THE CONTRACT LABOUR

(REGULATION AND ABOLITION)

ACT, 1970
Team Members: | 2 Devender Anand | 9 Prasad Dangle |10 Shrusti Desmukh |
|11 Neetu Dhoot | |12 Gautam Ghosh | 14 Harish Nagarajan |
 About the Act
• The contract Labour (Regulation & Abolition) Bill was passed on 5th September 1970 (37 of 1970)
• The contract Labour (Regulation and Abolition) (A Amendment) Act, 1986 (14 of 1986)
• The delegated Legislation Provisions (Amendment) act, 2004 (4 of 2005)

Objective:
• To regulate the employment of contract labor in certain establishments and to provide for its
abolition in certain circumstances and for matters connected therewith. 

Whom does it Apply to?

• The Act applies to every establishment in which 20 or more workmen are employed or were
employed on any day on the preceding 12 months as contract labour
• To every contractor who employs or who employed on any day of the preceding 12 months 20 or
more workmen. The Act also applies to establishments of the Government and local authorities
as well.
• It does not apply to establishments where the work performed is of intermittent or casual
nature.
Who is a Workman(contract labour)?
A workman shall be deemed to be employed
as "contract labour" in or in connection with
the work of an establishment when he is hired in or
In connection with such work by or through a
contractor, with or without the knowledge of the
principal employer;

A workman is “ Any person employed in or in

connection with the work of any establishment
to do any skilled or semi-skilled or unskilled,
manual, supervisory, technical or clerical work
for hire or reward whether the terms of the
employment be expressed or implied but does
not include:
a. Persons employed mainly in a managerial or
administrative capacity
b. Persons being employed in a supervisory capacity
draws wages exceeding Rs.500/ per month.
c. An out worker.[Section 2 (i)]
 Registration of Establishments, Licensing of
Contractors & Revocation
• Establishment to be registered as principle employer with the appropriate authorities
• Every contractor required to obtain a license and not to execute or undertake any work through contract
labour except under and in accordance with the license issued by the licensing officer
• License issued is subject to conditions as to hours of work, fixation of wages and other essential amenities
as laid in the rules

Revocation, suspension and amendment of licences.-

(1) If the licensing officer is satisfied, either on a reference made to him in this behalf or otherwise, that--
(a) a licence granted under section 12 has been obtained by misrepresentation or suppression of any material
fact, or
(b) the holder of a licence has, without reasonable cause, failed to comply with the conditions subject to
which the licence has been granted or has contravened any of the provisions of this Act or the rules made
thereunder, then,without prejudice to any other penalty to which the holder of the licence may be liable
under this Act, the licensing officer may, after giving the holder of the licence an opportunity of showing
cause, revoke or suspend the licence or forfeit the sum, if any, or any portion thereof deposited as security
for the due performance of the conditions subject to which the licence has been granted.
(2) Subject to any rules that may be made in this behalf, the licensing officer may vary or amend a licence granted
under section 12.
Payment of Wages, Welfare and Health of Contract
Labour- To be provided by Contractor
Canteens: Shall be provided by contractor if 100 or
more contract labour provided.
Rest Rooms: Wherein contract labour is require to
halt at night in connection with the work of an
establishment
Other Facilities: Supply of drinking water, latrines,
urinals & washing facilities
First – aid Facilities: Readily accessible equipped with
prescribed contents
Responsibility for 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
authorised representative of the Principal Employer.

In cases of failure on the part of the contractor to

provide the above mentioned facilities, the
Principal Employer is liable to provide the same.
 Registers
Principal Employer: To maintain a register of contractor in respect of every establishment in
Form XII

Contractor
1. To maintain register of workers for each registered establishment in Form XIII
2. To issue an employment card to each worker in Form XIV
3. To issue service certificate to every workman on his termination in Form XV
4. Maintain Muster Roll and a register of wages in Form XVI & XVII resp and combined in Form
XVIII
5. Maintain a Register of Deductions for damage or loss, Register of Fines and Register of
Advances in Form XX, Form XXI & Form XXII respectively
6. Maintain a Register of Overtime in Form XXIII
7. To issue wage slips in Form XIX, to the workmen at least a day prior to the disbursement of
wages.
8. Obtain the signature or thumb impression of the worker concerned against the entries relating
to him on the Register of wages or Muster Roll-Cum-Wages Register
 Penalties and Procedure
• Obstructions: In the work of inspector result in imprisonment of 3 months or fine of Rs. 500/-
or both

• Contravention of provision: Punishable with imprisonment of 3 months or fine of Rs. 1000/- or

both. Additional Rs. 100/- every day in case of continuation

• Offences by companies

Laws, Agreement or standing orders inconsistent with the Act-Not Permissible

• Unless the privileges in the contract between the parties or more favorable than the prescribed
in the Act, such contract will be invalid and the workers will continue to get more favorable
benefits
 Some Important Cases:
• Effect of absence of registration or licence:
Dena Nath v. National Fertilizers Ltd. 1992 I
C.L.R. 1 (S.C.)
• Held: The contract labour do not become
direct employees of the principal employer.
The only consequences provided in the Act in
such circumstances is the penal provision as
envisaged under the Act for which reference
may be made to Ss.23 and 25 of the Act.
 Some Important Cases:
• Bonus, Gratuity and Wages:
Cominco Binani Zinc Ltd. v. Pappachan 1989 I CLR
151 (Ker. H.C).
Held: The wages due to the workmen does not
include Bonus or Gratuity. While defining the term
wages, the Industrial Disputes Act and Payment of
Wages Act specifically excludes bonus and gratuity
from its purview. The petitioner is therefore liable
to pay arrears of wages and nothing more.
 Other Important Cases:
• Equal Wages to Contract Labour:
Investigating and Security Services (India) (P) Ltd. v.
Commissioner of Labour 1996 I LLJ 1049 (A.P. – D.B.).
• Liability of new contractor:
Bijli Mazdoor Panchayat v. State of Gujarat 1996 II
CLR 721 (Guj. H.C.)
• Direct employees if canteen is statutory
Hari Shankar Sharma v. M/s. Artificial Limbs
Manufacturing Corporation of India 1997 II C.L.R.
631 (All. H.C.).