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Contract labour is a method

Contract labour is a method


Contract labour is a method where a contractor hires workers under a contract for a set amount of time. A worker is referred to as a “contract laborer” when they are hired by a contractor to perform work for an establishment for a set length of time, either with or without the knowledge of the principal employer. Contract workers are indirect employees; they are either daily bettors or receive their aggregated daily pay at the end of each month. The contractor is in charge of selecting, managing, and paying contract labourers.


Contract labourers are used in India in a variety of industries for work ranging from highly skilled to semi-skilled. The status and circumstances of contract labour were examined both before and after independence by It has been determined by several commissions, committees, the Labour Bureau, the Ministry of Labor, etc. that the main characteristics of contract labour are the underwhelming economic circumstances of the workers, the ad hoc nature of their employment, the lack of job security, etc. In order to ensure that contract workers are functioning properly and to guard against management abuse, the legislature passed the Contract Labour (Regulation & Abolition) Act, 1970, which went into effect on February 10, 1971.


The Goals and Purpose of the Act


The Act’s goal and purview are as follows:

  • to avoid contract labour being abused.
  • To offer suitable and livable working circumstances.
  • to control how the advisory boards operate.
  • To establish guidelines and standards for the registration process of the businesses that use contract labour.
  • To outline the prerequisites and the licencing process for contracts.
  • To set the penalties in the event that the Act’s offences are violated.


Application of the 1970 Act on Regulation and Abolition of Contract Labor


Section 1(4) lists the establishments to which the Act applies:

  • Any place of business where twenty or more employees work there or have worked there under contract on any given day in the last twelve months.
  • Any contractor who, on any day during the previous 12 months, employed or employed 20 or more workers as contract labour.
  • If the workers are engaged by the establishment as “contract labour,” the Act also applies to that establishment. According to Section 2(b) of the Act, a workman is presumed to be hired in or in conjunction with such employment by or through a contractor with or without the knowledge of the principal employer and to be employed as contract labour.
  • Any organisation or facility that employs workers on a temporary or casual basis is exempt from the Act. According to the Act, a work is considered to be of an intermittent nature if it was undertaken for less than 120 days during the previous calendar year or if it was performed non-seasonally for less than 60 days each year.
  • A person who is appointed in an advisory or managerial capacity is exempt from the Act.

The Contract Labor (Regulation & Abolition) Act of 1970’s fundamental provisions

The fundamental guidelines are listed below under the Contract Labour (Regulation & Abolition) Act, 1970.


The advisory boards’ make up


The establishment and makeup of the Central and State Advisory Boards are covered in Chapter 2 of the Contract Labour (Regulation & Abolition) Act, 1970. These boards’ duties include carrying out all necessary tasks assigned by the Act as well as advising the federal and state governments, respectively, on matters pertaining to the administration of the Act.


The Board of Central Advisory


The Central Government may propose eleven to seventeen members to represent the government, railways, coal industry, mining industry, contractors, workmen, and any other fields which, in the view of the Central Government, are necessary to represent on the Central Advisory Board. The Central Advisory Board should have a representative from the Central Government.


The number of members nominated to represent the workers must, according to Section 3 of the Act, be at least equal to the number of members nominated to represent the primary employers and the contractors.


Board of State Advisors


The makeup of the State Advisory Board is outlined in Section 4 of the Contract Labor (Regulation & Abolition) Act, 1970. The state government may designate nine to eleven members to represent the state government, industry, contractors, workmen, and any other sector for which, in the absence of the Chairman and Labour Commissioner, any other official would be chosen by the state government. In the state government’s judgement, they should be represented on the State Advisory Board. However, the number of candidates for the workmen’s representative position must not be less than the number of candidates for the primary employers and contractors.


Under this Act, the Central and State Advisory Boards may establish committees as they see fit. The committees will operate in accordance with the Act’s guidelines and fulfil all relevant tasks and obligations.


Registration requirements for businesses that use contract labour


The Act specifies the correct procedure for registering businesses that use contract labour. Such individuals, who are Gazetted Officers of the relevant government, will be appointed by an order published in the Official Gazette. Registration offices under Chapter 3 of the Act are those designated by the government as it sees fit. It also specifies the parameters in which a registering officer must execute the authority granted to them by the Act.


Registration of specific businesses


The registration process for establishments covered by the Contract Labour (Regulation & Abolition) Act, 1970, is outlined in Section 7. The registering office must receive an application from the chief employer of such an establishment in the prescribed manner. Within the time frame allotted for registering the establishment, the competent government must publish a notification in the Official Gazette. The registering office will only accept applications after the specified period has passed if the registering officer is satisfied. A good enough reason kept the applicant from submitting the application on time.


The registering office will register the establishment and issue the major employer with the registration certificate following the completion of the registration application.


Registration revocation


If the registering office determines that an establishment’s registration was obtained by deception, the omission of a material fact, or for any other reason that renders the registration invalid, it may have its registration revoked with the permission of the relevant government. However, before cancelling the registration, the registering office must, however, offer the establishment’s major employer a chance to be heard.


Employment of contract labour is not permitted.


Following consultation with the relevant parties, the central or state government As stated in Section 10 of the Act, advisory boards may forbid the use of contract labour in any process, operation, or other job in any business.


Contractor licencing


The key requirements and the process for licencing contracts are laid out in Chapter 4 of the Contract Labour (Regulation & Abolition) Act, 1970. The procedures for awarding, cancelling, suspending, and changing a licence are outlined in this chapter.


Licensed officials are also appointed.

The appropriate government may designate Gazetted Officers of the government as licencing officers and specify their authority and responsibilities under Section 11 of the Act in an order published in the Official Gazette.


License issuance, revocation, suspension, and modification


Any request for a licence under this Act must include information about the location. The type of process, activity, or work that contract labour is to be used for within the establishment is to be determined. The issued licence will be good for the allotted term and may occasionally be renewed.


However, the licencing officer may revoke, suspend, or amend the licence as necessary after giving the licence holder a reasonable opportunity to be heard if it comes to their attention that the licence was obtained through misrepresentation, the omission of any material fact, a failure to comply with the conditions of the licence, or a violation of any Act provision.


The technique for appealing


The Act’s Section 15 says that any individual who feels wronged by an Act provision has thirty days from the date the order is conveyed to them to file an appeal with an appellate authority appointed by the relevant authorities.


Providing wages


Each employee hired under contract labour must receive the required wages from the contractor before the allotted time period has passed. The major employer will be responsible for making the entire payment of wages due or the outstanding amount due if the contractor fails to make the payment within the specified time frame. The Commissioner of Labor is responsible for setting the rate.


Health and safety of contract workers


The primary employer is required by Chapter 5 of the Act to make sure the contractor offers the following amenities in accordance with the regulations set forth by the relevant authorities.


  • One or more canteens must be provided and maintained by the contractor for the use of such contract labour if the contractor is using more than 100 workers.
  • The contractor is responsible for providing and maintaining restrooms or other appropriate facilities that are adequately illuminated, ventilated, clean, and comfortable for contract labourers working in establishments that require them to stop at night.
  • The contractor is responsible for providing additional amenities including drinking water, gender-specific restrooms and urinals, washing facilities, first aid, etc.


The violation of the rules governing employment of labour


The Contract Labour (Regulation & Abolition) Act, Section 23, provides that anyone who violates any provisions or rules regarding the employment of contract labour or contravenes any condition of a licence granted under this Act will be punished with imprisonment for a term that may extend to three months or with a fine that may extend to one thousand rupees or both, according to the 1970 Act, which regulates the proper functioning of the Act’s provisions.


According to the Act, if a firm violates any of its terms, they will all be held accountable, including the company and anybody else who was present while the offence was committed.


Recognition of the offences


No court lower than a Presidency Magistrate or a Magistrate of the First Class shall try any offence punishable under this Act, according to Section 26, which states that a court of law may only take cognizance of an offence after receiving a complaint from an inspector.

The Contract Labor (Regulation & Abolition) Act of 1970’s constitutionality

This Article of the Indian Constitution is not broken by the application of this Act. In the proceeding known as Gammon India Ltd., et al. vs. Union of India and others (1974), The Act’s constitutionality was contested on the grounds that Section 28 granted arbitrary and unrestrained power, in violation of Articles 14 and 15 of the Indian Constitution. Additionally, it was argued before the Court that Section

On the grounds of undue delegation, Section 34 of the Act, which gives the Central Government the authority to establish any provisions for easing difficulties, is unconstitutional. According to the Supreme Court, Section 34 of the Act does not constitute undue delegation because it applies to the internal operations of the administrative apparatus and gives the Act’s provisions force. The petitions were rejected by the court, which also determined that the Act is constitutionally valid and does not violate the Constitution.




The Contract Labour (Regulation & Abolition) Act of 1970 is a significant piece of legislation for safeguarding the rights of employees hired by contractors under a contract. However, the Act contains a number of shortcomings that should be considered. The Act should be changed to take this into consideration by the legislature.


  • The Act fails to distinguish between essential and incidental activities, which has prevented implementation.
  • The Act specifies that it applies to every organisation that employs 20 or more contract labourers; hence, by employing fewer than 20 workers, the business or contractor can escape their obligation to the welfare of the workers.
  • The establishments frequently abuse the rules by obtaining licences under various names. Therefore, in order to address this issue, there should be a single point of contact for granting licences and a licencing body to handle the matter in each state.

The Act’s criminal penalties are insufficiently dissuasive; therefore, they give the principal an advantage. Employers would choose to risk prosecution rather than adhere to the Act’s rules.

  • The Act should expand the education programme for contract labourers because the majority of workers are inexperienced, uneducated, and unaware of their legal rights.
  • The Act makes no specific or separate provisions for filing claims or for short/non-payments, unauthorised deductions, etc. These claims are made under the Minimum Wages Act of 1948 or the Payment of Wages Act of 1936, which raises questions about their application. Therefore, including these sections will improve the Act’s functionality.




Since there was no legislation that addressed contract labour, the Contract Labour (Regulation & Abolition) Act, 1970 was passed to stop the exploitation of contract labourers. However, the Act has some drawbacks. This must be taken into account by the legislature, and any adjustments made should be put into effect. The Act should also be made simpler for major employers and contractors, as well as provide improved protections and facilities for contract labourers.



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