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

Dear seniors,

Questions Related to Contract Labour

1. What are the differences between contract labour and outsourcing? Which is a better option and why?

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

3. What is the liability for staff engaged through a manpower agency?

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

5. What is a "Sham" contract?

6. What are non-perennial and non-permanent jobs that can be assigned to contract labour?

7. Each contractor engages less than 20, but together they engage more than 20. Will the provisions of registration, licensing, and other statutory provisions apply?

8. If a contractor engages a sub-contractor, who is the principal employer?

9. How to convert a labour supply contract into a job contract?

10. Can and should the employer have a say in the number and selection of contract labour?

11. Can we engage contract labour in place of a permanent employee?

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

13. Should the contractor issue an appointment letter to contract labour?

14. Is it necessary and desirable to issue an employment card/gate pass/identity card to contract labour? If so, under whose authority/signature? What are the safeguards required?

15. Can we have permanent employees and contract labour working side by side on the same job?

16. What is the best ratio between permanent employees and contract labour? Can we engage 100% contract labour?

17. Should the contractor and contract labour be rotated? Why? How often?

18. Can we have different wages and other terms for permanent employees and contract labour doing the same or similar job?

19. Can we transfer casuals/temporaries on the rolls of the contractor?

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

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

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

23. Security, Housekeeping, drivers, canteens, horticulture, etc., on contract/voucher payment. Sustainability? Case laws?

24. What is the liability of the principal employer for injury, illness, disability, death, etc.?

25. Who is to take disciplinary action against contract labour? Under what rules? Are standing orders applicable to contract labour?

26. Statutory requirements and precautions in awarding contracts for safeguarding management's interests.

27. License not renewed but the contractor continues to work. Legal implications including permanency?

28. Contractor changing but contract labour not changing. Implications? Precautions required?

29. 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 terminated through a settlement. Should the principal employer be a party?

31. What to do if the contractor refuses to pay labour? Can and should the Principal Employer pay contract labour directly? Any risk involved?

32. Action required to be taken by the management after the abolition of contract labour?

33. How to get rid of the contractor and contract labour?

34. How to reduce the number of contract labour?

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

36. Contract labour demanding permanency. How to handle it?

37. Contract labour demanding similar benefits as permanent employees. Is the claim legally valid?

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

39. Is the Minimum Wages Act applicable to contract labour?

40. Can we split minimum wages so as to reduce PF liability?

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

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

43. What is the eligibility for working hours, leave, holidays, OT, etc., for contract labour?

44. What is the liability of the Principal Employer in the case of sub-contracting?

45. Is there any maximum period prescribed for casual, temporary, and fixed-term employees, trainees? Do breaks in service help in reducing liability?

46. Are trainees exempt from P.F., ESI, and minimum wages? Which categories?

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

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

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

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

Regards,
Parameet Singh

For your query, most of the answers are covered in the attachment published by Mr. Anil Kaushik, Chief Editor of THE BUSINESS MANAGER (a valuable HR Magazine) on citehr earlier.

Regards,
PBS KUMAR

Dear seniors,

Contract Labour Queries

Can you provide me with answers to the following questions related to contract labour?

1. What are the differences between contract labour and outsourcing? Which is a better option and why?

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

3. What is the liability for staff engaged through a manpower agency?

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

5. What is a "Sham" contract?

6. What are non-perennial and non-permanent jobs that can be assigned to contract labor?

7. If each contractor engages less than 20, but together they engage more than 20, will the provisions of registration, licensing, and other statutory provisions apply?

8. If a contractor engages a sub-contractor, who is the principal employer?

9. How can a labour supply contract be converted into a job contract?

10. Can and should the employer have a say in the number and selection of contract labour?

11. Can we engage contract labour in place of a permanent employee?

12. Can and should we engage contract labour in manufacturing jobs? What are the risks involved?

13. Should the contractor issue an appointment letter to contract labour?

14. Is it necessary and desirable to issue an employment card/gate pass/identity card to contract labour? If so, under whose authority/signature? What safeguards are required?

15. Can we have permanent employees and contract labour working side by side on the same job?

16. What is the best ratio between permanent employees and contract labour? Can we engage 100% contract labour?

17. Should the contractor and contract labour be rotated? Why? How often?

18. Can we have different wages and other terms for permanent employees and contract labour doing the same or similar job?

19. Can we transfer casuals/temporaries to the rolls of the contractor?

20. What are the application and implications of P.F., ESI, Bonus, Gratuity, and other benefits to contract labour, and how can compliance be ensured?

21. How can the submission of PF and ESI returns by the contractor be ensured?

22. How can a new code/sub-code number be obtained from PF Authorities?

23. Security, housekeeping, drivers, canteens, horticulture, etc., on contract/voucher payment. Sustainability? Case laws?

24. What is the liability of the principal employer for injury, illness, disability, death, etc.?

25. Who is to take disciplinary action against contract labour? Under what rules? Are standing orders applicable to contract labour?

26. What are the statutory requirements and precautions in awarding contracts for safeguarding management's interests?

27. What are the legal implications, including permanency, if a license is not renewed but the contractor continues to work?

28. What are the implications and precautions required if the contractor changes but the contract labour does not?

29. If a contract is terminated due to the unsatisfactory performance of the contractor and the contractor leaves, can contract labour claim permanency? What should the principal employer do?

30. If contract labour is terminated through a settlement, should the principal employer be a party?

31. What should be done if the contractor refuses to pay labour? Can and should the Principal Employer pay contract labour directly? Are there any risks involved?

32. What actions are required to be taken by the management after the abolition of contract labour?

33. How can a contractor and contract labour be removed?

34. How can the number of contract labour be reduced?

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

36. How should demands for permanency from contract labour be handled?

37. If contract labour demands similar benefits as permanent employees, is the claim legally valid?

38. Is the pension scheme also applicable to contract labour? What are the details of the Pension Scheme?

39. Is the Minimum Wages Act applicable to contract labour?

40. Can we split minimum wages to reduce PF liability?

41. Should P.F. be deducted on the basic wage, basic plus DA, or total wage? What elements should be included?

42. If an employee is earning Rs. 5,000/-, can they be excluded from P.F. after crossing Rs. 6,500/-?

43. What is the eligibility for working hours, leave, holidays, OT, etc., for contract labour?

44. What is the liability of the Principal Employer in the case of sub-contracting?

45. Is there any maximum period prescribed for casual, temporary, and fixed-term employees, trainees? Do breaks in service help in reducing liability?

46. Are trainees exempt from P.F., ESI, and minimum wages? Which categories?

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

48. If employed by one contractor for three years and another for the next three years, who will pay the gratuity?

49. How can the appropriate Government—Central or State—be ascertained?

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

Regards,
Parameet Singh

If a company has hired workers who are employed in an establishment not owned by the company, would the company be considered the principal employer or contractor?