in a manufacturing unit if an organization have 50 employees are on company roles and rest of the 450 employees are contract workers. is there any legal provision against this.
From India, Chennai
Industrial Relations And Labour Laws
Manager - Human Resource
Gujarat Intrux Limited Head Hr & General
Korgaonkar K A
Private Consultant On Labour Laws
+2 Others

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Dear Sowmyarekha,
There is nothing any provision about how many no, should be on contract & how many on roll, only subject to there should not differentiate about the benefits within them.
Tushar Swar

From India, Mumbai

Do you mean any remedy for this or something else to safeguard the interest of the employer?

First of all as per the Contract Labour (Regulation and Abolition) Act you can not have contract labour on works of perennial or recurring nature which is incidental to the main activities of the company. In your case, I think you are engaging the contract workers in core areas of operations, that it is understandable that you do not require housekeeping, security or other casual workers ten times more than the employees employed for production. That means there is clear violation of legal provisions in this regard. Therefore, therefore, you will not get the protection of law.

If you need remedy for this, you can have, you just take all those who are engaged in routine, perennial or works which require engagement of permanent workers, in to your rolls and start paying their wages directly. This is the only solution. By doing this you become safe both in terms of law as well as financially because by engaging a contractor you must be paying a good amount to him as his service charges in return for no service. You have to take care of the remittances of PF, ESI, payment of wages, Bonus etc and at the same time you do not have any direct control over the workers also. You can not take any disciplinary action against any of them, you can not make them follow the HR or other policies or just Standing Orders of the company. If you put pressure on them, legally, that will prove against you with issues of sham contract etc. Then why should we go for off roll system? If they organize themselves, we should get involved in their negotiation etc and if we have to do that the picture would become very clear that this arrangement is just a windscreen. That was why while delivering the verdict in Bhilwara Dugdh Utpadak Sahakari S. Ltd. Vs. Vinod Kumar Sharma Dead by LRS & Ors. The Supreme Court has said that “…… this new technique of subterfuge has been adopted by some employers in recent years in order to deny the rights of the workmen under various labour statutes by showing that the concerned workmen are not their employees but are the employees/workmen of a contractor, or that they are merely daily wage or short term or casual employees when in fact they are doing the work of regular employees. This Court cannot countenance such practices any more. Globalization/liberalization in the name of growth cannot be at the human cost of exploitation of workers”.


From India, Kannur
Dear Madhu sir,
Thank you very much for your quick reply
In this case contractor is sister concern of company in this case to avoid union problems contractor came into existence in that case can u suggest a remedy

From India, Chennai

Since the contractor has some kind of influence, the entire system seems to be sham and the only remedy is to take the employees under your rolls. Yes, there are a lot of companies, very big companies including public sector companies who work like that of yours with a major chunk of employees under some other outsourcing agencies rolls. But I cannot suggest a feasible solution for carrying out business like this. As already pointed out, if you want to do this just to avoid union involvements, you are mistaken; the contract labour can raise an industrial dispute and in such a scenario your standing orders will not help you too. Remember what happened in Maruti.

From India, Kannur

There is one more issue.The contract employees in core functions are more than the regular employees,the contractor/s can stall the functions of the company on a dispute. Varghese Mathew 09961266966
From India, Thiruvananthapuram

Please find the GO on Contract labour Appointment. Please go as per the Attached GO
From India, Vijayawada

Attached Files (Download Requires Membership)
File Type: pdf Go on Core Activity-Contract labor.pdf (13.7 KB, 696 views)
Dear sir, in this case contractor is also running by principal employer
From India, Chennai

The answer is very simple. First the Principal Employer should obtain Form V under CLRA. Thereafter Contractor will obtain the CL Licence.If in the CL Licence you have the permission to employ 450 then it is legal .If not you need to get the licence to deploy the 450 contract workers.


Extracting Rule 18 of the CLRA Rules

18. Grant of certificate of Registration.—

(1) The certificate of registration granted under sub-section (2) of sec. 7 shall be in Form II.

(2) Every certificate of registration granted under sub-section (2) of Sec.7 shall contain the following particulars, namely:

(a) the name and address of the establishment;

(b) the maximum number of workmen to be employed as contract labour in the establishment;

(c) the type of business, trade, industry, manufacture or occupation which is carried on in the’ establishment; -

(d) such other particulars as may be releyant to the employment of contract labour in the establishment.

(3) The registering officer shall maintain a register in Form lit showing the particulars of -establishments in relation to which certificates of registration have been issued by him.

(4) if, in relation to an establishment, there is any change, ‘in the particulars specified in the certificate of registration, the principal employer of the establishment shall Intimate to -the registering officer, within thirty day from the date written such change takes place, the particulars of, and the reasons for, such change.

Therefore under Rule 18 (2) (b) the maximum No will be specified.If in the Registration Certificate 450 is permitted then its deployment will be legal.

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