Is Your Housing Society a Principal Employer Under the Contract Labor Act?

Hi all, I have one query related to contract labor. The current scenario is as follows: a Residential Building Housing Society wants to repair small damages and paint the building. The committed members have hired a job contractor to carry out the work. The contractor has engaged laborers to handle the repairs and painting of the old residential building.

Applicability of the Contract Labor (P&A) Act, 1970

Is the Contract Labor (P&A) Act, 1970 applicable to the Housing Society? Can the Housing Society be considered a Principal Employer?

Please reply.

With regards,
Avinash K.

Labor Engagement and Applicability of the Contract Labor Act

How many laborers has the contractor engaged? The applicability depends on the above question. If the labor strength is less than 20, then you need not worry. In some states, the strength must be within 10.

Hi all, the workforce varies from time to time. When repair work is ongoing, it will require around 15-18 laborers, whereas for painting, approximately 16 laborers will be needed.

Regards,
Avinash K.

If you do the same in a phased manner, i.e., first carrying out repair work with 15 to 18 laborers and then, upon completion of the repair work, painting work, you do not need to obtain any license. However, if you undertake the work all at once, then you must obtain a registration certificate under the CL Act, and the contractors you engage must acquire the necessary licenses.

Thank you for your reply.

My point is that the Housing Society is solely used for residential purposes. It is not involved in any commercial or manufacturing activities. Therefore, how could the Contract Labour Regulation and Abolition Act (CLRA) be applicable?

Regards,

If a person is injured in an accident while performing repair or painting work, will the WC Act exclude the owner of the house from paying compensation? There are exemptions for the BOCW Act, but there is no exemption for the CLRA. If you engage any contract labor, you must obtain registration under the CL Act. If the workforce exceeds 20, contractors must apply for a license under the CL Act.

If the total cost is less than Rs. 10 Lakhs, you do not need to apply for BOCW Act registration.

Regards.

Dear Mr. Akatrap,

According to section 1(4)(a) of the Contract Labour (Regulation and Abolition) Act, this law applies to every "establishment" in which twenty or more workmen are employed or were employed on any day of the preceding twelve months as contract labour. Therefore, for the CLRA Act to be applicable to the Housing Society, the society should be an "establishment" referred to in section 1(4)(a) and defined in section 2(e) of the CLRA Act.

According to section 2(e)(i), any office or department of the Government or a local authority is an establishment under this Act. This clause is not applicable to the Housing Society referred to by you. Further, Section 2(e)(ii) states that "establishment" means any place where any industry, trade, business, manufacture, or occupation is carried on. Your post does not indicate whether any industry, trade, business, manufacture, or occupation is carried on by the Housing Society referred to by you.

If your Housing Society does not carry on any industry, trade, business, manufacture, or occupation, then it is not an "establishment" as defined in section 2(e)(ii) of the CLRA Act and therefore need not take out a registration under the CLRA Act if contract labour is employed. You may refer to the judgment in the case Powar vs Labour Enforcement Officer (C) reported in 1993(66) FLR 833 (Kerala) = 1993 I LLJ 521 wherein it was held that the residential quarters of a Bank are not an "establishment" as defined under the CLRA Act and therefore the CLRA Act does not apply.

With regards

As I said, it is purely a residential building. The residents have formed the Housing Society. Over the period of time, maintenance issues have come up, and hence the housing society has decided to carry out maintenance and painting of the building.

Regards,

If, as you have said, the building is purely a residential building and the Housing Society is not carrying on any industry, etc., then the CLRA Act is not applicable. Therefore, the Society need not get a registration under the CLRA Act as Principal Employer, even if more than 20 contract workers are employed. However, the Housing Society will be liable to pay compensation under the Employees' Compensation Act (formerly Workmen's Compensation Act) if the workers engaged for maintenance/repairs are injured or lose their lives as a result of an accident arising out of and in the course of their employment. The applicability of the Employees' Compensation Act is subject to the condition that the ESI Act is not applicable. The circumstances/conditions under which the Employees' Compensation Act is applicable to a particular employment/employer and worker are different from the circumstances/conditions under which the Contract Labour Act or the BOCW Act is applicable to an employer/worker.

With regards,

Mr. Avinash, Mr. Harikrishnan hit the issue on its head. He is absolutely right. The CLRA Act is not applicable to a Residential/Housing Society since it is not an establishment. You can now breathe easy.

Regards,
B. Saikumar
HR & Labour Law Advisor
Mumbai

By the way, what do you mean to convey by the term "COMMITTED" as used in the phrase "Committed members"?

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Thank you for your question. The term "COMMITTED" in the context of "Committed members" typically refers to individuals who are dedicated, loyal, and actively involved in a particular group, organization, or cause. These members are reliable, steadfast, and demonstrate a strong commitment to the goals and values of the group they are a part of.

If you have any further questions or need clarification, please feel free to ask.

It's not "COMMITTED MEMBERS," it's "COMMITTEE MEMBERS" of the Housing Society. It's a spelling mistake on my part, and I apologize for the error.

Regards,

Thank you for your clarification. I was able to guess that correctly, but I preferred to seek clarification so that I may not misunderstand the term before I reply.

Contract Labor and Principal Employer Responsibilities

Regarding your query, if contract laborers have been engaged by the Committee Member in his individual capacity to repair and paint his own residential house, the Society is not involved in an official capacity for that. Therefore, the Society cannot be treated as the Principal Employer. The Committee Member himself would be responsible for any legal implications.

However, if the Committee Member has employed contract laborers through a labor contractor on behalf of the Society, the Society would become the Principal Employer in an official capacity. But, if the said Committee Member is responsible for the supervision and control of the contract labor establishment on behalf of the Society, he would be treated as the Principal Employer.

Repairs and painting work to a building by a contractor come under intermittent work of a casual nature. Even if the contractor engaged 20 contract laborers for this purpose, the Contract Labor (R&A) Act will not apply.

Regards,
D. Gurumurthy LL, HR & IR Consultant

Could you please specify the statutory provision for your proposition that the Contract Labour (Regulation and Abolition) Act will not apply to intermittent work of a casual nature undertaken by a contractor?

With regards,
Regards

Also, see that the contract agreement is for the completion of the work only or as engaged as one of the ongoing activities under the Maintenance department of the cooperative housing society. If the contractor is for "a few days," then it's based on the agreement, and the contractor is responsible for any compensation in case of an accident. Experts, please guide.

I have been going through various posts on this subject, and nobody has addressed the basic issue except Mr. V. Harikrishnan. As he has elaborately explained in his post why the CLRA is not applicable to a housing society, you can go by his views.

Regards,
B. Saikumar
HR & Labour Law Advisor
Mumbai

Mr. Harikrishnan and Mr. Dhingra are absolutely right. The CLRA cannot be applicable to a housing society by any stretch of the imagination as there is no commercial activity involved in it.

Dear Shri. Kamal Kant Ji (Advocate),

With due respect to you, Sir, I feel you have made a mistake in reading the reply of Shri. Dhindgra Ji (Advocate). What he has said is the Society would become the Principal Employer, which is very contradictory to the reply of Shri. Harikrishan.

My Say on the Subject Matter

A Co-operative Housing Society is not an establishment under CLA as defined therein. Also, there is a judgment of the Kerala HC as stated by Shri. Harikrishan. It was even mentioned to me by someone that the Mumbai High Court also has a similar judgment.

A Co-operative Housing Society is not an industrial establishment or undertaking or industry under the ID Act as defined therein.

The EPF Act is not applicable to a Co-operative Housing Society employing less than 50 employees (Section 16 (a)).

I have not come across any provision or notification covering or not covering a Co-operative Housing Society under the ESI Act. However, such repairs and painting work can be exempted from ESI.

It is advisable to hire a contractor for this work who is covered under the ESI Act. Otherwise, the Employee Compensation Act is applicable to this work.

The said repair and painting work may fall under the purview of the BOCW Act if the cost of work is more than 10 lakhs.

Experts are requested to contribute their views on this matter.

Thanks and regards,

Keshav Korgaonkar

http://www.shantadurgaent.com - Insurance Advisors, Corporate Advisors, Legal Advice, Wage and salary, Shantadurgaent.com, Labour Compliance Audit, SSI registration, NOC from

Dear V. Harikrishnan, My point is, if the Housing Society has not been formed, then is the CLRA Act/Rules applicable? Please revert to me as this matter is very urgent.

Regards,
AK SHARMA

Dear Keshav, Please understand that the Contract Labour Act is applicable to the establishments where some commercial activities are going on. However, in your case, it is a housing society which cannot be said to be conducting some commercial activity. That is why CLRA would not be applicable here.

Dear Shri. Kamal Kant ji (Advocate),

Thank you very much for your posting. Your posting gave me an opportunity to go through the thread once again. Due to this, I could trace out the judgment in Powar vs Labour Enforcement Officer (C) 1993 (66) FLR 833 (Kerala), which was requested by one of our colleagues, Shri. Anil Sharma.

Clarification on the Applicability of CLRA Act

I clarify myself as follows:

I mentioned in my post that a Co-operative Housing Society is not an establishment under the CLRA Act as defined therein. Shri. Hariharan also stated that a Housing Society does not carry on any industry, trade, business, manufacture, or occupation, and therefore it is not an "establishment" as defined in section 2(e)(ii) of the CLRA Act. Consequently, it need not take out a registration under the CLRA Act if contract labor is employed. However, Shri. Dhingra mentioned that the society would become the Principal Employer.

Hence, I pointed out to you that Shri. Hariharan and Dhingra are not in agreement on this matter. You have rightly said that the CLRA Act cannot be applicable to a housing society by any stretch of the imagination, as there is no commercial activity involved in it.

Regards,

Dear Anil Sharma,

Please find enclosed a copy of the judgment in Powar vs Labour Enforcement Officer (C) 1993 (66) FLR 833 (Kerala) and in Gowrisankaran K. vs Labour Enforcement Officer.

In response to your query to Mr. Harikrishnan, in my opinion, even if the housing society is not formed, the CLRA Act and rules would not be applicable, provided the Registration Certificate obtained by the Developer and Builder while constructing the building is surrendered upon completion of the project or upon obtaining the occupation certificate.

Regards,
AK SHARMA

I reside in a housing society that is registered under the Societies Act. There is a single employee responsible for cleanliness, security, STP maintenance from morning to evening, and is also required to sleep (only sleep) in the parking area at night for security purposes. There are no clear rules regarding the number of work hours per day/week or designated rest times. Can he be terminated with short notice (considering he has been working for the Society for 4 years)?

Regulations Governing Employment in the Unorganized Sector in India

What are the regulations governing the employment of labor in the unorganized sector in India, such as household workers, similar to this employee? Are individuals in this category entitled to leave, standard working hours per week/day, etc.?

Awaiting your response, please.

Thanks,

Mims

Attribution: https://www.citehr.com/203278-housin...#ixzz2TKuGGmc6

Continuing the Discussion on Labor Laws and Housing Societies

Dear All,

I would like to continue this old discussion. I also agree with Saikumar ji. In the entire discussion, only the point made by Harikrishan ji is in the right direction.

Please do not misunderstand me. I have no intention to hurt anyone. I wish to draw your kind attention only with the intention to exchange, share, enhance our information and knowledge, and correct ourselves.

The Question: Are Labor Laws Applicable to Housing Societies?

Judgments in Powar V. LEO© and Gowrisankaran K Vs. LEO have been given by me earlier. In addition to that, the following points may also be considered.

The society is under a statutory duty to manage, administer, and maintain the building of the society, pay property tax, water tax, and common electrical charges in stipulated time. Apart from this, maintenance of the building and other amenities such as sweeper services, security services, lift services, switching on/off common lights, pumping of water, etc., are to be looked after. The Managing Committee is responsible for this. The members of the society elect the Managing Committee. Each member is required to contribute his share of contribution to meet the expenses of the society. The Managing Committee or the society is required to hire services from various persons.

The services rendered to members are domestic in nature, like operating lifts, water supply, electricity, cleaning, sweeping, and security. Even repairs and maintenance are domestic in nature, according to me. These services are essential for the very existence, safety, and security of the members of the society and the building of the society. These services, therefore, are in the nature of personal services and cannot be said to be economic activity. Such services, as contended by itself, would not make the society a "shop." (Ref. ESIC Vs. Tulsiani Chambers HC Mum 2008 LLR 362).

A society consisting of various premises used for business purposes by the members is required to collect maintenance charges and statutory charges from its members under the provisions of the Co-operative Societies Act and its Bye-Laws. Such activity of the society would not amount to commercial or business activity. The society is hence not covered even under section 1(3) of the EPF&MP Act 1952. (Ref. Backbay Premises CHS Vs. Union of India 1997 (2) CLR 1075).

A Co-operative Society is neither an establishment that carries on any business, trade, or profession nor a society registered under the Societies Registration Act. It is therefore not a commercial establishment as defined under the Bombay S&E Act and hence it will not come within the purview of the Bombay S&E Act. (Ref: letter of Under Secretary to GOM addressed to Mumbai District Co-op. Housing Federation).

A society cannot be held to be an industry or shop, and at the highest, it can be stated that employees of the society are rendering personal services to the members of the society. The ID Act 1947 is not applicable to the society (Ref: Apex Court in Management of SOM Vihar Apartment Owners Housing Maintenance Society Ltd. Vs. Workmen, Indian Engineering and General Mazdoor 2001 LLR 599: 2001(3) LLN 815 (SC)).

A society in which its members carry on commercial and trading activities cannot be treated or said to be engaged in any commercial venture of business, trade, or profession and does not even amount to a "commercial establishment," much less a "shop." Such a society is amenable to the Minimum Wages Act 1948 insofar as employees of the society are concerned. (Ref: Kiran Industrial Premises Co-op Society Ltd. Vs. Janata Kamgar Union 2001 9890 FLR 707 (Bom)).

A CHS having residential and commercial tenements is not an establishment if it is not carrying on business, trade, or profession, even though some of its members are carrying on business, trade, or profession in their premises. The relevant test is whether the society is carrying on business, trade, or profession. Mere rendering of service by the society to its members cannot be said to be either business or trade or commercial activity to come under the purview of the Security Guards Act. (Ref: Maharashtra Rajya Suraksha Rakshak & Gen. Kamgar Union Vs. Security Guard Board for Greater Mumbai and Thane District 2007 (2) AIR Mom. R. 146 (DB)).

Hope the above points are sufficient to conclude whether the labor laws are applicable to societies.

Regards,
[Name Removed For Privacy Reasons]

Dear Mr. Korgaonkar,

I appreciate your discussion on the applicability of certain Labor Laws to CHS. Certainly, you have argued quite well. However, I would defer with a viewpoint that such logic cannot be applied as a blanket application to all possible cases of CHS. For example, considering these days that there are several large CHS forming of 1000+ members, or even Federation of CHS happening within the same premises (amalgamations). In such events, it is not so black and white to think that there is no economic interest. Say, if one security guard has to render a personal service to only one member, then it would cost such a member a lot more, but when a few members come together, they share such a bill, making their outgoings quite low. This certainly can be construed as an economic interest. Thus, it is not entirely true to say that there is no economic interest. Societies do have economic interest as mentioned under Section 4 of the Maharashtra Cooperative Societies Act, and such economic interest has to be looked after by the management committee (this principle is used by several Consumer Court case laws).

The purpose of CLRA is to protect the interests of the unorganized workforce who usually bear economic disadvantage. The laws are written to protect the weaker person or weaker section of society, as for obvious reasons, the stronger one rules the weaker one. This is the essence of common law. The laws are made for the welfare of mankind.

Besides, you may also know the legal maxim, "Those that cannot be done directly cannot be done indirectly." Let's consider this hypothetical situation. Just to bend the rules, 100 small subcontractors are formed, and no subcontracting company employs more than 20 persons, and all such subcontracting companies support a single Principal Employer. Such an arrangement would then defeat the purpose of the CLRA.

Certainly, the law is dynamic, and its interpretation keeps on changing with changing times. The interpretations of Article 21 of India's Constitution have widened so much since the 1950s. Therefore, I feel that each CHS case has to be evaluated based on the facts that are linked with its operation.

Regards,

P. Nadkarni
Advocate

Dear Nathrao, Your contribution is well appreciated by me. To elaborate on what you said, I had provided my quote in an earlier post in the thread. However, the same quote was deleted, possibly due to some technical reason. The quote is reproduced hereunder:

"The services rendered to members are domestic in nature, like operating lifts, water supply, electricity, cleaning, sweeping, and security. Even repairs and maintenance are domestic in nature, according to me. These services are essential for the very existence, safety, and security of the members of society and the building of society. These services, therefore, are in the nature of personal services and cannot be said to be economic activity. Such services, as contended by itself, would not make the society a 'shop.' (Ref. ESIC Vs. Tulsiani Chambers HC Mum 2008 LLR 362)"