Query
Seniors, Can we engage contract labour on Core Activity e.g. Production for certain period less than 06 months in an aggregate in total 12 calendar months due to sudden demand from customers as volume increased in production ?

Does Contract Labour Act prohibits engagement of workman in Core Activities?

Thanks in advance.

Regards,
Prashant
7th December 2017 From India, Pune

PARTICIPATING IN DISCUSSION:
Madhu.T.K
Industrial Relations And Labour Laws
Umakanthan53
Labour Law & Hr Consultant
Adv. Manoj Liyonzon
Lawyer, Chennai
Ranjankr
Personnel Officer
KK!HR
Management Consultancy
Sumitro_d
Administration Head
+3 Others

KK!HR 173
Dear Prashant: To meet sudden demand you can engage contract labour, in deed this is an apt situation for using contract labor. There is no distinction made in CLRA Act between core and non-core activities activities. Incidentally Core Activities are those activities which are of strategic importance to the company, they may not be central activity, for example in electronic goods industry Quality Control is core activity - the trade secrets should not go outside the company where as production of components need not be so.
7th December 2017 From India, Mumbai

KK!HR

Please read the CLA & you will know that contract workers can't be used in actual manufacturing process / or core work of an establishment. In fact if you use contract labour in core business process, labour office may abolish such contract work & direct employer to take them on their muster roll. KK!HR please be careful on content you post.
7th December 2017 From India, Mumbai

KK!HR 173
The understanding on CLRA Act is very clear that it is only in prohibited trades that contract labour cannot be deployed. If a trade is not prohibited, be it manufacturing or ancillary to it, the PE can outsource the job. If I am wrong, pl correct me. This has been practised for more than 2.5 decades.
8th December 2017 From India, Mumbai

Dear friends,
The Contract Labor ( Regulation & Abolition )Act,1970, as its short title suggests, is an Act to regulate the working conditions of the contract labor so as to prevent their exploitation by the contractors as well as principal employers and abolish the practice only wherever contract labor are engaged in activities of perennial nature. If we read the provisions of section 10 of the Act, prohibition of contract labor in any process, operation or other work in any establishment is an exercise to be taken by the Appropriate Government after considering the relevant factors mentioned in ss(2) of S.10 only. Similarly, if we analyze the exemption granted u/s 1(5) of the Act to establishments in which only works of intermittent or casual nature is performed, if such works are performed through contract labor beyond the number of days stipulated under the explanation to the above section, automatically the Act becomes applicable. Even in such a situation, prohibition becomes operative only when it is so notified by the App. Govt u/s 10. Till such time, all the provisions relating to regulation including the registration of the principal employer as well as the licensing of the contractors would be applicable to such establishments. Therefore, there is no element of automatic prohibition of engagement of contract labor in core ( the term is not defined in the Principal Act) or perennial process, operation or work in any establishment.
However, the State of Andhra Pradesh has amended S.2 of the Principal Act by inserting a new subsection (dd) and defined the term core activity as any activity for which the establishment is set up and included any activity which is essential or necessary to the core activity while excluding 12 specific activities. Likewise, the A.P Govt has amended S.10(1) by substitution of a sub section by enabling the principal employer to engage contract labor or a contractor to any core activity subject to the conditions (a)the normal functioning of the establishments is such that the activity is ordinarily done through contractors OR (b)the activities are such that they do not require full time workers for the major portion of the working hours in a day or longer periods (c) any sudden increase of volume of work in the core activity which needs to be accomplished in a specified time. But this amendment, as you are aware, is applicable only to the State of Andhra Pradesh.
8th December 2017 From India, Salem

KK!HR

Practice of 2.5 decades does not make it legally correct. When I mentioned PE can't engage them I was writing with reference to section 10 of the Act. There is eminent danger that labour office may intervene & abolish contract as per the provisions of the section. As long as you are not caught, you continue engaging contract workers in legally incorrect way.

"(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 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 whole-time
workmen."

Anyway.
8th December 2017 From India, Mumbai

KK!HR 173
As correctly explained by Umakanthan Sir, unless there is prohibition notified by the Appropriate Government, there is no ban on engaging the contract labour, be it core or non-core operations. The PE will get registration and the contractor will get license under the CLRA Act. As explained by Prashant, the issue pertains to Maharashtra where the AP Amendment to the Act is not applicable. It is in the above context that comment no.2 was made. I agree that continuance of any practice, howsoever long it has been would not render an illegal practice to be legal, the 2.5 decade practice was meant to signify that it is not illegal to outsource any manufacturing activity. Thanks once again to Shri Umakanthan Sir, in explaining in detail the provision for all the citehr affectionados.
9th December 2017 From India, Mumbai

Dear Prashant,
Is engagement of contract labour in said process is ban or not need to be check with the act & rules of the state where the establishment is exist? What made you to raise this question is accademic or problem you anticipate ? There is no need to engage contractor, rather appoint the required manpower on contract basis for six months. You discuss this with the union and take them into confidence and assured some % incentive out of extra gain you expect from this new order. There is always a way..................but to find it within.
9th December 2017 From India, Mumbai

saiconsult 1692
Mr. Umakanthan has put the issue in correct legal perspective. There is no automatic prohibition of contract labor in core activities till it is prohibited in that activity/trade by the appropriate government by way of a notification. However the Principal employer incurs the risk of sec.10 at nay time.

b.saikumar
HR & Labour Law advisor
Navi Mumbai
9th December 2017 From India, Mumbai

Dear colleague,

Nothing stops you from engaging Contract labour in core manufacturing activities if it is not specifically prohibited by Govt notification.

Regards

Vinayak Nagarkar
HR-Consultant
10th December 2017 From India, Mumbai


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