Managing Union Formation and Statutory Compliance for Contract Labor

Dear All,

Our company, located in Maharashtra, is not yet operational. However, we have awarded some ancillary work such as bush cutting, road preparation, civil construction, etc., to local contractors who, in turn, employ around 500 contract laborers.

Recently, there have been attempts by individuals with vested interests to obtain signatures from these contract laborers and involve them in a union.

Could you please inform me whether the formation of such a union will affect my company? Please note that we have not yet issued permanent work orders to the contractors.

Your assistance is greatly appreciated!

Regards,
Shaunak Marulkar
Pune
9423877450

Hi Shaunak,

"Our's is a manufacturing company located in Maharashtra, not yet operational. However, we have awarded some ancillary work like bush cutting, road preparation, civil construction, etc., to some local Contractors, who in turn employ some 500 contract laborers.

Now, recently there are attempts being made by some people with vested interests to take signatures, etc., of these Contract Labor and make them a part of some Union. Kindly let me know whether any such union formation will affect my company? Please note that we have not yet given the contractors a permanent work order.

I understand your situation concerning vested interests who have the least concern for the workers! Under the Trade Union Act, any seven workers coming together can form the union and get registered. You need to keep in mind that this game is about muscle power and requires patience.

First of all, you have to check if the Contractors have the license for employing contract workers and ensure that the statutory requirements like PF & ESI are fulfilled, which should be checked on a monthly basis upon submission of challans. The union of workers would not directly affect you, but it is always better to know the ground realities as your company is the Principal Employer.

Regards,
Rajat

Hello Rajat,

Thank you for the help!

Yes, you are right about needing 7 members for union formation. I also want to inform you that the PF formalities will be completed by the Principal Employers, i.e., us. This process is currently underway.

I just wanted to know if we would have to follow any statutory requirements such as providing canteen facilities, restrooms, etc., even if our work order for these contractors is not permanent. On what basis will our management become involved?

Please assist!

Shaunak Marulkar
Pune

Hi Shaunak Marulkar,

"Just wanted to know whether we would have to follow any statutory requirements like canteen, restrooms, etc., even if our work order for these contractors is not permanent?"

No, these are not your requirements; in fact, what you can do is indemnify your organization from future risks by inserting clauses in the work order.

On what grounds will our management come into the picture? It's difficult to answer this question without knowledge of the business dynamics and ground realities. First, I would urge you to understand the same and share it with us.

Best Regards,
Rajat Joshi

Dear Rajat Sir,

Thank you for the help! You have clarified things for me to a great extent. Kindly note my mobile number for our reference and association.

Regards, Shaunak M. Marulkar (9423877450) Pune