Standing Orders as it is will not be applicable to contract labours. But while engaging workers there will be a contract with the contractor (who engages labour) that some or some specified conditions of service, like safety provisions, shift timings, intervals of rest, confidentiality matters etc, that the workers of the contractor should follow. This does not mean that Standing Orders is applicable to workers who are engaged through a contractor and strictly speaking the standing orders itself would provide for its 'applicability' or on whom these rules are binding and if it is stated that it applies to contract labour, then sure the provisions of the orders will be applicable to them also.
By extending the standing orders to contract labour, the contract will not become sham. But it will become sham when you interfere with contract labour directly by initiating disciplinary action against them, by imposing fine or penalty on them for late coming or some other offenses, by directly controlling the work being done by them, by making direct payment of wages or advances under normal circumstances (in circumstances wherein the contractor has failed to pay wages, you the Principal employer can make direct payment to contract workers) etc.
You can engage contract labour only in such areas of operation which are not directly connected with the main business of the organisation. If you engage contract labour on work of perennial nature, that will be illegal. Housekeeping, security deployment etc are considered to be indirect operations and therefore, in such areas you can have contract labour. In a hospitality industry, for example, housekeeping in guest area is a core area of operation where you cannot have indirect labour. At the same time,for public area cleaning (admin office/ staff cafeteria etc) you can have contract labour. Similarly, in kitchen attached to restaurant you should have only direct labour but in staff kitchen you can have indirect / contract labour.
Madhu.T.K