Dear HR Professionals, Kindly suggest can we give on job contract rather labour contract to a contractor who is getting daily labours to get the job done. Also, he has less than 20 nos of labours every day and his labours are not fixed he is getting them from the roadside. Being a principal employer do we have to follow any statutory compliance? Also, does he abide by any statutory compliance? pls suggest
From India, Mumbai
Seasoned Ir Professional
Partner - Risk Management


What do you mean by Job Contract ans how does it differ from Labour contract?

If the contractor is to supply manpower, then you should comply with the provisions of CLRA Act. Though the single contractor may be supplying less than 20 workers, but if you have 20 or more such workers through different contractors, you should get Registration under the CLRA. Even otherwise the responsibility of a principal employer towards ESI, PF and payment of minimum wages cannot be ruled out.

From India, Kannur
On Job Contract Means you have quantum of work which you are giving it to contractor to complete the work irrespective of how many labours he will deploy . Its purely completion of job like how we give contract for renovation of our house. I need expert advice on this.
From India, Mumbai

If such contractor is using the materials that you supply and is making it by engaging his workers in your premises, the supervision is established and as such the provisions of CLRA Act and Acts like ESI and EPF will apply. On the other hand, if he is making it from his own premises using the materials purchased by him according to the specifications that you give, and then 'selling' it to you then it will be outside the purview of labour Acts. In the former case intermittent supervision of the quality will be available whereas in the latter case only final inspection of quality will be available.

Court verdicts on the subject show that it is very important to establish supervision over the work other than final inspection to prove master servant relationship to bring in application of labour laws in an outsourcing activity.

From India, Kannur

Dear Sanjay

The definition of contract labour basically says that any person who is working in your premises due to an agreement you have with his direct employer to deliver a result, other than pure sale of goods, is a contract worker. (except those who are there part time and purely admin role).

In view of the above, irrespective of whether he is given a labour supply contract or a job contract, the responsibility and liability is the same for the PE. The thing that will decide the applicability is whether his workers (and not necessary the same worker) regularly work in your premises.

Maharashtra has increased the license applicability from 20 to 50 workers, so he does not need a license. There is a debate (not decided by courts) as to whether the act applies even if the license is not required. So in order to keep yourself safe, ensure that you are verifying his payment of fair wages (and definitely minimum wages), over time at double rate, providing proper leaves and holidays as required under the law, paying all statutory dues.

Further, ensure all safety regulations are followed and if ESIC does not apply, ensure they have workman compensation insurance policy. As Madhu-ji said, ensure that you are not directly involved in controlling or managing the employees of the contractors (other than as required for QC purposes)

If you take care of the above, then you are unlikely to have a problem.

From India, Mumbai

Many Principal Employers have come up with this Idea of job contract instead of work contract so save them from the liabilities of labour laws. But this is not correct system. For example Principal employer is making agreement with the contractor to clean certain square feet area and rates are fixed as per sq/ft area cleaned without going into the requirement of workers for certain work. By doing such a provision, the PE thinks he will get rid of the responsibilities under labour laws like payment of minimum wages, PF, ESI etc.

The Definition of the contractor, contract labour and Principal Employer is covering all the job contracts when the contract labours are employed for any work with or without knowledge of the Principal Employer. The contractor is liable to pay minimum wages to the contract labours employed in his premises for the awarded contract work. If the workers are covered under PF and ESI, LWF, PT all the dues are to be paid/deposited with the concerned authorities and PE cannot shed its responsibility.

From India, Pune

The most important thing to be noted to differentiate a contract which will attract labour laws and that will not attract labour law is in its nature itself. A contract For Service is a contract in which master servant relationship is absent whereas a Contract OF Service is one in which the element of master servant relationship is present.
From India, Kannur

Job contract is helpful for the employer with respect to the work that needs to be done by the contractor. There are advantages to the same. but for the applicability of of labour law compliance-
all Labour Law compliances will be applicable with respect to the job contract done by the contractor.

Radius Enterprise Solutions, Mumbai.
We provide HR & Labour Law Compliance Management Services to different companies in Mumbai and outside Mumbai.
For more details you can go through our website-
Email ID-
Mob no- 9819228732

From India

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