Navigating Contract Labour and Outsourcing: Your Questions Answered on Legalities and Best Practices

raghvendrasingh
Respected all, please suggest answers for these questions.

1. Differences Between Contract Labour and Outsourcing
What are the differences between contract labour and outsourcing? Which is a better option and why?

2. Applicability of Contract Labour Act
Is the Contract Labour Act applicable when jobs and services are outsourced?

3. Liability for Staff Engaged Through Manpower Agency
What is the liability for staff engaged through a manpower agency?

4. Applicability of Contract Labour Act to Seasonal Labour
Is the Contract Labour Act applicable to seasonal labour?

5. Understanding "Sham" Contracts
What is a "sham" contract?

6. Non-Perennial and Non-Permanent Jobs
What are non-perennial and non-permanent jobs which can be assigned to contract labour?

7. Provisions for Contractors Engaging Less Than 20 Workers
Each contractor engages less than 20 workers, but together they engage more than 20. Will the provisions of registration, licensing, and other statutory provisions apply?

8. Principal Employer in Sub-Contracting
If a contractor engages a sub-contractor, who is the principal employer?

9. Converting Labour Supply Contract to Job Contract
How to convert a labour supply contract into a job contract?

10. Employer's Role in Selection of Contract Labour
Can and should the employer have a say in the number and selection of contract labour?

11. Contract Labour in Place of Permanent Employees
Can we engage contract labour in place of permanent employees?

12. Contract Labour in Manufacturing Jobs
Can and should we engage contract labour in manufacturing jobs? What is the risk involved?

13. Issuance of Appointment Letters to Contract Labour
Should the contractor issue appointment letters to contract labour?

14. Issuance of Employment Cards to Contract Labour
Is it necessary and desirable to issue employment cards/gate passes/identity cards to contract labour? If so, under whose authority/signature? What are the safeguards required?

15. Permanent Employees and Contract Labour Working Together
Can we have permanent employees and contract labour working side by side on the same job?

16. Ratio Between Permanent Employees and Contract Labour
What is the best ratio between permanent employees and contract labour? Can we engage 100% contract labour?

17. Rotation of Contractor and Contract Labour
Should the contractor and contract labour be rotated? Why? How often?

18. Wages and Terms for Permanent Employees and Contract Labour
Can we have different wages and other terms for permanent employees and contract labour doing the same or similar job?

19. Transfer of Casuals/Temporaries to Contractor's Rolls
Can we transfer casuals/temporaries to the rolls of the contractor?

20. Compliance with P.F., ESI, Bonus, Gratuity for Contract Labour
Application and implication of P.F., ESI, Bonus, Gratuity, and other benefits to contract labour and how to ensure compliance?

21. Submission of PF and ESI Returns by Contractor
How to ensure submission of PF and ESI returns by the contractor?

22. Obtaining a New Code/Sub-Code from PF Authorities
How to get a new code/sub-code number from PF Authorities?

23. Sustainability of Contract/Voucher Payment for Services
Security, housekeeping, drivers, canteens, horticulture, etc., on contract/voucher payment. Sustainability? Case laws?

24. Liability of Principal Employer for Injuries and Illness
What is the liability of the principal employer for injury, illness, disability, death, etc.?

25. Disciplinary Action Against Contract Labour
Who is to take disciplinary action against contract labour? Under what rules? Are standing orders applicable to contract labour?

26. Safeguarding Management's Interests in Awarding Contracts
Statutory requirements and precautions in awarding contracts for safeguarding management's interests.

27. Legal Implications of Unrenewed Contractor Licenses
License not renewed but contractor continues to work. Legal implications including permanency?

28. Implications of Contractor Changes Without Labour Changes
Contractor changing but contract labour not changing. Implications? Precautions required?

29. Contract Termination Due to Unsatisfactory Performance
Contract terminated due to unsatisfactory performance of the contractor, contractor leaves. Can contract labour claim permanency? What should the principal employer do?

30. Contract Labour Termination Through Settlement
Contract labour terminated through a settlement. Should the principal employer be a party?

31. Non-Payment by Contractor
What to do if the contractor refuses to pay labour? Can and should the principal employer pay contract labour directly? Any risk involved?

32. Actions Post-Abolition of Contract Labour
Action required to be taken by the management after the abolition of contract labour?

33. Reducing or Eliminating Contract Labour
How to get rid of contractor and contract labour?

34. Reducing the Number of Contract Labour
How to reduce the number of contract labour?

35. P.F. and ESI Contributions for Casual Employment
Do we have to make P.F. and ESI contributions even for a few days of casual employment?

36. Handling Demands for Permanency by Contract Labour
Contract labour demanding permanency. How to handle?

37. Claims for Similar Benefits by Contract Labour
Contract labour demanding similar benefits as permanent employees. Is the claim legally valid?

38. Applicability of Pension Scheme to Contract Labour
Is the pension scheme also applicable to contract labour? Details of the Pension Scheme?

39. Applicability of Minimum Wages Act to Contract Labour
Is the Minimum Wages Act applicable to contract labour?

40. Splitting Minimum Wages to Reduce PF Liability
Can we split minimum wages so as to reduce PF liability?

41. PF Deductions on Wages
Is P.F. to be deducted on basic wage, basic plus DA, or total wage? Elements to be included?

42. PF Exclusion After Salary Increase
Employed at Rs. 5,000/-. Can the employee be excluded for P.F. after crossing Rs. 6,500/-?

43. Eligibility for Working Hours, Leave, and OT for Contract Labour
What is the eligibility for working hours, leave, holidays, OT, etc., for contract labour?

44. Liability of Principal Employer in Sub-Contracting
What is the liability of the principal employer in the case of sub-contracting?

45. Maximum Period for Casual, Temporary, and Fixed-Term Employees
Is there any maximum period prescribed for casual, temporary, and fixed-term employees, trainees? Do breaks in service help in reducing liability?

46. Exemptions for Trainees from P.F., ESI, and Minimum Wages
Are trainees exempt from P.F., ESI, and minimum wages? Which categories?

47. Requirement and Certification of Standing Orders
Are standing orders a must? How soon is it legally required to frame the Standing Orders and get certified after start? After engagement of how many employees? What is the procedure for certification?

48. Gratuity Payment Responsibility
Employed by one contractor for three years and another for the next three years. Who will pay the gratuity?

49. Determining the Appropriate Government Authority
How to ascertain the appropriate Government – Central or State?

50. Implications of Supreme Court Judgment in SAIL Case
What are the implications of the Supreme Court Judgment in the Steel Authority (SAIL) case reversing the earlier Air India Judgment?

Regards,
Raghvendra Singh
[Phone Number Removed For Privacy Reasons]
Khan Akram
The only difference I see is that contract labor is usually for a specific length of time tied to a particular project. Outsourcing labor is an alternative way of hiring employees without having to worry about HR expenses and the overhead that comes with managing personnel resources. Labor is more like open-ended labor services. The expiration date is undefined.
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