Contract Employees in India

8/2/2019 Contract Employees in India

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ISSUES AND PROVISIONS

Contract Employees in India


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Table Of Content

1. Introduction Contract Labor

2. Contract Labor Act, 1970

3. Penalties and Procedure of Contract Labor Act.

4. Social and Ethical Issues.


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Contract Employee?

A Person is deemed to be employed as Contract Labour when he ishired in connection with the work of an establishment by or through acontractor.

Contract workmen are indirect employees; Persons who are hired,supervised and remunerated by a contractor who, in turn, iscompensated by the establishment.

Contract labour has to be employed for work which is specific and for

definite duration. If the employer prematurely terminates the services of the contract

employee, that individual in many instances will be able to collect thefull amount agreed to under the terms of the agreement. The onlyexception is if the contract employee engaged in misconduct that led tohis or her termination.


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Characterstics Of Contract Labour

Inferior labour status

Casual nature of employment

Lack of job security

Poor economic conditions


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THE KEY PROVISIONS

Contract Labour Act, 1970


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Objective: Contract Labour Act, 1970

The Object of the Contract Labour Regulation and Abolition Act, 1970 isto prevent exploitation of contract labour and also to introduce betterconditions of work.

Where contract labour should not be employed

The work is perennial and must go on from day to day; The work is incidental to and necessary for the work of the factory; The work is sufficient to employ considerable number of whole time

workmen; and The work is being done in most concerns through regular workmen.


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What is Contract Labour Act, 1970

The Contract Labour (Regulation and Abolition) Act, 1970 was broughton the Statute Book to regulate the employment of Contract Labour incertain establishments and to provide for its abolition in certaincircumstances.

ApplicationThe Act applies to the Principal Employer of an Establishment and theContractor where in 20 or more workmen are employed or wereemployed even for one day during preceding 12 months as ContractLabour.

It does not apply to establishments where the work performed is ofintermittent or seasonal nature.


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Contract Labour Act, 1970

The Act enjoins Joint and Several responsibity on the PrincipalEmployer and the Contractor.

The Principal Employer should ensure that the Contractor does thefollowing:

a) Pays the wages as determined by the Government, if any, or;b) Pays the wages as may be fixed by the Commissioner of Labour.c) In their absence pays fair wages to contract labourer.d) Provides the following facilities: Canteen , Rest rooms, Drinking

water, First Aid, Creche

e) Maintains various registers and records, displays notices, abstractsof the Acts, Rules etc.f) Issues employment card to his workmen, etc.


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PENALTIES AND PROCEDURE

Obstructions

Whoever obstructs an inspector in the discharge of his duties under this Act orrefuses or wilfully neglects to afford the inspector any reasonable facility formaking any inspection, examination, inquiry or investigation authorised by orunder this Act in relation to an establishment to which, or a contractor to

whom, this Act applies, shall be punishable with imprisonment for a termwhich may extend to three months, or with fine which may extend to fivehundred rupees, or with both.

Contravention of provisions regarding employment of contractlabour

Whoever contravenes any provision of this Act or of any rules made

thereunder prohibiting, restricting or regulating the employment of contractlabour, or contravenes any condition of a licence granted under this Act, shallbe punishable with imprisonment for a term which may extend to threemonths, or with fine which may extend to one thousand rupees, or with both.


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PENALTIES AND PROCEDURE

Offences by companies

If the person committing an offence under this Act is a company, thecompany as well as every person in charge of, and responsible to, thecompany for the conduct of its business at the time of commission ofthe offence shall be deemed to be guilty of the offence and shall be

liable to be proceeded against and punished accordingly

Inspecting staff

The appropriate government may, by notification in the Official

Gazette, appoint such persons as it thinks fit to be inspectors for thepurposes of this Act, and define the local limits within which theyshall exercise their powers under this Act.


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TREATMENT OF CONTRACT EMPLOYEES

Social and Ethical Issues


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The Allied Nippon factory Incident

On the fateful Saturday a mob of workers lynched the assistant generalmanager of Allied Nippon, Yogendra Chaudhary. Sahibabad SHOAvneesh Kumar Goutam feels, "It stemmed from a sense of insecurityamong the permanent laborers: what if they increase the number ofcontract laborers and fire us."

On the other hand, MS Chaudhry, VP-HR at Allied Nippon, said, "Itwas the removal of five contract employees that triggered it. There weredisciplinary issues as well. But we never thought the workers wouldtake such an extreme step."

Chaudhry, who was present in the factory on Saturday as well, "just

about managed to escape". His hand was bruised and there werestitches on his head. Two of his other colleagues weren't as lucky; theywere to be admitted to ICU.


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Contract Employees in India

As much as 30% of the labor force in India is on contract or astemporary workers. Worse still, 99% of these 30% are in theunorganized sector. There is clearly a labor market emergency.

Ideally, not more than 5-10% of the workers should be temporary orcontract workers.

One million people will join the labor force every month for the next 20years. The labor laws need to be urgently reformed.

As Peruvian president Alan Garcia remarked, it's time, to eradicate and

eliminate slavery in the 21st century by giving employees of contractorsmore rights.


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Unequal Rights

Workers employed on contract basis, left in the lurch by thecontractors, have no social security or compensation in case of job loss,accident and injury.

The management has been found to be cautious in making contract

labor permanent because of fluctuations in production schedule, as wellas tremendous cost pressures.

It is a difficult task for a laborer to make a livelihood in an industrialarea. The inflation has been rising steadily. Moreover, a lot of disparity

prevails in an industrial belt.


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Unequal Rights Contd.

Violence was triggered by police atrocities.

More often than not, they are indiscriminately terminated by theemployers.

They are not paid the minimum wages.

They are not allowed to make a union; the basic right of association istaken from them, their bargaining rights are curtailed.

The issue of dignity also counts a lot.

They need social security like savings in the form of PF. Why shouldthey just be hired and fired


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Way Out: Unequal Rights

There are three major issues that need to be urgently addressed.

1. Non-payment of minimum wages needs to be looked into seriously.

2. Employers don't let workers register unions or join any trade union.

Workers are sacked and harassed if the management comes to knowthat they are forming an association.

3. Contract labor employment is rampant in non-standardized andatypical forms of employment. These need to be addressed on apriority by the government if we want to save ourselves from a

possibly dangerous situation in the near future.


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Inadequate Laws

The unions argue that the contract workers are dependent on middleman or agents who hire out workers to employers, often in labor gangs.

Such workers are usually indebted to the contractors and this debtbondage leads to exploitation of workers in various ways.


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Way Out: Inadequate Laws

The rule book categorically says:If the contract labor performs the same or similar kind of work as theworkmen directly appointed by the principal employer, the wage rates,holidays, hours of work social security and other conditions of serviceof contract labor shall be the same as available to the regular workforce.

The problem also lies in the way the Contract Labor (Regulation &

Abolition) Act, 1970, is interpreted.

The Supreme Court, through its judgment in the Air India StatutoryCorporation case, regularized employees in the case of industries wherethe contract labor is prohibited, but subsequently over-ruled it in theSteel Authority of India Ltd case. There is a need to amend the Act insuch a way that it cannot be challenged.


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Govt. Role

In the conference of state labor ministers in January 2011, Anil Swarup,director-general labor welfare (DGLW), proposed to amend the Act andadd two provisions.

1. In case where the contract labor performs the same or similar kind ofwork as the workmen directly appointed by the principal employer, thewage rates, holidays, hours of work, social security and other

conditions of service of contract labor shall be the same as available tothe workmen on rolls of the principal employer.In case same or similar kind of work is not being performed by theworkmen directly employed by the principal employer, the appropriategovernment will notify the wage rates, holidays, hours of work, socialsecurity and other conditions of service.

2. Whenever a contract is given to a contractor, the contract agreementbetween the principal employer and the contractor should clearlyindicate the wages contribution towards social security schemes andother benefits that are to be paid by the contractor to the contractedworkman. The Cabinet Secretariat had asked the National Institute of Labor to

conduct a feasibility study of the two amendments mooted.


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Collective Bargaining

Experts at the ILO (International Labor Organization) believe thatproper and regular communication and understanding between themanagement and workforce is something every enterprise should strivefor and suggest collective bargaining as an efficient tool to arrive at anagreement that satisfies all stakeholders.

In many countries, management, as well as workers, are not aware of

the efficacy of collective bargaining as an instrument of improvingworkers' rights and also of improvement in the productivity of thecompany. It provides clarity in the working relationship between thelabor and management and helps prevent and solve disputes.

These written agreements between the employers and laborers andtheir representatives can go a long way in preventing small conflicts

between the management and the workers from escalating and goingout of hand to take the form of major disputes. Enterprises that do not have the capacity to reach collective agreements

can set up mechanisms like committees, which can createcommunication channels between the management and the workforce.


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Bibliography

Sharma Sukalp & Yadav Kiran. (2010). The Blue Collar Challenge.Retrieved May 16, 2011, from

http://www.financialexpress.com/news/the-blue-collar-challenge/713893/

http://www.ehow.com/about_5144620_contract-employee.html

http://labour.nic.in/annrep/files2k1/lab10.pdf
http://www.financialexpress.com/news/the-blue-collar-challenge/713893/0http://www.ehow.com/about_5144620_contract-employee.htmlhttp://labour.nic.in/annrep/files2k1/lab10.pdfhttp://labour.nic.in/annrep/files2k1/lab10.pdfhttp://www.ehow.com/about_5144620_contract-employee.htmlhttp://www.financialexpress.com/news/the-blue-collar-challenge/713893/0

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Contract Employees in India