Anuj Trivedi
Labour Law Consultant
Senior Manager-hr, Er & Admin
Territory Manager
+1 Other

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Hi there!
One of the good industrial organizations are enganging contract workers in the main production or manufacturing process for support to their regular workers. Is there any restrictions under the law for enganging such contract labour to the main production activity for any organization?
Also, if the contractor is not paying minimum wages as per the prescribed applicable minimum wages act . Is there any binding for the principal employer to pay the wage according to law? (or should have to pay the difference of the decided minimum wages and the actual paid wages by contractor)
Please advice in this regard... possibly through mail.


you should study the Contract Labour Regulationa and Aolition Act of 1970. It is applicable to establishments including industrial establishment, employing 20 or more contract labour. it is applicable to contractors who are employing 20 or more contact workers.

Subject to the applicability of the act, if the work being done by the contract workers comes under 'prohibited category' for which there is a notification, then you cannot employ contract labour in such jobs. If the jobs, donot come iunder the prohibited category, then you can engage contract labour. However, their working conditions are to be regulated as provided under the Act.

As per the terms of licence, the contractor must pay the minimum wages to his workers and the payment of wages should be witnessed by the pricipal employers representative. Contravention of this provision will invite prosecution.

As mentioned by you that similar jobs are being done by regular workers. This will make your position vulnerable as under section 10(3), jobs which are permanent and perenial in nature, can be prohibited by the Government.

In short, you can engage workers on contract, if the work is not under prohibited category.The contractor must pay the minimum wages, and as the priuncipal employer you have to ensure that payment is disbursed in the presence of your representative.



Contract Labour can't be engaged for principal employer regular nature of work.

1. Gujrat E.B. Thermal Power Station, Ukai, Gujrat Fs Hind Mazdoor Sabha & Other 1995 LLR 552(SC)

2. Cipla Ltd Vs Maharashtra General Kamgar Union , 2001 LLR 305(SC)

3. Secretary, Haryana State Electricity Board Vs. Sourish & Others etc. 1999 LLR 433(SC)

4. Steel Authority of India Ltd. Fs National Union Water Front Workers LAR 2001 SC 961

If the work is of a perennial nature and is integral part of operations, there is likelihood of its abolition and in the event of abolition there may be a demand for it absorption by the Principal Employer.

The trend setting Judgment delivered on 30the Aug 2001 LAR 961 S.C. by a Five Judges constitution bench has far reaching implication .

PSU which had been severally affected beside other industrial establishments by Air India Statutory Corporation and others Vs United Labour Union & others Case 1997, (9)SCC 337 which had prohibited the employment of contract Labour even in menial work like cleaning, sweeping , dusting and the security watchman et and they had to absorbed . The constitution Bench reversed the Air India Judgment. The apex court interpreted.

1. the true and correct import of expression "Appropriate Government".

2. Automatic absorption of contract labour, working in establishment of the principal employer as regular employee following issuance of valid notification u/s 10 (1) of the CLRA Act prohibiting the contract labour in concerned establishment.

So we can't employ contract labour in Core Activity.

The provisions of the Minimum Wages Act, 1948 are applicable to the Contract Labour if the employment in which they are engaged is duly covered by Minimum Wages Act 1948.

Rule 25 (IV) of Contract Labour (Regulation and Abolition) Rules stipulates terms and conditions for license.

The rates of wages to contract workers shall not be less than the rates prescribed under MWAct.



In order to understand the provisions of CLRA act and the implications, we normally classify the employment of contract labour in three zones:
1. Critical zone: All jobs which come under prohibited category.
No contract labour should be engaged in such jobs.
2. Danger zone: All jobs which are of permanent and perenial in nature, and which come under clase 10 of the Act. If notification prohibiting such jobs have not been issued, one can engage contract labour but must be prpared to face the implications of their regularisation, if notification is eventually issued.
3. Safe zone: The contarct labour is employed for temparory nature of work,or work of casual nature and such jobs which are not of permanent and perenial in nature.

Thanks Cyril & Anuj for such a valuable information. It will be very helpful to me.
One more question is in my mind.
If any contractor engaging his labours through contract, who are working with him since last 4 to 5 years and which is continuation in nature. Is there any obligation for any contractor or ultimately principal employer to designate these labours as 'permanent' or to provide all the benefits as the permanent labours getting?
If any worker is continuously working with any contractor for more than 180 days, is the contractor bound to make him as 'Confirm' or 'Permanent'?
Please clear this...

Hi.. I am Rajesh,
One question is for Cyril / Anuj, what is your openion about If we hire one contractor and we allow them to use our PF / ESI code to comply with the rules framed thereunder, are there any obligation on us under Idustrial Disputes Act about the claim of employee for permanency in our organisation?

Dear sir What is the minimum wages in skilled peoples working in power plant in Andra pradesh. Kindly send the proper wages for unskilled, semiskilled amd skilled emps in AP
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