2. Members of the Study Team
Adv. Shrikant Dharap
Senior Advocate, Bombay High Court,
Senior functionary of Bharatiya Mazdoor Sangh (BMS)
for the last over three decades
Tel. 91 22 26478754 Mobile 9821471767
Adv. Vinay Menon
Advocate, Bombay High Court
Yashwant Thakar
Advisor, RMP’s Centre for Development, Planning and Research
Suryakant Paranjape
Senior Functionary, BMS and Bharatiya Shramshodh Mandal
Documentation Consultants
Pulind Samant, Mumbai
Niranjan Welankar, Vasai
Project Coordination
Mrudul Bapat,
Project Officer, Rambhau Mhalgi Prabodhini, Mumbai
3. Including the Excluded
A Study of the Impact of Contract Labour
(Regulation and Abolition) Act, 1970
S M Dharap
Advocate, Bombay High Court
Mumbai Office:
17, Chanchal Smurti, G.D. Ambekar Road, Opp. Shriram Industrial Estate,
Wadala, Mumbai - 400 031.
Tel: 022 - 2416 6966 / 2418 5502, Fax: 022 - 2415 6725.
RMP - KEC:
Keshav Srushti, Essel World Road, Uttan Village, Bhayander (West), Thane - 401 106.
Tel: 022 - 2845 0101, Fax: 022 - 2845 0106
Website: http://www.rmponweb.org
Including the Excluded
5. Contents
S. No. Topic Page No.
1. List of Tables 4
2. Preface 5
3. Background 7
4. Chapter I: Research Design 9
5. Chapter II: Literature Review 12
6. Chapter III: Case Law and the Role of Judiciary 23
7. Chapter IV: Data Analysis 34
8. Chapter V: Views of Trade Unions 62
Chapter VI: Views of Law Practitioners, Consultants
9. 70
Educationists
10. Chapter VII: Conclusions 73
11. Chapter VIII: Recommendations 76
Annexure I: Contract Labour
12. 78
(Regulation and Abolition) Act, 1970
Annexure II: Conclusions of Workers Symposium
13. on Policies and Regulations to Combat Precarious 91
Employment (Geneva, 4 – 7 October 2011)
14. Annexure III: Interview Schedules 96
Including the Excluded
6. List of Tables
Sr. No. Title
1. City- wise distribution of respondents
2. Type of Units
3. Types of Management or Ownership
4. Age Wise Distribution of contract workers
5. Education of Contract Workers
6. Number of Dependents
7. Ownership Pattern of Residence
8. Number of Migrants.
9. Periods of Work
Distribution of contract workers According to Companies
10.
Where They Have Worked
11. Number of Years Working with the current Contractor
12. Nature of Work
13. Engagement in Any Productive/ Main Work
14. Average Wages
15. Wages According to Type of Unit
16. Place Wise Wages
17. Salary Received in Last 3 Years
18. Facilities. (Only Positive Responses)
19. Awareness About the Act
20. Available Staff in the Offices of the Assistant Labour Commissioners
21. Details of Licenses Issued and Number of contract workers
22. Details of Inspections Carried Out
23. Enforcement of Contract Labour (R and A) Act, 1970 (96-00)
No. Of Cases Received / Disposed of During the Last Five Years under Rule 25 (2) (v) (a) and (b)
24.
of the Contract Labour (R and A) Central Rules, 1971 Relating to Payment of Wages (96-00)
25. Enforcement of Contract Labour (R and A) Act, 1970 (04- 08)
No. Of Cases Received / Disposed of During the Last Five Years under Rule 25 (2) (v) (a) and (b)
26.
of the Contract Labour (R and A) Central Rules, 1971 Relating to Payment of Wages (03-06)
27. National figures about cases
Including the Excluded
7. Preface
The Contract Labour (Regulation and Abolition) Act 1970 (hereinafter referred to
as the Act) has been in force for last 42 years. During these 42 long years several
changes have occurred in the industrial sector. Especially after opening the economy
in the early nineties and globalisation, the industrial picture of India has changed
completely. Adoption of high-tech methods for the production and the quality of the
products has assumed an exceptional importance, primarily because of the market
oriented business and industrial policies adopted by the Government as well as by the
practices of industrialists/businessmen. It has also extremely affected the employer
- employee relations. Output and profitability have assumed greater importance,
encouraging some employers to bypass or find loopholes, in the laws enacted for
protection of the interests of the workers, with the sole objective of achieving higher
productivity, which in turn has affected this relationship. One of such laws which
was passed for the protection of the contract labour was the Act, Contract Labour
(Regulation and Abolition) (CLRA) 1970. The decisions by the Courts, in respect of
this law, are now being used for the purposes contrary to the purpose for which the
Act was enacted.
Our Constitution, enjoins the responsibility on each of the four factors of production,
which should consider each other’s interest in this era of cooperation. However this
shared responsibility has been largely ignored.
We met several Trade unionists, lawyers and such other persons who have worked
in the field for long time. We tried to analyse and find out as to what is the reason for
this Act becoming impracticable and redundant and whether it should be repealed
or amended and if amendment is to be carried out, what can be the basis on which
we can arrive at relevant conclusions for suggesting amendments or whether a
fresh legislation should be enacted by incorporating such provisions which can be
expected to fulfil the objects of the Act and also remove its shortcomings.
It was thus necessary to approach some leaders of the labour unions, employers’
associations, and lawyers appearing on both sides, contractors and contract workers
to gather impartial and unbiased information to arrive at relevant conclusions.
An approach under Right To Information Act was required to be made wherever
information from the Government machinery was not readily available.
The project was conceived by Adv. Shrikant M. Dharap, a senior lawyer specialising in
labour law, practising in Bombay High Court. He is also one of the senior national level
functionaries of the Bharatiya Mazdoor Sangh (B.M.S.), a leading labour organisation
in India for the last over three decades. He was duly assisted by a team comprising
Adv. Vinay Menon, Yashwant Thakar and Suryakant Paranjape.
We must say that our endeavour was not easy one as we found a lot of psychological
resistance on the part of employers and surprisingly even some unions, in furnishing
Including the Excluded
8. the information sought. Certain employers went to the extent of prohibiting the entry
of the researchers of Rambhau Mhalagi Prabodhini.
The work was carried out in spite of all such difficulties. Accordingly, a report was
prepared and the conclusions drawn, which are being presented in this report. We
also would like to make certain recommendations, which are stated separately.
The exercise was not undertaken with an objective of finding fault or assigning blame,
but only with an earnest desire to ascertain, as to whether, the present Act, with the
interpretations placed by the Hon’ble Supreme Court and High Courts have helped
in achieving the objectives of the Act for which it was enacted and if it is so, what are
the other factors responsible for that. While researching the topic from various angles,
we did come across a few other similar studies undertaken in the past by different
institutions and organisations, which we have taken due cognisance of in the body of
the report, wherever appropriate.
We hope this report serves the cause of the most under previliged and highly neglected
class of unorganised labour in our country. To that end this report very clearly tries to
point out the gaping inadequacies in the whole system including the Act itself and its
present day administration.
Last but not the least, it is only necessary to thank some people and appreciate
their effort in making this project a meaningful one. As aforesaid, Adv. Dharap has
been the initiator and the leading light throughout. He successfully solicited strong
contributions to the body of the project, through all his team members. Adv. Dharap
was so very keen about the success of this project that he voluntarily took pains
to organise some financial support through his personal friends. Some valuable
assistance was rendered by some other of his such as members of Labour Law
Practitioners’ Association, Mumbai, Thane, Nashik and Pune trade unionists and
representatives of employers’ associations and that too at their own costs. We are
grateful to all of them.
Vinay Sahasrabuddhe
Director General
Rambhau Mhalgi Prabodhini April 30, 2012
Including the Excluded
9. Background
The triggering point of this project was the judgment of the Supreme Court in Steel
Authority of India Case which caused us to refer back to the history, the purpose and
the object of the legislation known as Contract Labour (Regulation and Abolition) Act.
1970. When we refer to the background of the legislation, which is almost fully covered
in the case of Standard Vacuum Company Vs. Its workmen, 1960 (Supreme Court),
which emphasised on the condition then prevailing that in absence of any legislation
or rules dealing with the conditions of service of the contract labour, the workers were
being exploited by the Industrialists.
We presume that the Hon’ble Supreme Court, in the said judgment, had rightly
given the guideline to the Government and as a matter of necessity, the Bill came
to be placed in July 1967 before the parliament, which resulted the Contract Labour
(Regulation and Abolition) Act of 1970. All the judgments delivered by the Supreme
Court thereafter, right up to the 2001 Case of Steel Authority of India Ltd., were
studied and pondered over, resulting in a disturbed state of mind about not so positive
results of the decisions reached in respect of this Act. The 1st Case of the Supreme
Court, in 1971, separated the cases under this Act from the coverage of Industrial
Disputes Act 1947, on the ground that the new legislation was a special legislation
dealing with the subject matter under the Act and therefore, ousted the jurisdiction of
the forum under the I. D. Act 1947.
Alternative to this machinery was the creation and the formation of the State and
Central Advisory boards which was in the nature of an administrative body which was
made the sole alternative to the I.D. Act expecting that the machinery of the boards
would resolve all the issues. Strangely, these boards were not given any judicial
powers with a binding effect. This resulted in taking away the rights of the concerned
workmen to approach the Court under any law and who could not knock the doors
of any judicial forum having powers to deal with various aspects arising out of the
dispute. The Act more relies on the Government machinery functioning under the
Department of the Labour which in fact, as our experience goes, is totally inefficient,
inadequate and in some cases corrupt.
Another case in point and that too of recent origin is that of Jupiter Life Line Hospital,
Thane (Arbiter, Jan.’11) had engaged over 500 contract labour in various jobs, 77
of whom were engaged through one agency viz. ‘Rare Hospitality Services’ for
housekeeping work, which they had been doing continuously for 5 years, ever since the
said hospital was established. In March 2009, the said contract labour was transferred
arbitrarily to distant places in and around Mumbai. As they were earning between
Rs. 3000 and Rs. 4000 a month, they couldn’t manage the conveyance expenses,
consequent to said transfers. They complained to the State Labour Ministry, who
after going through the facts of the case, abolished the said contract work, but the
complainant workers lost their jobs, as there was no provision in law, for prohibiting
Including the Excluded
10. the practice as an interim relief on receipt of the complaint or/and for regularisation of
their services post abolition and. Thus it was a victory in principle for them, but which
brought along the ‘gift’ of job-loss.
All these and such other shortcomings resulted in denial of justice to the workers, upon
the abolition of contract and the regularisation of their employment with the principal
employer and in fact prolonged the dispute where approach was only to the High Court.
In the intervening period several judgments show that technicalities crept in, as a result
of which, instead of dealing with the main issue, the Courts got involved in dealing
with the technical issues. This resulted, unfortunately, in keeping aside the main issue
of abolition of the employment of contract labour and regularisation with the principal
employer or regulating their conditions of service to a possible extent, wherever
such regularisation was not possible. The classic example is of the judgement of the
Steel Authority of India Ltd., where the main issue was as to the definition of the
term “Appropriate Government”. All these exercises undertaken by the SC resulted
in the continuance of Contract labour in the same status in which they were placed
and denying all hopes of contract workers in getting the status of permanency with
the principal employer. The study of cases also shows that the Courts have deviated
themselves from the earlier principles laid down by them while interpreting the
provisions of law. The glaring example is of statutory and non-statutory canteens. The
variation in various pronouncements and the approach of the Courts has, according
to us, resulted in making the Act redundant or inapplicable. We also thought that the
interpretations made by the Hon’ble Courts, have deviated from the philosophy of
labour jurisprudence, as espoused by the earlier decisions of the Hon’ble Supreme
Court.
Including the Excluded
11. Chapter I
Research Design
1. Objectives of the Study
In this study efforts are made to find out whether any improvement or changes have
occurred in the conditions of the contract labour by the implementation of the Act
and whether the purposes for which this law was enacted have been fulfilled. Keeping
in mind this main objective, following points were proposed to be studied in details,
during this survey:
1.1 To find out the present conditions of the contract workers in the context of the
Act by visiting and interviewing them and to find out the conveniences and
facilities available at their work places.
1.2 To understand the mechanism and methodology of the implementation of
the Act.
1.3 To carry out comparative study of the various cases and decisions of the
courts thereon in respect of the implementation of the provisions of the Act.
1.4 To examine the roles of the various players in the effective implementation of
the Act.
1.5 To study and discuss the deficiencies and shortcomings in the provisions of
the Act.
1.6 To consider the utility of the Act and also suggest the improvements required
to be made in the Act.
2. Scope of the Study
It covers a limited industrial zone of the Maharashtra state. Industrial areas viz.
Mumbai, Pune, Thane, Nashik and Aurangabad were selected for this study.
Some Government establishments have been included in this study because there is
a good proportion of the contract labour in such Government establishments. Thus
this survey is restricted to the workers appointed as contract workers and for whom
the Act is applicable.
3. Research Questions and Items of Information
A questionnaire was prepared for interviewing them and was tested prior to actual
start of the survey. The questionnaire was finalised on the basis of the findings of the
pre-testing. These contract workers were contacted at the following places:
Including the Excluded
12. Their actual places of work.
In or out of the premises of work, but at the time of their lunch break or after
their work hours were over.
Offices of the trade unions.
Offices of the Assistant Labour Commissioners.
Their residences.
The work of contacting these labourers and eliciting information from them was the most
difficult task of this study. These labourers were afraid that if they provide the information
asked for, they may lose their jobs. They were afraid of the intimidation by the contractors.
Hence they were required to be contacted in a number of ways. The method of direct
interviews was adopted for collecting necessary information for this survey. The workers
from large, medium and small scale private industries as well as those from Government
or Semi-Government establishments were selected for this study.
The other constituents related to the Act were also contacted and interviewed with
the help of different FGD checklists designed for the purpose and the data was
collected from them. These constituents include:
Contractors supplying labour.
Industrialists or owners of the businesses.
Officer in charge of administration and welfare in industry / business.
Labour advisors / consultants.
Trade union officials.
Association of employers.
In addition, the officials of the Labour Commissioner who are entrusted with the task
of implementation of the Act were also contacted. Discussions were held with the
Assistant Commissioners, Government Labour Officers and the Inspectors working
under them.
It was also necessary to obtain authentic information in this context from the
Government authorities. Offices of the Assistant Labour Commissioners were visited
a number of times and efforts were made to obtain the necessary information. But
we could not get any response from them. The required information was therefore
obtained by resorting to the Right To Information Act (RTI).
In this entire study, the Library Research was also equally important. The literature
available in respect of the Act was carefully gone through. Similarly the reports of
the discussions in the Loksabha in this regard, were also studied. This pilot study
being related to the Maharashtra State, Labour Policy of the state was also studied.
As a part of this study, members of the study team also participated in seminars,
symposia, and workshops pertaining to the topic under study.
10 Including the Excluded
13. Efforts were also made to collect information about the case studies related to this
subject. For this purpose the offices of the trade unions as well as the Assistant
Labour Commissioners and other such authorities were contacted. But except for
one case of Pune Municipal Corporation (PMC) establishment, in no other case-
information could be collected for the detailed study. The detailed information of that
case (PMC) has however been collected.
Information about the movements organised by various trade unions in this context
of laws concerning contract labour, the resolutions passed, efforts made for the
regulations and various cases raised by them has also been collected for this study.
This is because the role of the trade unions was very important for the successful
implementation of the Act and as such it was obligatory to take a note of the same
for this study.
It was also absolutely essential to obtain the details of the decisions of the various
courts in this regard, for this study. Effort is made for carrying out comparative study
of the main judicial decisions in this matter, during this survey.
Besides the above a number of focussed group discussions were also arranged
independently, with the concerned players.
4. Sampling Universe
Sampling universe for this study was the contract labours in industrial areas of Thane,
Pune, Nashik and Aurangabad cities in Maharashtra.
5. Sample Size and Method
It included views of 571 contract labours from industrial areas of the cities along with
a few FGDs of contractors and other key- persons related to labours. For this project
random sampling method was used.
6. Tools and sources of Data Collection
Major tool of data collection was the interview schedules for the contract labour
respondents. Mostly primary sources of data were used. Also, to complement the
interview schedules, Focused Group Discussions (FGDs) were conducted with some
contractors and key persons in order to understand their perspectives.
7. Data Analysis
Tabular and descriptive analysis of data was conducted.
Including the Excluded 11
14. Chapter II
Literature Review
In order to have a comprehensive approach towards the subject of research a
review of the past work in this regard is essential. The past work majorly consists of
work done at the government level and initiatives of non-government agencies.
Firstly let us review the documents produced by the government and allied
organisations.
I. Review of Government Documents
It is seen that there are 17 different forms required to be filled in as per the Act. Details
of the same are given in the Annexure I. It is difficult to scrutinise these large number
of duly filled in forms. The facilities of computerisation available in the offices of the
labour commissioners are greatly insufficient. This is a matter of grave concern.
These inadequacies are visible even to any casual visitor to the offices of the labour
commissioners, who are entrusted with the task of implementation of the Act. The
cases for regulation and abolition under this Act are received by the offices of the
State and Central Advisory Boards. But owing to the delay in these cases being sent
to these boards the contract workers whose cases are referred do not get justice as
they are no longer in the employment of the same contractor. When asked about the
numbers of meetings held by these boards, it was stated that only 74 meetings of
the Central Advisory Board are held so far. The information about the State Board
meetings was not available.
A special group was appointed in accordance with the recommendations of the
Indian Labour Conference (ILC) held on 20-21 February 2009 for the protection of the
interests of the contract workers under the Act. So far 4 meetings of this group have
been held. The report of this group was expected to be received by 31st December
2009. However the report is not readily available.
Similarly a Central Industrial Relations Machinery (CIRM) has also been appointed
under the chairmanship of the Chief Central Labour Commissioner. The work of
implementation of the provisions of the Act has been entrusted to this machinery.
But all these arrangements are found to be severely wanting in protection of the
interests of the contract workers.
There are a number of provisions in the Act, from registration to issuance of the
license, after issuance of the license inspection of the industries, to take cognizance
of the complaints when received and cancellation of licenses etc. But because
of the insufficiency of the implementing machinery, and basically because of the
12 Including the Excluded
15. unwillingness on the part of the existing machinery, enforcement of the provisions of
the Act is not effective, and now that the provision for approaching the courts of law
for removing the injustice done to the contract workers has not been for in this Act,
this machinery has become absolutely toothless.
Standing Labour Committee Session
In the 44 th session of the Standing Labour Committee (2011), the following was
mentioned:
As far as the issue of amendments in the Act and its Rules are concerned, a proposal
for the amendments was prepared. However, it was found desirable to have an impact
study of the proposal on the economy and financial implications for the Central and
the State Governments, including different sectors of production and employment
which depend on labour as one of the important input. The V.V. Giri National Labour
Institute, NOIDA was entrusted with the task and they have submitted their study
report. The report is now being examined by the Government
Apart from the above, the following resolutions were passed unanimously in the said
session:
i) All efforts should be made to ensure that the existing provisions of the Act and
the Rules made there under are implemente in letter and spirit.
ii) The labour enforcement machinery in the Centre and the State should be
strengthened by providing requisite manpower and other logistic facilities so
as to ensure effective implementation of labour related legislations.
iii) States are mandated to constitute Tripartite State Advisory Boards under the
Act. However, it was pointed out that a number of states do not have such
Boards constituted. It was unanimously resolved that such states should be
asked to constitute such Boards at the earliest.
iv) Payments should be made to the contract workers through banks. Necessary
amendments should be made in the Act/Rules.
It would be pertinent to take a quick stock of the happenings at the Government level
as regards the subject.
Government of Maharashtra Labour Policy
Government of Maharashtra came out for the first time, with a proposal (draft) of
its labour policy on 06/11/10. It invited suggestions and objections on the same,
from interested parties, whom they addressed as ‘social partners’. The said exercise
was preceded by State level conferences involving all interested parties, under the
Including the Excluded 13
16. Chairmanship of Mr. Arun Maira, Member – Planning Commission, Government of
India, on 26/08/10 and 27/10/10.
It would be interesting to go through some excerpts from the background note
prepared by the Government of Maharashtra, for the purpose of the conference dated
27/10/10, which are as below:
Employers favour contract labour as a means to give them flexibility they
require in that they do not have to commit to permanent employees and the
associated higher non-wage costs, for efficiency, competitiveness, lower
wage cost, lack of employer-employee relations. It is argued that lack of
any relation between productivity and wages, higher labour cost due to
job security, pressure of trade unions to adjust workforce discouraged
organised sector to expand employment. These factors are responsible for
modernisation, substitution of capital for labour and tendency to employ
contract labour to achieve productivity. It is also argued that due to rigid
provisions in the Industrial Disputes Act, employers are unable to reduce
workforce and hence reluctant to increase strength of permanent employees.
Contract labour is one of the principal methods used by employers to gain
flexibility in the labour market.
Currently contract labour are being liberally employed to perform even task
which are regular, perennial and permanent in nature though the law prohibits
employment of contract labour in such activities.
A few relevant salient features of the 1st draft policy of the Government of Maharashtra,
in the context of contract labour are as follows:
It has acknowledged contract labour as one of the vulnerable groups (page
6) as, “there is a need for targeted protection and assistance to some of the
State’s most vulnerable groups including contract workers in both organised
and unorganised sectors”.
It has also acknowledged the need for ‘capacity building for dept. of labour’
(page 36) as, “this will require the dept. to be strengthened, revitalised
and probably restructured to give full effect to policy intentions and ensure
adherence to the principles of good governance”.
It further acknowledges “the need to improve the overall efficiency and
effectiveness of the labour inspection services”. (page 37)
Based on the suggestions / objections that may have been received in the meantime,
the Government came out with the revised draft in 2011, which is yet to be made a
policy. Its salient features in the context, are as follows:
Paragraph 4.1.2 talks about its intention to enforce effectively its earlier
mandate under various labour laws about payments to labour through cheque/
bank account only, both in organised and unorganised sectors.
14 Including the Excluded
17. Paragraph 5.1 acknowledges the need for protection to contract labour as,
“with more than 93% o Maharashtra’s workers engaged in the unorganised
sector and a substantial number working as contract workers, extending
protection to these workers poses a major challenge for the Labour Dept.
since such workers would be numbering more than 40 million. For these
workers, protection is virtually non-existent and the workers are caught in
the low wage, low productivity trap where they have no voice, their safety an
health considerations are largely ignored and other social security is non-
existent”.
Paragraph 5.2.1 acknowledges specifically the inadequacy of the Act as, “due
to lacuna in the Act, which does not mandate regularising contract workers in
case of abolition of contract, the abolition may not necessarily go in favour of
the contract workers”.
Paragraph 5.2.3 promises to address the issue as, “the Dept. of Labour will
facilitate discussions with the social partners with a view to deciding on a
model/s that ensure/s both fairness and productivity. It would also work on
amendments or legislations that will enable the implementation of the said
model/s after being found suitable”.
The same paragraph, while discussing the proposed issue of incentivising
flexibility by providing a loading factor to compensate contract workers
against their loss of certain benefits, also doubts the fundamentals that may
have formed the basis of said ‘flexibility’ as, “it is nonetheless necessary to
re-examine whether flexibility necessarily results in enhanced productivity
and competitiveness. This is because the employers are not incentivised to
provide skill-upgrading, training and adequate safety and health provisions to
contract workers, which may result in their lower productivity levels”.
The same paragraph also comments on the issue of the nature of contract
work (under section 10 of the Act) as, “the State would also examine whether
it would be appropriate to demarcate activities into core and non-core and
limit contract. If however the core and non-core activity demarcation is worked
upon, the State shall define the core activity and would prepare a list of no-core
activities. Generally, contract labour would not be permitted to be engaged in
core activities. However, for sporadic seasonal demand, such employment
would be permitted. The non-core services like sanitation, housekeeping,
canteen and eatery services, courier services, transport services etc. which are
in the nature of support services like running of hospitals, clubs, educational
or training institutions, guest houses etc. to be provided by other agencies
would be permitted on the following conditions.....”.
The same paragraph also proposes as, “the Act should be amended to place
the responsibility of payment of all non-wage benefits like bonus, gratuity,
provident fund, earned leave encashment benefit, maternity benefit and all
other such legal benefits, on the principal employer”.
Including the Excluded 15
18. Paragraph 5.4.2 mentions that the Government is considering amendment
to chapter VB of the Industrial Disputes Act, changing its applicability to
establishments employing 300 workmen, in place of current 100.
Paragraph 5.4.5 talks about a proposed amendment to Trade Unions Act,
by introducing provisions to enable unorganised sector workers to form
trade unions, where “the employer-employee relationship does not exist or is
difficult to establish”.
Paragraph 5.13.2 acknowledges “the need to prepare a staffing plan (for
Labour Dept.) with reference to numbers, levels and deployment to ensure the
fullest possible implementation of the labour policy”.
The same paragraph also acknowledges “the need to adopt a systematic and
co-ordinated approach to staff training and development, to cater for induction,
refresher and upgrading training and preparation of training material for
labour officials as well as for the benefit of employers and workers, including
establishment of a dedicated training cell within the dept.”.
Paragraph 6.2 comments on the dept.’s proposed computerised Labour
Management System viz. ‘Mahashramm’ as, “it would have significant impact
on inspections, considerably reducing the requirement of inspections since
it will be possible to monitor compliance on on-line basis. Only in case that
compliance does not happen, inspection would be required”.
Planning Commission Directives
The planning Commission also constituted a pan-India working group for
deliberating on future policy directives on the subject of ‘Labour Laws and Other
Labour Regulations, consisting of representatives of all interest groups, in April 2011.
The points as regards the topic of contract labour, that figured in the agenda for the
meeting of the said working group on 20/05/11, were as under:
Point no. 10 consisted of the matters that can be considered for suitable
amendments in concerned statutes. The 3rd bullet point under the same
mentioned, “Contract labour shouldn’t be engaged for core production/service
activities”.
Point no. 28 mentions, “Regular workers are getting substituted by contract
labour, in the on-going process of liberalisation/ privatisation/globalisation.
Various studies show differences in wage rates, work hours, holidays, social
security applicable to permanent and contract workers. There is a need to
have a law to prevent exploitation of contract labour.
Point no. 31 enumerates the matters proposed to be considered for
amendment to the Act as, “give effect of same wage rate, working hours,
holidays and social security to the contract labour (to be mentioned in the
agreement between principal employer and contractor), as available to the
16 Including the Excluded
19. regular workers, if the work performed is same or similar. The Act may be
made applicable to establishments where the number of contract labour is 10
or more”.
Moreover, a private member’s bill (no. XI of 2002) was moved by one Shri Ramchandra
Khuntia (MP) in the Rajya Sabha where inter alia several proposals for amendments
were made. It was proposed that the section 10 of the Act should be amended so as
to ensure regularisation of the contract workers’ services in a particular establishment
where they were found to have been engaged in the tasks/processes/operations that
could be termed as of perennial nature. Although the said proposal was important
and so much necessary, it has yet to see the light of the day. It appears that this bill
now lapsed.
Comments
The readers, after going through the whole quoted text above, can easily notice
practical acceptance by the Central as well as State Governments of the failure of
their policies as incorporated in the Act and enforcement thereof for last over 40
years, with an expression of their intentions to handle things appropriately in future.
II. Review of Studies through private initiatives and Other Publications
We believed that a study of this volume would attain the state of comprehensive
coverage, by going through similar studies or research papers, articles and other
publications on the subject, that may have taken place in the past, and acknowledge
notable contributions from there. The relevant excerpts from among the same, are
presented below:
i. Study Report by Bharatiya Sharmshodh Mandal, Pune
(1996):
It was a peripheral study of contract workers and their socio-economic
conditions. It was taken up in Jan-Feb.,’96 in four districts of western
Maharashtra viz. Pune, Ahmednagar, Sangli and Solapur. Their observations
are reproduced in the following bullet points.
Contract labour which accounts for a significant proportion of the total labour
force in the large scale industries, is also the most disgruntled and depressed
as well as exploited segment of the workforce.
After independence, the Central as well as State Governments Enacted different
legislations and consequent rules and regulations, to safeguard welfare and
interests of the labour class. However, the machinery to implement the said
legislations and rules thereunder was neither adequate nor vigilant enough to
do the same.
Including the Excluded 17
20. Earlier, the operators (permanent workers) used to do the work of cleaning
and repairs on their own, but now they refuse to do the same, under the plea
of extra effort needed to be put in for increased productivity. Sometimes such
jobs involve difficult or extremely unhealthy conditions and grave danger.
In order to avoid confrontation with such organised permanent workers,
the management, instead of improving the working conditions, resort to
engagement of insecure contract labour.
One can understand employers’ interest in creating a rift between the
permanent and contract workers or discouraging unionisation of the latter; but
it is difficult to understand the reluctance on the part of trade unions to enrol
the contract workers in their fold and make a common cause with them.
Under the new economic policy of liberalisation, the employers’ lobby always
insists on reduction of costs of their production and services, because they
have to sustain themselves in internal/external competition. An employer of a
paper manufacturing factory located on the border of Maharashtra and Andhra
Pradesh, has been engaging contract labour in the regular production process.
He says that if the contract labour system is abolished in Maharashtra and
they are made permanent, his costs will increase and then he will not be able
to compete with his competitors having their factories across the border, in
A.P. Many industries even threaten the respective State Governments to close
down their operations if the Act is enforced diligently and go to neighbouring
States. Under such circumstances, many State Governments are reluctant to
strictly implement the Act.
ii. Study Report by Tata Institute of Social Sciences and
Navjeevan Samiti on ‘Wages and Work Conditions of
Contractual Conservancy Workers’ (April, 2008):
Conducted in two phases. Phase 1 – Pimpri Chinchwad Municipal Corporation.,
Navi Mumbai Mun. Corp. (both Maharashtra); Hubli Dharwad Mun. Corp.,
Mysore Mun. Corp., Bangalore Mun. Corp., Tumkur, Mandya (all Karnataka);
Chennai, Chandigarh, Surat, Udaipur AND Phase 2 – Workers in solid waste
management, situation at a glance in 27 urban centres in Maharashtra. Their
observations are reproduced in the following bullet points.
Conservancy work is statutory and perennial in nature; contract labour should
not be employed for performing the same.
Conservancy work has been taken out of the purview of the Act, in Tamilnadu
through an amendment.
Except in Chandigarh, the contract workers are nowhere paid minimum
wages. They do not get a single day of leave with pay. In some cases, there is
deduction in wages for provident fund, but the proof of the same is not given
to them.
18 Including the Excluded
21. In all the urban centres, contract workers are engaged alongside the permanent
workers in the same tasks, where the issue of ‘Equal Pay for Equal Work’
emerges as significant and needs to be addressed.
Working conditions are very difficult and compounded by the fact that work
with waste is itself hazardous to heath and increases proneness to skin and
respiratory infections. Contract workers are not provided any safety gear.
There are different patterns of employment. For instance, in one of the
corporations, each worker has been treated as a contractor and has to sign
an independent contract, evidently in order to circumvent the Act.
iii. Contract Labour Act in India – A Pragmatic View, (research
paper) by Meenakshi Rajeev (Faculty, Institute of Social
and Economic Change, Bengaluru): (2009)
A primary survey carried out in Karnataka, an industrially developed state,
reveals that many of the stipulations made in the Act to safeguard contract
labour are not followed in practice. It has been felt by the workers that collusive
agreement between the Labour Inspector, the protector of law, and the
principal employer and the contractor has aided the violation of law. Among
different kinds of employment that have been created in various economies
to circumvent labour laws, contract labour is becoming one of the prominent
forms. It is revealed through survey that some of the companies maintain
more than one register, one for the scrutiny of the labour inspector and other
contains the actual figures.
Collection of data regarding contract labour is extremely difficult and
managements of the firms were often secretive about the number of contract
workers employed and the benefits provided to them.
Knowledge of high level of corruption in connection with violation of the
Act has been reported by 90% of the agencies. It has been reported that
government officers have been neglecting their duties towards compliance of
the Act for extraneous reasons.
There are number of unregistered contract agencies that deduct P.F.
contribution from the workers but never deposit the same in P.F. office and
after few years change the location and start the same business with different
name. There are obvious advantages of being unregistered to its owner as it
enables agency to evade taxes, paying P.F., E.S.I. benefits etc. to a worker
and thereby increase one’s profit margin.
It is the overtime payment through which contractors usually try to generate
additional income for themselves by taking advantage of the vulnerability of
contract employees. The contract workers interviewed were not very sure of
the wage rate for the overtime work.
Including the Excluded 19
22. In Indian case, blame is on the fact that for a contract worker it is not only
hard to prove his/her identity as worker under the relevant labour law, but
employer- employee relationship is also not easy to establish.
iv. Contract Labour in South Asia, (book) by D.P.A. Naidu,
International Labour Organisation (ILO) Geneva: (1999)
Employment of contract labour is a long established practice in virtually the
entire public sector. Now it is becoming more extensive. Due to the ban on
new recruitment by Government, large number of regular posts lie vacant and
establishments are rather forced to engage contract labour. Low labour costs,
flexibility in the size of labour force and ease of maintaining discipline and
extracting work are strong incentives for them to engage contract labour.
In almost all units work done through contract labour includes essential and
perennial jobs in the unit. Though law clearly prohibits it, the practice persists
and even grows. In majority organizations proportion of contract labour is up
to 40% of the work force.
In the name of introducing greater flexibility in the labour market, Government
has for the past five years tilted in favour of non-regular modes of employment
rather than job security for workers which earlier used to be public policy.
Industrial society has undergone a drastic change over the years in terms of
technology, work organization, and human resources. These developments
during recent past have posed serious challenge to trade unions. Trade unions
are faced with threats of survival in the new economic environment. In this
situation, non-governmental and unorganized sector including industries and
services engaging large proportion of contract labour need to be focussed
upon and their needs to be identified. Where contract labour are unionised,
they have been able to make significant gains in respect of prohibiting the
contract labour system on essential and perennial jobs, improving wages and
securing fringe benefits and a modicum of job security. The gap between
wages of contract employees and regular employees is also narrowed to
some extent.
v. Contract Labour and Judicial Interventions, (book) by
Sanjay Upadhyaya, V.V. Giri National Labour Institute, New
Delhi. (2009)
Process of globalization, liberalization has resulted in the increase in the trend
towards substitution of regular employment by contract employment and this
trend is going to continue and grow in future.
One of the major factors responsible for preferring contract labour against
the regular employees is the temptation to lower overall wage cost for similar
quality and quantity of work.
20 Including the Excluded
23. Poor conditions of work; excessively long hours and very low wages as
compared to workers with permanent status doing similar work. Many of the
benefits, even the statutory ones, like provident fund, sickness insurance,
gratuity, and privilege leave with pay and so on are usually not available to
contract workers.
Indian state has made different enactments for labour at different points of
time to cover various categories of workers including contract labour. However
the limitations and constraints of most of these enactments are that majority
of these enactments put one kind of ceiling or the other either in terms of
number of workers engaged or wages or duration of employment for the
purpose of coverage under these enactments. As a result large section of
vulnerable group of workers including those working as contract labour is
left out of the legislative coverage and protection. Another limitation of these
legislative measures is that the various kinds of penalties provided under
most of these enactments are quite meagre in nature and the procedures
prescribed under most of these enactments for realising various kinds of dues
and benefits are quite cumbersome which defeats the very purpose of making
elaborate legislative provisions.
vi. Contract Labour in India, (book) by Dr. D.C. Mathur: (1989)
It is opined that the factors like uncertainly of work-orders, difficulty in ensuring
closer supervision by employer, higher output by workers cost effectiveness,
flexibility in manpower deployment, concentration in core competencies etc/.,
justify the system of contract labour.
In the name of employment through contractors many employers have tried
to evade their responsibilities towards a section of labour which is connected
with the manufacturing process and resultant overall development of the
industry as well as of the country but the contract worker is an exploited
section of Indian working class.
vii. Indian Industry Dependent on a Forgotten Workforce by
Dibyendu Maiti, Institute of Economic Growth, New Delhi:
(20/07/2009)
In India we observe an increasing use of casual, contract or other such non-
regular labour over a time-period. In India’s manufacturing sector surprisingly
high levels of contract workers are being used, in some cases, as many as
three times the regular workers. The official estimate however, states that,
some of India’s key industries such as cement, iron and steel, cotton textile
and jute, rely on contract labour. As many as four out of every five workers are
contract workers. The official record of industrial statistics puts the share of
Including the Excluded 21
24. contract labour in organised manufacturing sector at 15% to 26% across West
Bengal and Gujarat states; but research found the share to be much higher,
up to 60% to 70% across these states.
But, India’s economic success is not improving the lives of contract and
informal workers who form the largest section of the economy and make a
major contribution to the country’s global success.
viii. No End in Sight to Contract Labour Debate, by Maitreyee
Handique (Mon. 3, August 2009; livemint.com/Articles):
At Indian labour conference, employers pointed out that in order to remain
competitive firms must be allowed greater flexibility to outsource workers.
Employers also said that in changing environment of business a separation
of core and non-core activities in not possible and pointed out that China’s
contract law does not make such distinction.
In Bharat Aluminium Co. Ltd. (a public sector unit), contract labour has
increased from 1500 to 15000 and regular employment decreased from 7000
to 5400. However, the wages of contract labour were Rs. 3000/- to Rs. 5000/-
p.m. and regular workers Rs. 12000/- to Rs. 19000/- p.m. Contract workers are
also often deprived of benefits such as medical facilities.
ix. Impact of Liberalisation on Employment in India, by
R.K. Shastry, Ravindra Tripathi and Anushree Singh
(International Journal of Technical and Vocational
Education, Vol. 2(3) pp33-35: (July 2010)
In Urban India, contract and sub-contract as well as migratory agricultural
labours make up the most of the unorganised labour force 90% of this labour
force do not have social security and other benefits of employment as in the
organized sector.
Harmonisation of labour welfare with the privatisation process is really
desirable in the present scheme of things, so as to strike the right balance
between economic exigencies and social justice.
22 Including the Excluded
25. Chapter III
Case Law and the Role of Judiciary
Statement of Object and Reasons of the Contract Labour (RA) Act 1970.
“The system of employment of contract labour lends itself to various abuses, The
question of its abolition has been under the consideration of Government for a
long time. In the Second Five Year Plan, the Planning Commission made certain
recommendations, namely, undertaking of studies to ascertain progressive abolition
of system and improvement of service conditions of contract labour where the
abolition was not possible. The matter was discussed at various meetings of Tripartite
Committees at which the State Government were also represented and the general
consensus of opinion was that the system should be abolished wherever possible or
practicable and that in cases where this system could not be abolished altogether, the
working conditions of contract labour should be regulated so as to ensure payment of
wages and provision of essential amenities.
The bill aims at abolition of contract labour in respect of such categories as may be
notified by appropriate Government in the light of certain criteria that have been laid
down, and at regulating the service conditions of contract labour where abolition is
not possible. The Bill provides for the setting up of Advisory Boards of a tripartite
character, representing various interests, to advise Central and State Governments
in administering the legislation and registration of establishments and contractors.
Under the Scheme of the Bill, the provision and maintenance of certain basic welfare
amenities for contract labour, like drinking water and first- aid facilities, and in certain
cases rest room and canteens, have been made obligatory. Provisions have been
made to guard against delays in the matter of wage payment.”
Preamble:
An act to regulate the employment of contract labour in certain establishments and to
provide for its abolition in certain circumstances and for matter connected therewith.
Though the preamble of the Act speaks of abolition in certain cases, the whole of the
Act is silent about any reference to abolition, but talks of prohibition of contract labour
in certain cases on issuance of notification under S. 10 of the Act. The legal pundits
infer that following the principles of statutory interpretation, the act does not spell out
any provision of abolition and absorption of workers but of regulation. This and such
other interpretation makes the whole or major part of the Act redundant and nugatory
in nature. Though the interpretative law says that the statement of object and reasons
as well as the preamble of the Act are not binding while deciding the object of the
Act which can be inferred from the actual provisions of the Act, it is suggested that
Including the Excluded 23
26. the Courts should also give importance to the history of legislation and the purpose
for which the Act is enacted; if not done, the legislation will make the act redundant,
useless and the utility of the rest of the provisions of the Act will be only restricted
to implementation of the Act, which will be entirely in the hands of administrative
machinery.
It is clear that the mischief sought to be corrected by the act was that the system
of employment of contract labour lends itself to various abuses and hence working
conditions of contract labour should be regulated so as to ensure payment of wages
and provision of essential amenities, ultimately aiming at, ascertaining progressive
abolition of system of contract labour.
If we apply the principles of mischief rule, purposive interpretation and interpretation
of a beneficent piece of legislation are applied, the act should be interpreted in such
a manner which will be beneficial to the weaker section which in the present case is
contract labour.
Article. 38, 39, 40 and 43(a) Constitution of India, may be useful for interpretation of
the provisions of the act in favour of contract labour.
For the sake of convenience we quote herein below some of the observations on the
construction of Statue with reference to purpose and object of the Act, reproduced
from the Book “Principles of Statutory interpretation’ 1
“The duty of judicature is to act upon the true intention of the legislature – Mens or
sententia legis” 2
“If a statutory provision is open to more than one interpretation the court has to
choose that interpretation which represents the true intention of the legislature” 3
“Legislation in the modern state is actuated with some policy to curb some public evil
or to effectuate some public benefits” 4
“The legislation is primarily directed to the problems before the legislature based on
information derived from past and present experience. It may also be designed by use
of general words to cover similar problems arising in future” 5
“The intention of the legislature thus assimilates two aspects; in one aspect it carries
the concept of ‘meaning’ i.e. what the word means and in another aspect it conveys
the concept of purpose and object or reason and spirit prevailing in the statute. The
process of construction therefore combines both literal and purposive approach.”
1. by Justice G.P. Singh, (Former Chief Justice Madhya Pradesh High Court) (11th Edition 2008)
2. J. P. Bansal vs. State of Rajasthan, (A.I.R. 2003 SC 1405)
3. Bhatia International vs. Bulk Trading S.A. (A.I.R. 2002 SC. 1432)
4. United Bank of India Calcutta vs. Abhijit Tea Company Pvt. Ltd. (A.I.R. 2000 SC. 2957
5. American Cynamid Co. vs. Upjohn Co. (1970 ) 3 All. E. R. pg 785
6. Land acquisition officer and Mandal Revenue Officer vs. Narsaiah (A.I.R. 2001 SC, pg. 1117)
24 Including the Excluded
27. “Court should adopt an object oriented approach keeping in mind the principal that
legislative futility is to be ruled out so long as interpretative possibilities permit” 7
Foundation of the Act
The judicial world woke up to the plight of such workmen in the case of Standard
Vacuum Refinery Company Private Limited Versus Their Workmen Standard Vacuum
Refinery Company Private Limited Versus Their Workmen
(1960 LLJ II 233, SC)
‘It was concerned with an Award of the Industrial Tribunal, which considered the
demand made by the Union for abolition of contract system of work, where the nature
of work was of cleaning and maintenance of machinery. The award was in favour of
workmen. The said award was challenged by the employer in special leave petition
before the Apex Court wherein two issues were raised as to whether such dispute
constitutes an Industrial Dispute under (Sec.2-K) of the Industrial Disputes Act and
justifiability of the tribunal in interfering with the Managements right.
The Supreme Court observed that “there was a community of interest between
the concerned workers and the workers of employer, who had a substantial
interest in the contractors’ labour. In this Judgment, Supreme Court referred to the
observation of the Royal Commission of the Labour and observed that the complex
responsibility lay down upon it by law and by equity, that the manager should have full
control over the selection, hours of work, and payment of workers”.
The Supreme Court observed the system to be primitive and baneful. A reference was
also made to a discussion of Indian Labour Conference. The other issue regarding
justifiability of the tribunal in interfering with the Managements right was also negated
by the Supreme Court.
The Supreme Court observed “so far as this work is concerned it is incidental to the
manufacturing process and is necessary for it and of a nature which must be done
every day. Such work is generally done by workmen in the regular employee of the
employer and there should be no difficulty in having regular workmen for this kind of
work”.
Thus it is clear that the Supreme Court has simply upheld the order of the Industrial
Court which directed the company to discontinue the practice of getting work
done through contractor’s and to have it done through workmen engaged by itself.
Surprisingly there was no justification given by the Industrial Court in holding that the
workman of the contractor could not claim any relief in respect of their past services
7. Nathdevi vs. Radha Devi (2005, 2SCC pg. 271)
Including the Excluded 25
28. rendered to the company. All that was said was that the company was free to give
preference to the workmen engaged by the contractor.
Pursuant thereto a Bill was introduced in the Lok Sabha on 31.7.1967 for regulation and
abolition of employment of contact labour. The said bill aimed at abolition of contract
labour in respect of such categories as may be notified by the appropriate government
in the light of certain criteria that had to be laid down and at regulating the service
conditions of contract labour where abolition is not possible. The Bill also provided for
various other things such as establishment of Central and State Advisory boards, on
the basis of whose report, the appropriate government may take a decision of abolition
or regulation of contract labour. The Bill provided for coverage of establishments,
employing 20 or more persons. It provided for registration of the principal employer
and license for the contractor and also for certain welfare measures.
Since then there have been a cartload of Judgements which have reiterated the need
of abolishing contract labour but has however not granted any practical relief to the
contract workers. As such, despite the passing of 40 years, after the implementation
of the act the plight of the workers continues to be the same. While analysing the
case law, we have referred only to the Supreme Court judgements and not High
Court judgements, though the latter have also dealt with the issue appropriately, as
the finality rests with the Hon’ble Supreme Court. We also make it clear that in this
analysis, we have not intended to show any disrespect to it nor is there an intention
to criticise its hon’ble judges or the judiciary in general. This exercise is intended to
find out the reasons for ineffectiveness of the Act in doing justice to the subject viz.
Contract labour.
Analysis of the Supreme Court Judgements: Post Enactment of the Law:
Supreme Court Judgments on the provisions of the Act especially with
reference to Section 10 (2) of the Act:
1) Vegoils Pvt. Ltd. vs. Its workmen,
1971 II LLJ 567. AIR Supreme Court 1972, pg. 1942
In this case a reference was made under Section 10 of the I.D. Act for adjudication to
decide whether contract labour system should be abolished and whether the workmen
engaged by the contractor should be treated as principal employer’s regular employees.
The Industrial Tribunal, Maharashtra delivered an award directing the employer, not to
engage any labour through a contractor. The claim for abolition was rejected by the
Tribunal in respect of Canteen Section and directed not to engage contract labour for
work of loading and unloading.
The Hon’ble Supreme Court held that “the abolition of contract labour in respect of
feeding the hoppers, for the requirements of the solvent extraction plant, is quite
correct in accordance with the various decisions.
26 Including the Excluded
29. The issue whether the Act, which is the Central legislation or the State legislation viz.
Maharashtra Mathadi, Hamal and Other Manual Workers (Regulation of Employment
and Welfare) Act would prevail and also the one about the jurisdiction of the Tribunal
for its direction not to engage contract labour, was set aside.
Under Section 10 of the Act, the jurisdiction to decide matters connected with
prohibition of contract labour is now vested in Appropriate Government.
On facts of the case, the Supreme Court directed the enquiry about the regularisation.
At that time the Act had received assent on 05/09/1970, which eventually came into
force from 10/02/1971 and the Mathadi Act was in force from 13/06/1969 at the time
of passing award, by the Industrial Tribunal. The said award by thus set aside by
the Apex Court, in view of the later day development of the Act coming into being
(paragraph 44).
2) Denanath vs. National Fertilizers
(1992 1 CLR 1, 1992 LIC 75, 1992 I LLJ 289)
This is a case of non-compliance of section 7 and section 12 by the principal
employer and contractor and the issue involved was whether due to non- compliance,
the employees of the contractor are deemed to be the employees of the principal
employer.
Paragraph 22 of the Judgment states “it is not for the High Court to enquire into the
question and decide whether the employment of the contract labour in any process,
operation or any other work should be abolished or not. It is entirely in the hands of
the Government. Therefore under Article 226 of the Constitution the Court cannot
issue a writ of mandamus or any writ for deeming the contract as having become the
employees of the principal employer.”
In view of the difference of opinion of the various High Courts, after consideration of
those judgments, the Supreme Court upheld the view that Non Compliance of Section
7 of the Act would result only in prosecution.
3) Gujarat Electricity Board vs. Hind Mazdoor Sabha and others 1995 1 CLR
967.
In spite of there being an agreement between the company and the contract labourers’
union as regards the service conditions of the members of the latter under section
2P read with section 18 of the ID Act and award being declared the Supreme Court
considered to give importance to the point of jurisdiction and held that the issue of
jurisdiction of court under ID Act is ousted and a reading section 10 of the Act, it is
only the appropriate Government to decide whether the system of contract labour
should be abolished.
Including the Excluded 27
30. The Apex Court for the first time however, observed that the Act was silent on the
question of status of the workmen of the erstwhile contractor once the contract is
abolished by the appropriate government. It also expressed its dismay over the fact
that even the public sector undertakings were indulging in unfair labour contracts
by engaging contract labour when the workmen can be employed directly. It further
observed that economic growth is not to be in terms of production and profits alone
but to be gauged primarily in terms of employment and earnings of the people.
4) Air India Statutory Corporation vs. United Labour Union 1997 I CLR 292,
1997 I LLJ 113, 1997 (1) LLN 75, 1997 LLR 305
It is held that the notification dated 9/12/1976 prohibiting employment of contract
labour was valid in law.
Here, the Supreme Court provided clear and specific relief, holding that on abolition
of contract labour system, by necessary implication, the principal employer is under
statutory obligation to absorb the contract labour. The linkage between the contractor
and the employer stood snapped and direct relationship stood restored between
principal employer and the contract labour as its employees.
The Supreme Court further upheld that the High Court under Article 226 of the
Constitution can direct the principal employer to absorb the contract labour after its
abolition.
There are instances where statutes provide for some welfare measures such as
canteen, etc. Section 46 of the Factories Act, provides that in case where the factory
engages 100 or more workers, the principal employer must make a provision for
canteen. Provisions of Section 46 of the Factories Act came to be considered in
various judgments and ultimately it was held that though the factories Act provides
for a canteen in the factory engaging more than 100 workers it cannot be said to be
a regular activity of the principal employer. The employer therefore can give contract
of the canteen to the contractor and make a provision of canteen as provided for
under section 46 of the Factories Act. There are cases where contractor continues to
be same for years together but workers are changed or where the workers continued
to be same for years together but the contractors are changed and the third case is
that the contractor and workers continued to be same for years together. The issue
whether the activity is of perennial nature came to be considered for various courts and
it was held that since it’s a statutory liability therefore the nature of work is perennial.
As regards the status of workmen of contractor it is held that the workmen of the
contractor do not automatically become direct employees of the principal employer
even where the registration/licence is cancelled or the contract is abolished.
5) In Steel Authority of India Ltd. vs. National Union Waterfront Workers,
2001 III CLR 349, 2001 II LLJ 1087
28 Including the Excluded
31. Though the main issue for consideration was whether for Steel Authority of India,
whether the Appropriate Government is the State or the Central Government and even
though the issue of interpretation of section 10 of the Act was not there, the Supreme
Court while holding that for Steel Authority Of India the Appropriate Government was
the State Government went ahead and thought of deciding the issue of section 10 of
the Act.
In this case though the issue in respect of contract labour did not directly arise,
as there was no specific prayer, the Hon’ble Supreme Court took a stock of various
judgments on the Act, and in paragraphgraph l04 and 105 considered the previous
decisions. The Supreme Court summarised the decision in various cases in the said
paragraphgraphs. In paragraph 122 of the said Judgment the Supreme Court dealt with
the powers of the appropriate Government u/s 10 of the Act. By this paragraphgraph
the Supreme Court overruled the judgment in Air India’s case prospectively holding
that there cannot be absorption of the workmen of the contractor even if the contract
is abolished or it is held to be sham and/or bogus.
Though the said issue was incidental one, the Supreme Court went on to decide it as
a main issue.
The net result of the above mentioned judgement is that the door which was open for
the workers to ventilate their grievance before the adjudicating authority is closed but
the same is available only in the cases of sham, bogus contract or a contract which
was not genuine. The issue of contract being bogus, sham or not genuine mainly
depends upon facts, the knowledge of which is with the employer and the contractor
and therefore, in fact, the door for adjudication was completely closed. Indirectly it
also resulted in denial of opportunity to the workers to ventilate their grievances as
the power of deciding the issue is exclusively in the hands of the Government whose
order is an administrative order and the issue is not decided there by any judicial or
quasi-judicial process.
6) Cipla Ltd. Vs. Maharashtra General Kamgar
Union and others (2001 CLR I 754, SC)
The case put forth by the workers was that they had been directly employed by
the company and the contract was a camouflage. Their union considered the said
matter as one of unfair labour practice (ULP) by the company and approached the
Court under the concerned law viz. Maharashtra Recognition of Trade Unions and
Prevention of Unfair Labour Practices Act. When the matter reached the Supreme
Court, it observed that for any practice to be considered as an ULP, there had be a
clear employer-employee relationship between the parties to the case. Since such a
relationship didn’t exist between the appellant and the respondents, the Court under
MRTU and PULP Act can’t adjudicate the said case.
Including the Excluded 29
32. Thus, although the company had truly been committing an unfair practice, (though
not defined so under the concerned law as an ULP), the Apex Court dismissed the
case by taking a very technical view as regards the employer-employee relationship,
which was actually the bone of contention.
7) Vividh Kamgar Sabha vs. Kalyani Steels Ltd. and Anr. (2001 I CLR 532,
SC)
The context of this case was exactly the same, only the parties to the case being
different. The Supreme Court held exactly the same view as, “The provisions of MRTU
and PULP Act can only be enforced by persons who admittedly are workmen. If there
is a dispute whether the employees are employees of the company, then that dispute
must first be got resolved by raising a dispute before the appropriate forum. It is only
after the status as a workman is established at the said forum, that a complaint could
be made under the provisions of MRTU and PULP Act”.
After considering these judgments, one can see that instead of providing solutions,
these judgments have multiplied the problems of the contract labours.
Prior to the enactment of the Act, the remedy of adjudication was available to the
aggrieved workers. Considering the history prior to the said enactment, the intention
was to give powers to the Government to abolish the contract labour, wherever
the nature of work was found to be permanent or incidental thereto. Due to the
interpretations of the highest Court of the land, the available remedy at times is taken
away and the fate of the aggrieved workers is placed entirely in the hands of the
Government. The interpretative process may be within four corners of the law, but
the results do not afford any substantive relief to the contract labours. The Act has
not provided for any separate adjudicating machinery to resolve the grievances of
the aggrieved workers resulting into denial of fundamental rights of the workers to
ventilate their grievances before the adjudicating authority.
The advisory board can only recommend and final decision remains in the hands of
the appropriate Government, which is only on the basis of the material collected by
the Government machinery.
Comparing this Act with other statutes, viz. I.D. Act, BIR Act, MRTU and PULP Act, it
does not provide for any judicial or quasi-judicial forum for determination of disputes.
This has resulted either in perpetuation or prolongation of the issue of the contract
labour and their employment.
Today we are placed in a situation that grievance of contract labour continues to exist
in spite of perennial nature of work and there is no machinery for redressing these
grievances. Unfortunately therefore, we come to the conclusion that this act has not
served the object and purpose for which it was enacted.
30 Including the Excluded
33. A ray of hope is created by the recent Supreme Court judgment reported by an
observations in paragraph 23 in the judgement of the Hon’ble Supreme Court in the
case of Harjinder Singh versus Punjab State Warehousing Corporation, reported
in Manu /SC/0060/2010, without any further comment
Quote: - Of late, there has been a visible shift in the court’s approach in dealing with
the cases involving the interpretation of social welfare legislations. The attractive
mantras of globalization and liberalization are fast becoming the Raison D’ etre of
judicial process and an impression has been created that the constitutional courts are
no longer sympathetic towards the plight of industrial and unorganized workers”.
Quote:- “The courts have readily accepted such plea unmindful of the accountability of
the wrong doer and indirectly punished the tiny beneficiary of the wrong ignoring the
fact that he may have continued in the employment for years together and that micro
wages earned by him may be the only source of his livelihood. It needs no emphasis
that if a man is deprived of his livelihood, he is deprived of all his fundamental and
constitutional rights and for him the goal of social and economic justice equality of
status and of opportunity the freedom enshrined in the constitution remained illusory.
Therefore the approach of the courts must be compatible with the constitutional
philosophy of which the directive principles of state policy constitute an integral part
of justice due to the workmen should not be denied by entertaining the spacious and
untenable grounds put forward by the employer/ public or private”.
Similarly, in the past too, there were a few such Court verdicts, though more as
exception, but nevertheless provided the much needed ray of hope. They are as
follows:
National Federation of Railway Porters, Vendors and bearers vs. Union of
India (1995 II CLR 214, SC)
In this case the Supreme Court granted regularisation to the railway parcel porters,
provided by societies or private contractors as contract labour, at the backdrop of
those porters having worked so continuously for a number of years and also that the
work of parcel-handling was perennial in nature.
Indian Airports Employees’ Union vs. International Airports Authority of
India (1996(1) Mah. LJ, SC)
The Central Government had issued a notification dated 09/12/1976, prohibiting
engagement of contract labour in sweeping, cleaning, dusting work with effect from
01/03/77 in respect of establishments for which the appropriate Government was the
Central Government The respondent company fitted squarely under the purview of
the said notification. Despite the same, it continued its practice of engaging contract
labour in the said work. The supreme Court in this case, provided the expected relief
of absorption of the concerned contract labour.
Including the Excluded 31
34. Secretary, Haryana State Electricity Board vs. Suresh and Ors. etc. etc.
(1999 I CLR 959, SC)
Safai karmacharis were engaged as contract labour for cleaning/sweeping work. After
their services were terminated, they claimed permanency. The Supreme Court in this
case called the said contract system a mere camouflage, smokescreen and disguised
in a veil, which could easily be pierced and the real relationship between the Board on
one hand and the employees on the other hand, could clearly be visualised. The facts
of the case that supported the said conclusion of the Court was notably the absence
of due registration of the Board as well as that of a licence, as required under the Act,
in the hands of the person who posed as contractor.
Hindalco Industries Ltd. Vs. Association of Engineering Workers (2008 I
CLR 1023, SC)
Here, the contract labour working in the canteen of the company had continued
working so despite a change in the contractor in the meantime. Secondly, evidence
on record established the ultimate control of the company management on the said
workers. The respondent union had approached the Industrial Court by filing a case
of ULP under the Industrial Disputes Act, who in view of the facts and circumstances
of the case, that the canteen contract was merely a paper agreement. In the appeal,
the High Court had endorsed the view of the Industrial Court. In the subsequent
appeal, the Supreme Court also upheld the same.
Sarva Shramik Sangh vs. Indian Oil Corporation Ltd. and Ors. (AIR 2009
2355, SC)
Here, relief was sought under the Act, for abolition of contract labour system in
the canteen of the marketing establishment of the principal employer. The State
Government examined the merits of the dispute and refused to make reference on
the ground that the workers were not the employees of the company, where the very
dispute that required reference was whether the workers should be considered as
the employees of the company. In this case, the Supreme Court directed the Central
Government to reconsider the matter and take an appropriate decision on the request
for reference of the dispute to the industrial adjudicator (paragraphs13, 15).
Bhilwara Dugdh Utpadak Sahakari Sangh Ltd. V. Vinod Kumar Sharma Dead
by LRS and Ors. (SC, Sept., 2011)
The Labour Court had held that the workmen were the employees of the appellant
and not the employees of the contractor. The High Court too had upheld the said
position. In the appeal to the Supreme Court, it not only upheld the said finding but
also observed, “This appeal reveals the unfortunate state of affairs prevailing in the
32 Including the Excluded
35. field of labour relations in our country. In order to avoid their liabilities under various
labour statutes, employers are very often resorting to subterfuge, by trying to show
that their employees are in fact the employees of their contractors. It’s high time that
such subterfuge must come to an end. Globalisation / liberalisation in the name of
growth, can not be at the cost of exploitation of workers”.
Ironically, every judgment stated above has very broadly reiterated the principles
and foundations on which the Act was based, that are to prevent the exploitation of
contract labour and also to introduce better conditions of work.
We feel that the Hon’ble Supreme Court did not give due importance to the object of
providing for job security for such of those employees who have been engaged as
contract labour and bring them at par with the permanent employees. Except for a few
Judgements passed by the very same Supreme Court that have boldly pointed out
that there is a gross lacuna in the Act itself which required a very strong amendment,
none of the Judgements have in fact, set out any path nor shown the way to help
these contract employees.
Including the Excluded 33
36. Chapter IV
Data Analysis
Field research was carried out as mentioned earlier. Relevant data was gathered
during the same, the analysis of which has been presented with the help of the
following tables.
Table No. 1
A.
Type of Contact Pune % Nasik % Thane % % Mumbai % Total %
bad
Contract Labour 120 21 60 10.5 200 35 40 7.01 151 26.4 571 100
Contractor 8 33.3 3 12.5 4 16.7 2 8.33 7 29.2 24 100
Trade Union
6 25 4 16.7 5 20.8 3 12.5 6 25 24 100
Official
Government
4 22.2 3 16.7 0 0 3 16.7 8 44.4 18 100
Officials
Employers 8 23.5 3 8.82 5 14.7 2 5.88 16 47.1 34 100
Legal Advisors/
Labour 10 41.7 2 8.33 5 20.8 2 8.33 5 20.8 24 100
Consultants
Employers
1 25 2 50 0 0 0 0 1 25 4 100
Association
Coverage of the Pilot Study.
The detailed observations pertaining to the field survey that covered people ranging
from contract labour to the representatives of trade unions as well as employers and
also independent professionals, have been narrated.
2.1 Survey of the contract workers:
2.1.1. The Number of the contract workers Selected for the
Survey, according to the Categories of the Industries:
During this study total 571 contract workers were interviewed . Among them
200 labourers i.e. about 35%, were from Thane Belapur Industrial area, while
26% are from Mumbai, industrial area, where as 21% from Pune industrial area
and remaining 100 (18%) are from Nashik and Aurangabad industrial areas.
While selecting the contract workers for the survey, all the three categories of
industries viz. the large, medium and small scale inclusive of Government and
semi Government establishments were taken into consideration.
34 Including the Excluded
37. Break up of these labourers selected for the survey is as under:
Table No. 2
Break-up According to Type of Units
Type of Contact Pune % Nashik % Thane % A. bad % Mumbai % Total %
Small Scale 12 30. 4 26.7 30 32.3 5 31.3 8 20.0 59 28.9
Medium Scale 8 20. 3 20.0 34 36.6 6 37.5 11 27.5 62 30.4
Large Scale 14 35. 8 53.3 29 31.2 5 31.3 8 20.0 64 31.4
Gov. and Semi
2 5. 0 0.0 0 0.0 0 0.0 5 12.5 7 3.4
Government
Service Sector 4 10. 0 0.0 0 0.0 0 0.0 8 20.0 12 5.9
Total 40 100 15 100 93 100 16 100 40 100 204 100
Thus this pilot study has surveyed 571 contract workers from 204 units
of different types of industries.
Break-up of the units according to type of management is shown in the table below.
Table No. 3
Break-up of Units According to Types of Management or Ownership
Type of
Pune % Nashik % Thane % A. bad % Mumbai % Total %
Contact
Government 1 2.5 1 6.7 0 0.0 0 0.0 1 2.5 3 1.5
Semi-
2 5.0 0 0.0 0 0.0 0 0.0 4 10.0 6 2.9
Government
Private 37 92.5 14 93.3 93 100.0 16 100.0 32 80.0 192 94.1
Others 0 0.0 0 0.0 0 0.0 0 0.0 3 7.5 3 1.5
Total 40 100 15 100 93 100 16 100 40 100 204 100
It will be evident from the above data that 94 % of the units were from the private
sector. As explained in the methodology, stress in this pilot study was laid mainly
on the contract workers from the industrial sector. Efforts were also made to contact
the semi-government agencies like, MMRDA, MSEDL and Municipal Corporations
etc., where there is a higher proportion of work being carried out through contract
workers, for this study. Comparatively, it was easier to contact the contractors or their
labourers and collect the data for this survey from Government and Semi- Government
establishments than from Private agencies. Before contacting these units, the lists of
industries from the office of the Chamber of Commerce and Industries or from the
Industrial Directories were obtained for collection of the information. However, actual
selection of the units was made on the basis of availability of the concerned persons
in these units.
Including the Excluded 35
38. Personal Information of the contract workers Selected for the Survey:
The detailed information of the contract workers selected for the survey viz. their age
group, level of education, marital status and family background. has been collected
during this survey for understanding their background. The information collected in
respect of each of these aspects is presented in the following paragraphgraphs:
1. Age Group:
Out of 571 contract workers surveyed, more than half i.e. 51.8% were found to be in
the age group of 26 to 35 years, while 26% were of the age less than 25 years of age.
In short, more than three fourth of them belong to a young age group. The youth
have greater physical strength and therefore those establishments gave preference
for employing this category of the workers. Their proportion is higher in small and
medium scale establishments as shown in the the following Table
Table No. 4
Age Wise Distribution of contract workers.
Age A.
Pune % Nashik % Thane % % Mumbai % Total %
Group bad
18 - 25 42 35 21 35 30 15 21 52.5 35 23.2 149 26.1
26 - 35 54 45 32 53.3 115 57.5 13 32.5 82 54.3 296 51.8
36 - 50 14 11.7 7 11.7 53 26.5 6 15 31 20.5 111 19.4
51 - 60 10 8.3 0 0 2 1 0 0 3 2 15 2.6
Total 120 100 60 100 200 100 40 100 151 100 571 100
36 Including the Excluded
39. 2. Educational Level:
There were only four illiterate contract workers among those surveyed. About 25% of
them had however, completed only Primary Level education i.e. up to 7th standard,
while 44% contract workers had studied up to 10 th standard. Thus about 70% have
however completed only mid-level education i.e. up to 10 th standard. Percentage of
the contract workers who have studied up to 12 th standard works out to 23%. A few of
them were observed to have been trained in technical subjects/crafts in the Industrial
Training Institutes (ITIs). They appeared to be more interested in securing jobs for
their livelihoods rather than those matching their education and training.
Table No. 5
Educational Level of Contract Workers
A.
Education Pune % Nashik % Thane % % Mumbai % Total %
bad
Illiterate 0 0 0 0 0 0 0 0 4 2.6 4 0.7
Primary (Up to 7th) 26 21.7 1 1.67 70 35 13 32.5 34 22.5 144 25.2
Up to 10th 69 57.5 33 55 80 40 14 35 56 37.1 252 44.1
Up to 12th 20 16.7 18 30 40 20 10 25 42 27.8 130 22.8
Under Graduate 0 0 0 0 0 0 0 0 3 2 3 0.5
Graduate 5 4.2 0 0 5 2.5 3 7.5 7 4.6 20 3.5
ITI Trained 0 0 7 11.7 5 2.5 0 0 5 3.3 17 3
Engineering
0 0 1 1.7 0 0 0 0 0 0 1 0.2
Diploma
Engineering
0 0 0 0 0 0 0 0 0 0 0 0
Graduate
Total 120 100 60 100 200 100 40 100 151 100 571 100
Including the Excluded 37
40. 3. Marital Status:
As per the survey it was found that about 76.2% of the workers were married.
4. Number of Dependents:
Average number of dependents on 58.7% of those contract workers was found to be
4 to 6, while that in case of 24% of them was 3, which indicates the significant number
dependents on the contract workers. The Chart below gives the relevant details.
Table No. 6
Number of Dependents
No. of A.
Pune % Nashik % Thane % % Mumbai % Total %
Dependents bad
Nil 0 0 2 3.3 0 0 0 0 20 13.2 22 3.9
One 0 0 2 3.3 0 0 0 0 17 11.3 19 3.3
Two 4 3.3 8 13.3 12 6 2 5 23 15.2 49 8.6
Three 12 10 26 43.3 50 25 11 27.5 38 25.2 137 24
4 to 6 104 86.7 22 36.7 138 69 24 60 47 31.1 335 58.7
7 and Above 0 0 0 0 0 0 3 7.5 6 4 9 1.6
Total 120 100 60 100 200 100 40 100 151 100 571 100
38 Including the Excluded
41. Ownership of Residences
The data in respect of the ownership of the residences indicates their economic
status. It is revealed from the survey that 45% of them have their own houses. The rest
of them are staying in the rented accommodations. It is also observed that out of the
contract workers surveyed, the number of those commuting daily from their residences
to the places of work, in the industrial estates is significant. Generally it is seen that,
in the areas surrounding the industrial estates, chawl type structures are built on a
large scale which enables the workers to hire the accommodations in these chawls. It
is also observed that in some cases labour contractors do provide accommodations
to the workmen at their own cost. However barring a few cases, more often than not;
this provision of accommodation benefits the contractor more as he thereby ensures
that the labourers are available to him beyond the legally permissible hours. Besides
thereby these labourers are kept under obligations.
Further it is seen that most of the workers who migrate for the employment, do so
singly. Rest of their family members stay back at their original places. It therefore
becomes possible to provide accommodations to these individual labourers easily.
Table No. 7
Ownership Pattern of Residence
A.
Ownership Pune % Nashik % Thane % % Mumbai % Total %
bad
Own 65 54.2 25 41.7 94 47 18 45 54 35.8 256 44.8
Rented 55 45.8 35 58.3 106 53 22 55 97 64.2 315 55.2
Total 120 100 60 100 200 100 40 100 151 100 571 100
5. Places of Origin:
It is noted that out of 571 contract workers surveyed, about 46% of them have migrated
from their native place to the places of work. This factor is very important. Since there
are no means of earning livelihoods at their places of origin, they have migrated in
search of jobs after studying up to 10 th or 12 th standards out of sheer necessity and
not by their own choice, as stated by these labourers surveyed.
The above personal information of the contract labour has been collected by adopting
methodology of direct interviews. Some of the workers were required to be interviewed
at their residences. This provided an opportunity for us for observing the living
conditions of these labourers. The conditions of the workers staying in the MIDC areas
are found to be worse. The contract workers staying at Kurkumbh (Baramati), Waluj
– Pandharpur (Aurangabad), Rajangaon (Pune) and Satpur (Nashik) are places where
these contract workers have migrated solely for the purpose of earning livelihood and
sending money back home for helping their family members. Their only aim in their
Including the Excluded 39
