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Dear HR team, Greetings of the day..!! As per Contract Labour Act, 1970 .. under Sec. 1 (4(a)) defines every establishment in which twenty or more workmen, are employed or were employed on any day of the preceding twelve months as contract labour. My doubt is why only 20 or more.. why not 10/30/50.
Thanks in advance.

From India, Hyderabad

Dear Colleague,

We will have a quick look at the below provisions:

The Factories Act 1948 : The Act is applicable to any factory using power & employing 10 or more workers and if not using power, employing 20 or more workers on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of power, or is ordinarily so carried on, or whereon twenty or ...

The Employees State Insurance Act 1948: The ESI scheme is applicable to all factories and other establishments as defined in the Act with 10 or more persons employed in such establishment and the beneficiaries' monthly wage does not exceed Rs 21,000 are covered under the scheme.

The Employees Provident Fund and MP Act 1952 : EPF registration is mandatory for all establishments-which is a factory engaged in any industry having 20 or more persons, and to any other establishment employing 20 or more persons or class of such establishments which the Central Government may, by notification specify on this behalf.

As per Contract Labour Act, 1970 .. under Sec. 1 (4(a)) defines every establishment in which twenty or more workmen, are employed or were employed on any day of the preceding twelve months as contract labour.

Broadly the magic number 20 arise from the threshold number mentioned in the Factories Act 1948 where in it is 20 or more workers without the aid of power. The Government for the purpose of not to take too much into its plate and also to focus reasonably big factories and leaving the tiny factories from coverage of Labour Laws Provision the Magic Number 20 is followed for similar laws also including Contract Labour.

CONDITIONS CODE, 2020 the number of Contract Workers threshold is proposed to be increased to 50 workers or more.
Tamil Nadu

From India, Chennai

The threshold limit for the applicability of the Act is decided looking to the minimum feasibility number for implementation of the Act. The labour legislations are welfare oriented and hence the avowed objective is to widen the coverage so that more gets benefitted. The decision on such numbers is made by the framers of the Act and is not justiciable.
From India, Mumbai

Dear Ganesh,

The very question you have raised is the one that always arises in the inquisitive mind of a person who gives a serious study about the Labor Laws and their applicability based on the number of people employed in certain types of industries and certain types of employment benefits as mentioned by Dr.Sivakumar.

The primary reasons appear to me are the practical difficulties due to
1) the implementation of technical standards involving the safety and health of the people who are directly associated with the processes carried out therein and the environmental impact on the surroundings where such industries are located
2) the nature of certain employment benefits like payment of Bonus, gratuity, enrollment into social security schemes like provident fund, insurance against injuries arising out of employment accidents which require the constant adherence to rules and regulations and upkeep of proper professional accounting which might be very difficult for a small employer and
3) The number criterion could have been perhaps, as opined by Dr.Sivakumar, adopted from the Factories Act which is the mother of all labor laws of the past two centuries. The reasons should be ease of compliance and effective enforcement.

This explanation may sound inadequate as there is the possibility of employees of other establishments being deprived of the rights and benefits available to the employees of large establishments. If we trace the general origin of laws, we will find it emanating from the customs and practices of the orderly societies to regulate the conditions of living and cordial relationship and therefore the main purpose of enactment of laws is to prevent the possible mischief therein likely to be dictated by unscrupulous tendencies. The relationship of employment i.e master and servant is not an exception. This relationship naturally turned out to be an agreement earlier specifying the mutual rights and obligations of the master and servant slowly metamorphosed into what we call now as contract of employment. The advent of industrial revolution and the emergence of joint-stock companies coupled with the trade union movement necessitated the passing of numerous Labor Laws pertaining to establishment-specific, employment condition-specific and industrial relations-specific. The impacts of IT revolution and LPG brought out a paradigm shift in the employment pattern as a result of which we have new classes of employees like gig workers, platform workers etc.However, you may note that labor laws governing certain basic and universal conditions of employment like working hours, leave benefits, minimum wages,tenure of employment, redress of employment grievances do not rest on the number criterion for applicability.
You should also note that saving clause has been included in such number-based laws to ensure continued application even if the number of employees fall below the minimum later and enabling provisions are there to reduce the number to extend the application. In technical labor like the Factories Act, 1948, there is a provision u/s 85 to notify industries engaged in certain manufacturing process as factories for certain purposes of the Act, even they do not have the minimum threshold number of employees. There is no legal bar on a small employer to bestow the benefits of bonus, gratuity etc to his employees and in fact such things happen depending on their cordial relationship and customary practices as in the case of puja bonus to employees.

Therefore, the number of employees in an establishment as a requirement for the applicability of any particular labor law is based on the principles of technical feasibility, professional accounting system, the nature of the service conditions and employment benefits and so on. That's why it is 10, 20,50,100 or 300 and even the number game comes into play in respect of certain conditions like lay off, retrenchment etc in laws which are not restricted by the number of employees principle.

From India, Salem

Dear Ganesh,

Our senior members/colleagues have given their valued opinion to your query.

In my view the law makers might had in mind to provide same and equal status and welfare measures to the workmen under contractor as extended to workmen in a “Factory”. Therefore, it might be the thought in any work twenty or more workers are working, or were working on any day of the preceding twelve months without the aid of power( is ordinarily a factory). Because this CL(R&A) Act came much later even after two decades of Factories Act.

It is much unfortunate and a regrettable matter that this Act become paralyzed by the authority of Execution and Administration. At present the sole objectives is to get manpower at much lower cost. This can be well witnessed in all factories by comparing the wages/facility are being extended to both category of workmen. The workmen under contractor grinded with the structure of minimum wages range between 300-500, this is the plight.

From India, Mumbai
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