Is It Legal to Hire Outsourced Staff for Permanent Roles in Manufacturing? Seeking Advice

Hi Friends, I need your suggestions on staff outsourcing. I am working in a manufacturing unit of a pharma company. We are planning to hire employees through third-party arrangements. I have some doubts:

We will be engaging employees through third-party contracts, and they will work at our plant in various positions, some of which may be permanent. Is it legal to hire outsourced staff for permanent positions, considering the Contract Labour Act prohibits deploying contract labor for permanent roles?

Additionally, if an individual works for more than six months in a manufacturing plant, do they transition from off-rolls to on-rolls?

I would be highly grateful for any valuable suggestions.

Regards,
Pankaj Sharma

Legality of Engaging Employees Through Contractors

It is not legal to engage employees through contractors for jobs of a regular nature. However, in the current business environment, many corporate giants are adopting this practice, perhaps to avoid trade unions or similar issues. It is important to note that it is against the law to engage contract labor for core activities.

Nevertheless, if a specific activity is outsourced, such as manufacturing a certain type of bearings, wrapping finished goods, or telemarketing, then it may be permissible. In a manufacturing industry, the feasibility of such practices needs to be carefully examined.

Regards,
Madhu.T.K

Please check whether you can obtain a Certificate of Registration under CLRA for engaging the Contract Labour. If the Department grants it, then you can proceed. The procedure is as follows:

REGISTRATION AND LICENSING

Manner of making an application for the registration of establishments —

1. The application referred to in subsection (1) of Section 7 shall be made in triplicate on Form I to the registering officer of the area where the establishment sought to be registered is located.

2. The application referred to in sub-rule (1) shall be accompanied by a treasury receipt showing payment of the fees at the rate prescribed in Rule 26 for the registration of the establishment.

3. Every application referred to in sub-rule (1) shall be either personally delivered to the registering officer or sent to him by registered post.

4. Upon receipt of the application referred to in sub-rule (1), the registering officer shall, after noting the date of receipt by him of the application, grant an acknowledgment to the applicant.

Grant of a Certificate of Registration

1. The certificate of registration granted under subsection (2) of Section 7 shall be in Form II.

2. Every certificate of registration granted under subsection (2) of Section 7 shall contain the following particulars:
- (a) the name and address of the establishment;
- (b) the maximum number of workmen to be employed as contract labour in the establishment;
- (c) the type of business, trade, industry, manufacture, or occupation carried on in the establishment;
- (d) any other relevant particulars to the employment of contract labour in the establishment.

3. The registering officer shall maintain a register in Form III showing the particulars of establishments for which certificates of registration have been issued by him.

4. If there is any change in the particulars specified in the certificate of registration for an establishment, the principal employer shall notify the registering officer within thirty days of such change, providing the details and reasons for the change, and submit an application for the modification of the registration certificate along with the prescribed fee.

Please review the process; the solution/rejection will be automatically generated.

Regards,
rajanassociates. https://www.citehr.com/285737-legal-...-industry.html

Administrative Work and Contract Labor

Administrative work is also directly connected with the main activities of the company; therefore, you cannot engage contract labor in administration. If you write "administrative work" in the required column in the application for registration under the CLRA Act, your application will be straight away rejected.

Regards,
Madhu.T.K

Dear Mr. Pankaj Sharma, Please indicate the appropriate Government under the Contract Labour (Regulation and Abolition) Act in respect of your industrial establishment. If, in the case of your establishment, the State Government is the appropriate Government, please indicate the State in which your establishment is situated. Also, please indicate whether your State Government has carried out any amendments to the Contract Labour (Regulation and Abolition) Act incorporating the processes or activities or work in which contract labour should not be engaged. Also, please indicate specifically whether Section 10 of the Contract Labour (Regulation and Abolition) Act has been amended by your State Government. A view on your first post and subsequent posts could be formulated only with the above-required information. Please see Section 10 of the CLRA Act. It gives power to the appropriate Government to prohibit the employment of contract labour in any process, operation, or other work in any establishment. If such an order is made by the appropriate Government, then contract labour cannot be employed in such a process, operation, or other work of the establishment. Conversely, if no such order prohibiting the engagement of contract labour is in existence, then the principal employer can engage contract labour. In some States, the State Governments have amended the CLRA Act prohibiting the engagement of contract labour in core activities. Certain States, for instance, the State of Tamil Nadu, have not carried out any such amendments. Furthermore, the Central Government has prohibited the engagement of contract labour in certain processes, operations, and other works. Certain State Governments have also prohibited the engagement of contract labour in specific processes, operations, and other works. Therefore, I have sought the above-mentioned information from you. I trust you would appreciate the reasons for asking for this information. Without this information, it will not be possible for me to formulate a view on the query raised by you in your first post in this thread.

With regards,

I perfectly agree with Mr. Hariharan. Apart from Andhra Pradesh, no state government has expressly prohibited engaging contract workforce in the core activities of an organization.

Regards

Dear Sir, Thanks for your reply. I am working in Himachal Pradesh. As far as my knowledge is concerned, the State Govt. has not made any such amendments in CLRA. One of the amendments which I have found is attached, which doesn't indicate any orders. Please suggest.

Dear Mr. Pankaj Sharma, I presume that the appropriate government in your case is the Himachal Pradesh Government. I have seen the notification uploaded by you. It is a notification issued by the Government of H.P. making certain amendments in the Contract Labour Rules. You say that as far as your knowledge goes, there are no other amendments. Based on this information furnished by you, my view is that you can engage contract labour for the activities specified by you in your first post in this thread. Of course, in case the number of contract workers employed by you is twenty or more, you have to register your factory under the CLRA Act. If the contractor employs twenty or more workers on contract, then he has to take out a license under the CLRA Act.

With regards,