Contract Labour Process - CiteHR
Madhu.T.K
Industrial Relations And Labour Laws
DilipSN
Labour Law Consulting & Outsourcing
Jitendersyadav
Hr Manager

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Dear All, I work as HR in Manufacturing industry. I need to set up a process for Contract labour Hiring. Can any body guide me on this. Thanks & Regards Shrini
First of all, you can not engage labour through any contractor on operations related to the core areas of business which are perennial in nature for which a regular employee can be employed. If the operation is not directly connected with the main business like housekeeping, gardening, security service etc, you can have contract labour. If the total number of people to be engaged is not less than 20, you have to take registration under the Contract Labour (Regulation and Abolition) Act from the department of Labour. If any one contractor engages 20 or more persons in your plant, he should also take contract labour licence from the department for which you have to give a certificate declaring that you have appointed him as contractor for engaging labour in your plant.

As Principal employer it becomes your responsibility to ensure that the employees engaged through the contractor(s) are paid at least the minimum wages fixed by the govt. You should also ensure that the contractor complies with statutory rules regarding payment of ESI, EPF etc in respect of employees engaged in your plant. Since it is the duty of the principal employer to ensure payment of wages, contributions towards ESI and PF by the contractor, you will be held liable in case the contractor fails to pay it in time.

Being principal employer,though you have to ensure compliance, you are not expected to negotiate with the employees of the contractor on any matters connected with their wages and other service conditions. You are not supposed to take any disciplinary action against them. By doing so you will be establishing that you have control and supervision over them which will lead to make the contract just a sham contract.

In a situation like that of yours, the contractor has to provide for rest room, lunch room etc and since it is not practical to have separate facilities, the principal employer has to take ownership of these facilities and do the needful so that the workers do not suffer.

Regards,

Madhu.T.K

Hi,
1. First understand the requirement of the Organisation, whether contractual labour requirement would be more than 19 on any day during the proceeding twelve months.
2. Identify the Labour Contractor/ Agency to deploy the manpower in your organisation based on their categorised specialisation. Negotiated with them for Service Charge/ Commission. After Finalisation, Make an agreement with the contractors/ agencies to supply the manpower on the agreed terms & Conditions.
3. If you required more than 19 on average basis then get registered your organisation under CLRA and obtain the Registration Certificate
4. If contractual manpower required more than 19 from an individual contractor/ Contractors, Issue him/ them Form-V and ask him/them to obtain the Licence under CLRA.
5. Follow the rule laid down in CLRA Act for contractual labour.
Incase your required any further help do write us..
Rgds/Jitender

Hi
Pls send following details at
Nature of work of the company -( for decide to register with central or state labour department)
Total number of contract labour/employee/staff wants to hire ( for decide to need to registered the establishment with labour department or not)
Number of contractors with their strength ( for decide to need to apply for Contract Labour Licence or not).
Regards,
Dilip Nandanwar
Labour Law Consulting & Payroll Outsourcing
Navi Mumbai
Cell - 86555 76111

Dear All,
Thanks for your valuable inputs and time for replying to my post.
The above mentioned procedures / things are fine and in place.
The real sceniro is in my present organisation HR has no direct role in hiring contract employees. and now situation is there are more people than budgetd and addition to that OT is being paid to them.
Now the task has been given to HR(Me) to set a process on hiring and OT to avoid the above situation.
Attached is the draft processs which i have worked on. Kindly provide your valuable inputs on the same.
Note :
1. Admin will remain directly involved in contract hiring.
2. These contract are not directly involved in main business.
rgds
Shrini

Hi,

You are very correct that HR will not be involved in contractual manpower hiring & as you are mentioning that the Organisation is over staffed and that task has been given to you to reduce the cost and manpower. To achieve the given task you may follow the following practice : -

1. Get the production planning schedules from the HODs in a day advance.

2. Based on the Production Planning, ask them to analysis the Manpower requirement on daily basis.

3. Give the manpower requirement to contractor to arrange the manpower as per the required schedule (Give requirement in a day advance).

4. After analysing the production schedule & manpower requirement, you may ask the contractor to discontinue the excess manpower.

5. Also take the overtime work schedule from the HODs/ Line Supervisor and make mechanism that incase any worker required to work overtime, permission will be obtained in well advance.

Hope, the above process will help you to reduce the manpower cost without halting the work.

Rgds/Jitender

Why HR is not involved in engaging of contract labour? It is not a child's play that anybody can hire people without following rules- both statutory and internal. If HR is not involved in hiring why he should be involved in sending them out?
Contract labour is a very sensitive area where no engagement should happen without intervention of HR. At the end of the day HR should only be blamed if the contractor fails to pay the statutory wages, PF, ESI etc and also when the workers demand regularisation finding that they are also doing the same kind of job as the other regular workers are doing. Therefore, if the current practice is that the department heads hire them directly, stop it and route it through HR .
Madhu.T.K

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