Partner - Risk Management
Korgaonkar K A
Consultancy_hr & Ir
+2 Others

In my company we do not have any employee on roll we have 100 employees from contractor.
My query is should not we have some employees on roll or how many min. employees should we have?
What law says, How many employees can we have on roll or from contractor.or what is the ratio should be.

From India, Mumbai

The law is silent on the question of proportion between regular and contract employees.

I presume that the compliance under various labour laws is impeccable and more particularly under the Contract Labour (R & A) Act.

Then I proceed to know whether the system of engaging contractual labour is "time rate" basis or "piece rate" basis.

Notwithstanding that, I would raise a cautions as under:

1) If the contract between the company is declared in appropriate case by courts to be SHAM (and there amny reasons and factors due to which the contract could be considered SHAM) the company runs the risk under Sec. 10 of the contract labour act, of ABOLITION of contract labour system altogether! This is quite possible if company supervisors and executives are responsible to extract actual work performance from such contract labour.

2) The company will remain vulnerable to individual complaints by contract labour or any other people who may have a secret interest in disrupting company operations!

Yes, the normal practice in evidence, in this regard is, companies do maintain some employees (critical jobs, essential services etc) and only engage contract labour in allied, incidental and non production related tasks like gardening, security etc.

I feel you will get away with your present system only as long as you are LUCKY!

Does that answer your question please?



September 2, 2012


From India, Pune
You do not have any core activities or activities of perennial nature ? Though the Contract Labour Act does not by itself prohibit enaging contract labour even in these activities, the spirit and objectives of the Act is not to substitute contarct labour for permanent employeess in core activities and work of perenniel nature. The appropriate government is armed with powers to prohibit contract labour under SEc.10 of the Act in such activities.It is for you to take a call in this regard.
HR & Labour Law advsior

From India, Mumbai
I agree, this is a dangerous path to follow No court will accept that you do not have core functions or perinial jobs. There are also other rules that apply in terms of unfair labour practices
From India, Mumbai
There is no prescription in law necessitating the ratio of the company employee vis-a vis contract employee. I learnt long ago about a company in New Delhi engaged in engineering works, earning profits but had no employee. Of course, such a practice falls under the category of unfair labour practice.
In order to protect you and your company from the clutches of the law enforcing agencies it is prudent for you to engage workers (including supervisors) on the rolls of the company in core functions while other activities may be outsourced.

From India, Delhi
Dear All,

Although the earlier contributors in the discussions are right, I am reproducing the Section 10 of CL (R&A) Act 1970 to make it very clear.

Sec 10: Prohibition of employment of contract labour.-

(1) Notwithstanding anything contained in this Act, the appropriate Government may, after consultation with the Central Board or, as the case may be, a State Board, prohibit, by notification in the Official Gazette, employment of contract labour in any process, operation or other work in any establishment.

(2) Before issuing any notification under sub-section(1) in relation to an establishment, the appropriate Government shall have regard to the conditions of work and benefits provided for the contract labour in that establishment and other relevant factors, such as -

(a) whether the process, operation or other work is incidental to, or necessary for the industry, trade, business, manufacture or occupation that is carried on in the establishment;

(b) whether it is of perennial nature, that is to say, it is of sufficient duration having regard to the nature of industry, trade, business, manufacture or occupation that is carried on in that establishment;

(c) whether it is done ordinarily through regular workmen in that establishment or an establishment similar thereto;

(d) whether it is sufficient to employ considerable number of wholetime workmen.

Explanation.- If a question arises whether any process or operation or other

work is of perennial nature, the decision of the appropriate Government thereon

shall be final.

I hope Mr. Arora who has started the Thread is now very clear about the answer.

Thanks with regards.

Keshav Korgaonkar,Insurance Advisors,Corporate Advisors,Legal Advise,Wage and salary,,Labour Compliance Audit,SSI registration,NOC from

From India, Mumbai
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