. Contract Labour is justified by the industries since the need is
transitory or seasonal. Nonetheless, contract Labour is frequently used for jobs such as security,
sweeping, and cleaning, despite the fact that it is difficult to understand how these tasks are
temporary and do not warrant full-time regular employees. Managements attempt to skirt around the
provisions of social legislation unless legally compelled to do so by circumstances, but the judiciary
has consistently upheld the concepts of social justice, human dignity, and worker welfare.

Contract Labour is used in almost every industry and in a variety of occupations,

including skilled and semi-skilled jobs. It is also seen in agricultural and allied operations, as well
as in the service sector to some extent. When a workman is hired in connection with the work of a
business by or via a contractor, he is said to be employed as Contract Labour. They are indirect
employees who are employed, overseen, and compensated by a contractor who is compensated by
the establishment. Contract Labour must be used for work that is defined and for a set period of
time. It is defined by its lower Labour status, casual form of employment, lack of job security, and
poor economic conditions. While economic variables such as cost effectiveness may support the use
of contract Labour, social justice concerns need its eradication or restriction. Before and after
independence, many commissions, committees, as well as the Labour Bureau and Ministry of
Labour, evaluated the state of contract Labour in India. All of them have deemed their situation to
be deplorable and exploitative. In the case of Standard Vacuum Refinery Company vs. Its workmen
& ors.1, the Supreme Court of India ruled that contract Labour should not be used where: —

1
1960 AIR 948
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(a) The work is ongoing and must be done on a daily basis;

(b) The work is incidental to and necessary for the factory's operations;

(c) The work is adequate to employ a large number of full-time employees; and

(d) The job is performed by regular employees in most companies.

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SITUATION OF CONTRACT LABOURERS IN INDIA

It was usual practice to hire Labour through contractors and other organizations, minimizing direct
contact between employers and their employees. As a result, entire factories were leased out to
contractors, who were required to create things in those facilities using machinery owned by the
employers, and the commodities were then branded with the employer's brand name. As a result,
the workers were paid far less than they would have been entitled to under direct employment. This
system resulted in widespread Labour exploitation, prompting a series of demands for the repeal of
the contract Labour system before tribunals. The claims were heard by the tribunals, and in many
cases, the demands were granted through their decisions. The Supreme Court recognized the right
of workmen to seek abolition of contract Labour on behalf of the contractors' workmen in Standard
Vacuum Refining Co. of India Ltd. v. Workmen, a major decision on the subject, and identified
some of the circumstances in which such abolition can be directed.

Workmen and their unions campaigned hard for contract Labour to be abolished, especially in
circumstances where it was absolutely necessary to govern the terms and conditions of service
under which such Labour may be engaged. As a result, Parliament approved the Contract Labour
(Regulation & Abolition) Act 1970, which went into effect in September 1970.

I. THE CONTRACT LABOUR (REGULATION & ABOLITION) ACT 1970

The Contract Labour Regulation and Abolition Act, 1970 protects contract workers in India. A
contract labourer is one who is hired by a major employer through a contractor in connection with
the work of an establishment. A contractor is the organization's supplier of contract Labour,
whereas a major employer is the person in charge of the establishment's control. This act applies to
any establishment that employs or has employed 20 or more contract workers on any day in the
previous year, as well as all contractors that employ or have employed 20 or more contract workers
on any day in the previous twelve months. Every major employer who is subject to this act must
register his or her business in the required manner for contract labour. In contrast to the industry
sector, there is no provision for remaining unregistered in general. The government has the
authority to cancel an establishment's registration at any time if it is displeased with its activities.

Contract workers must be paid in accordance with the minimum wage statute. The Contract
Labour Act makes specific provisions, such as safe drinking water, canteen facilities, and first-aid
facilities, necessary for contract Labourers' health and wellbeing. Contract employees must also be
provided with social security coverage in the form of provident fund benefits and medical care.
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It is the contractors' primary responsibility to supply all of the workers' needs as outlined in
the Act. The major employer, on the other hand, should assure the presence of his authorized
representative at the location and time of salary disbursement by the contractor to the workmen, and
it is the contractor's responsibility to ensure wage disbursement in his/her presence. However, if the
contractor fails to pay salaries or provide other services, the primary employer is responsible.
Regular inspections by Labour department field officers are required to detect infractions of the
Act's provisions. A government can prohibit contract Labour employment at any establishment in
any process operation or other task, in addition to the regulatory measures provided under the Act
for the benefit of contract Labour. Such limitations are frequently determined by whether the task is
perennial or incidental in nature.

In such circumstances, it is also investigated whether the work is being done on a regular
basis by regular workers in that or a comparable establishment. Despite the fact that the Act
establishes rules for how contractual employment should be maintained and that government
officials are available for inspection to detect violations of the rules, the employer-employee
relationship frequently becomes muddled due to the presence of two separate management systems,
namely the contractor and the principal employer. As a result, contract labour is frequently
underpaid, which has resulted in a number of lawsuits. One of the major points of contention is
whether contract labour can be used alongside permanent employees in an establishment's main
duties. A set of perennial or core activities is defined by the major activities that a company
specified at the time of formation under the Factories Act of 1948. Several lawsuits developed as a
result of the employment of contract Labour in so-called "core activities," and a number of notices
were issued barring corporations from using contract labour for certain tasks. In general, an
establishment's use of contract Labour for core tasks is not restricted at this time. A state
government, on the other hand, has the authority to change this section of the statute. A few state
administrations have already enacted such changes.
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BRIEF ANALYSIS OF THE JUDGMENT

FACTUAL MATRIX

The petitioners claim that the Indian government invested much in a hydroelectric project on the
lower Subansiri River to generate 2000 megawatts of energy. Through the respondent workers,
respondent No. 1, a Government of India firm, hired a large number of contract workers, both
technical and non-technical. The petitioner claims that there were a number of difficulties, including
a desire for a wage increase and an improvement in the condition of their project-related services.
On September 11, 2006, a Memorandum of Settlement was reached and signed between the
management and the contract workers in front of the Labour Officer of North Lakhimpur and the
Conciliation Officer. The parties agreed, as part of the settlement, to organize a Committee for
Wage Increases, whose recommendations will be followed in letter and spirit. Aside from that, it
was said that the management would consider implementing a medi-claims plan for employees and
would ensure that CPF compliance was met. According to the findings of the Government Board of
Inquiry, the management would take appropriate action in the event of alleged illegal dismissal of
personnel.

Following that, on 12.07.2010, at the request of the Assistant Labour Commissioner

(Central), Ministry of Labour and Employment, Government of India, a Memorandum of
Understanding was signed in the presence of NHPC between the General Secretary of the Union
and the NHPC Contractors Association on the demand for bonus payments under the Payment of
Bonus (Amendment) Ordinance, 2007. Following that, on the 10.11.2010, a meeting was called at
the office of the Assistant Labour Commissioner (Central) Guwahati to discuss a disagreement over
the non-payment of bonus to contractual workers involved in the establishment of NHPC. However,
because the problem could not be resolved, it was agreed that it should be brought before higher
authorities. After that, the impugned communication to the contractors in question was sent out,
stating that the contract work was set to expire on September 30, 2014, and that it had been decided
that the work would not be extended any further, and that the contract work would only be awarded
to potential bidders through open tender if the project's construction work was resumed. Following
that, on the 1st, 2nd, and 4th of September, 2014, the respondent NHPC Limited issued an open
offer for various running and maintenance of works relating to the project, rather than issuing work
orders to several contractors for the same task. The petitioners are bringing this writ petition to the
Court because they are aggrieved by such action.
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THE JUDGMENT

The court ruled in favour of the respondents:

 Some of the authorities on which the projections were based should be included. On the
question of appointment/employment without advertisement, the Apex Court concluded in
Mamata Mohanty & Anr.2 that no one can be appointed, even on a temporary or adhoc basis,
without seeking applications from qualified individuals. Article 16's equality requirement
demands an open advertisement so that all eligible people can compete on merit. In addition,
the Supreme Court ruled that relief that is not a claim cannot be awarded.

 As a result, there is a well-established legal principle that no one can be appointed, even on
a temporary or ad hoc basis, without first inviting all qualified individuals to apply. The
requirement of Articles 14 and 16 of the Constitution will not be met if an appointment is
made solely by inviting names from the job exchange or posting a notice on the notice
board. Such a course is in violation of Articles 14 and 16 of the Indian Constitution, as it
excludes applicants who are qualified for the position from consideration. Any redress,
including compensation, is not available to anyone who is employed in contravention of
these laws. Compliance with the aforementioned constitutional condition is required for a
legitimate and legal appointment. Article 16's equality clause mandates that any such
appointment be made through an open advertisement, allowing all qualified candidates to
compete on merit.

 In the case of Steel Authority of India Ltd. & Ors., the Apex Court held that Section 10 of
the Contract Labour (Regulation and Abolition) Act, 1970 does not provide for automatic
absorption of contract labor upon the appropriate Government issuing a notification under
sub-section I of Section 10 prohibiting contract labor employment in any process, operation,
or other work in any establishment. As a result, the major employer cannot be forced to
order the absorption of contract labor employed at the establishment in question.

2
CIVIL APPEAL NO. 1272 OF 2011
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 In the case of Balwant Rai Saluja & Anr., the Apex Court held that the relevant factors to be
taken into consideration to establish an employer-employee relationship would include inter
alia:
o (i) who appoints the workers;
o (ii) who pays the salary/ remuneration
o (iii) who has the authority to dismiss
o (iv) who can take disciplinary action
o (v) whether there is continuity of service and
o (vi) extent of control and supervision i.e. whether there exists complete control and
supervision.

By applying the above test, it can only be seen that the members of the petitioners Union are
paid their wage or remuneration through the Contractors engaged by the NHPC. The court
held the view that the materials available on record is not sufficient to show that there is a
master servant relationship between the petitioners and the HPCL.
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BIBLIOGRAPHY

I. ARTICLES & RESEARCH PAPERS

i. Youth inactivity in India at 30%, highest among emerging markets: IMF economist by Nidhi
Bhati
ii. Uber, Postmates Suit Says California Law on Gig Work Is Unconstitutional by Eric Savltz
iii. California Truck Ruling Exposes Weakness of Gig Economy Law AB5 by Stephen Carter
iv. India and the Gig Economy by Indus Law Partners

III. MISCELLANEOUS
i. Merriam Webster Online Dictionary, Entry 3 of 9