Labour Law & Hr Consultant
Industrial Relations And Labour Laws
Adv. Manoj Liyonzon
Lawyer, Chennai
Personnel Officer
Management Consultancy
Administration Head
+3 Others

Thread Started by #Prashant B Ingawale

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.
7th December 2017 From India, Pune
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
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
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
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
8th December 2017 From India, Mumbai
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
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.
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.
Vinayak Nagarkar
10th December 2017 From India, Mumbai
No. Contract Labour Act do not Prohibits Engaging Workman in Core Activities. However if the nature of new activity differs from earlier work, then Wages, Incentives, Safety Measures, Fringe benefits shall apply accordinglywith prior notification and sufficient period
Adv Manoj Liyonzon

+91 7010513085
11th December 2017 From India, Chennai
The requirement is just for 6 months over a period of 12 months period. Then why don't you employ workers directly for 6 months? Pay them wages directly, contribute to their PF, ESI etc directly without involving a contractor in between. This is even possible by employing a certain number of workers on a fixed term contract and terminate them once the work is over. Since the termination of fixed term employees will take place automatically, the retrenchment clauses will not become applicable. Even otherwise, for a normal working of 6 months which should be less than 240 days the retrenchment provisions will not come into picture. I think this kind of employment would be more safe.
11th December 2017 From India, Kannur
Ok so any manufacturing unit whose core business is the manufacturing of products, can not employ any contractual worker in the core section of manufacturing. Fine but if they get their all benefits as same as co payroll permanent worker i.e PF, ESI, Pay, Bonus, what's the issue? The more people will get a job as per state minimum wage scale. PE must monitor the payment stringently of those workers.
12th December 2017 From India
Dear Sumitra,
If you read all the posts carefully, you will realise that CLAct does not prohibit engagingg contract labour in core activities as such and when Govt wants to prohibit
in certain industry it notifies to that effect in the gazette. In the absence of such notification, one can engage CL in core activities.
Vinayak Nagarkar
12th December 2017 From India, Mumbai
Yes, you can engage the contract labour in the core activities of your establishment also. The CLRA Act does not prescribe the notion that you can or can not engage contract labour in certain activity. It is only the Appropriate Government who can notify in what activities contract labours can not be deployed. Other than that, contract labours can be engaged in almost any activity. However, as a professional we must foresee the implications in future before engaging contract labours in certain activities such as core activity as you suggested as it may lead to problem in future regarding employment and unnecessary litigation in this regard.
12th December 2017 From India, Calcutta
All of you please read section 10 of the Act. I had pointed to imminent danger of prohibition order for engaging contract labour in core process. It is call of the org whether to take risk or not.
13th December 2017 From India, Mumbai
Dear colleague,
No doubt there is exposure. But I want to know, in how many industries Govt has prohibited engaging Contract labour in core processes ever since tha Act came into existence? Therefore, despite certain amount of risk , organisations are engaging Contract labour in core processes by complying with the regulatory provisions of the Act and carrying on with the business for many year
. It is rampant practice to engage contract labour in assembly operations in electronic/ electrical industry, garment and such others in the absence of prohibitory orders.
The Act seeks to regulate service conditions of contract labour where it is not prohibited.
Vinayak Nagarkar
13th December 2017 From India, Mumbai
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