Hello,
Outsourcing understood as vendorising (getting the work-core or incidental) OUTSIDE the premises, is SAFE if possible as the Contract Labour (R &A Act) does not apply to such a situation at all.
However if the "production" (again core or otherwise) is outsourced (sub contracted) but to be performed within the company premises, then the employee would be vulnerable to the mischief of Sec. 10
To steer clear of impact of the Sec. 10, following issues need to to be taken care of:
1) The contract (whether as "production on contract" or as supplying labour) cannot be sham.
2) This would entail, the employer having virtually NO control over the attendance, conduct, performance, recruitment and discipline of the employees of the contractor. Even nominal supervision often becomes enough to infer "employer-employee relationship" between the company and labour supplied by the contractor.
3) Compliance (ESI, PF, SMW, PPA, Gratuity, LWF, Muster, wage rolls, identity cards etc. have to be impeccable by the contractor-preferably!
4) If the contract labour and copany's own labour perform same work, then their wages have to be identical. This is condition precedent to issuance of labour license to a contractor.
Despite taking such precautionary measure, the vulnerability of the principla employer is NOT eliminated-it is just reduced! In brief the principal employer must not do ANYTHING that may lead someone to infer direct "employer-employee" relationship.
I must also state here in clear terms that the above is NOT a fool proof arrangement to escape the mischief of Sec. 10. It is better to discuss any given situation with bare facts of the matter
Have I been helpful please?
Regards
samvedan
June 4, 2012
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