Contract vs. On-Roll Employees: What Does the Factory Act Say About Outsourcing?

Contract and Outsourcing Employment under the Factory Act

Is it allowed to keep the maximum number of employees on a contract basis or by outsourcing? What are the implications when a company wants to maintain very few on-roll employees? What does the Factory Act say about this?

Regards

There is no restriction on the number of contract laborers that can be deployed in the factory premises as per the Factories Act of 1948; however, all of them would be considered as 'workers'. The restriction on the deployment of contract labor comes from the Contract Labor (Regulation & Abolition) Act, which makes it illegal to deploy contract labor in prohibited trades. I hope that your business does not fall under any such prohibited trade. Many organizations have a majority of contract workers, but whether this is a good practice or not remains a debatable point.

Regards,
KK