Is the Contract Labour Act Applicable When One Contractor Supplies 45 Workers Across Multiple Sites?

Dear All,

Under the Contract Labour (Regulation & Abolition) Act, it applies to every establishment in which twenty or more workmen are employed on any day in the preceding twelve months as contract labour. We have 9 establishments under one umbrella. My query pertains to a situation where one contractor is supplying 5 contract labourers to each establishment, resulting in a total of 45 contract labourers. Could you please confirm whether the aforementioned act is applicable to the contractor in question?

Regards,
RNSwamy

Dear R N Swami,

If all the nine establishments have their separate entity and are separately registered under either the State Shops Act or the Factories Act, 1948, then, in my opinion, he is not required to have any license under the Contract Labour (Regulation & Abolition) Act, 1970.

With Regards,
R.N. Khola

The contention of Mr. R N Khola is correct. However, as the principal employer, you need to register your establishment with the Labour Dept for engaging a contractor.

Thanks
Regards

I have a query. If we would like to have housekeeping on contract, what compliances do we need to take care of?

Thanks for your help,

Raman

Dear Sir,

Please see section 1(4)(b) of the Contract Labour Act. According to this section, the Act applies to every contractor who employs or who employed on any day of the preceding twelve months twenty or more workmen. So, the Act applies to the contractor if they employ 20 or more workmen. In the case referred to by Mr. Narayanaswamy, the contractor, having employed 45 workers, is covered by the CLR Act. Section 1(4)(a) uses the word "establishment," while section 1(4)(b) uses the word "contractor."

If the nine separate establishments are controlled by the same management or board of directors, then it will be easy for the authorities to prove that there exists functional integrality or dependency among each unit. This, in turn, will lead to the clubbing of units for deciding coverage under the EPF Act, ESI Act, and other similar labor acts. Viewed from that perspective, even if the units have different factory or shop registrations, the CLRA Act provisions will still be applicable.

Regards, Madhu.T.K

Dear Sir,

It makes no difference even if the nine employers are owned by different legal entities. If the contractor who supplies workmen to these nine employers, whether they are under the same umbrella or not, whether they are different entities or not, the contractor, having employed more than twenty workmen in the case referred to by Mr. Narayana Swamy, is bound to take out a license. Section 1(4)(b) makes the CLR and A Act applicable to every contractor who employs twenty or more workers. According to section 12(1) of the CLR and A Act, it is the legal obligation of a contractor who employs twenty or more workers to take out a license. In this case, as in any case where there is an engagement of contract labour, the employer of the contract worker is the contractor and not the principal employer. It may be that all the contract workers employed by the individual contractor are not working in the same location, but still, they continue to be the employees of that particular contractor irrespective of their location/place of employment.

Yes, I understand. But my post was to say that if the nine establishments are working under the same umbrella, then registration as is required to be taken by the Principal Employer for engaging contract labour will have to be taken by the employer. If these nine units have separate functional identity, then each unit may not be required to take separate registration under the CLRA Act. On the other hand, if functional integrality is proved, all the nine units could be clubbed together, following which the requirement of taking registration will be applicable to the unit.

For the purpose of Provident Fund and ESI coverage, it is very common that the authorities club the units. In the similar way is it not possible in the case of Contract labour also?

Regards,

Madhu.T.K

Dear Sir/Madam,

Please let me know what the labor laws are for contract laborers who work in the agricultural sector, agricultural farms (private limited), or seed companies in India, specifically for Karnataka.

Could you also suggest any books on this topic?

Regards,
Manju