Navigating Contract Labor Laws: Are Our Inspectors and Guards Entitled to Benefits?

Our organization is a factory (CPSU). Need guidance on the following:

1. We have given a contract to an agency for the job of inspecting materials at stores. The contractor has deputed an employee as an Inspector whose job will be to inspect materials and certify. Do they come under the CL(R&A) Act?

2. In our factory, the security part has been outsourced. The security agency pays their guards wages at par with the minimum wages for the watch and ward category and DGR structure. However, nowhere is it mentioned whether the security guards are entitled to paid leave. Please guide whether the security guards on contract are to be paid leave with wages.

Regards,
DG

Dear Saptarshi,

Answer to your queries is provided below:

Applicability of the Contract Labour Act

1) The applicability of the Contract Labour Act is based on the number of contract staff. If the number of employees is 20 or more, then it will be applicable to you.

Wages and Leave Entitlements for Security Guards

2) Firstly, security guards should be paid according to the "Security Board wages" and not by the Minimum wages. Secondly, they are also entitled to paid leave with wages.

Regards,

Since Mr. Tushar has clarified that the Contract Labour (CL) Act is applicable only if the number of contract laborers is 20 or more, you need to approach the relevant authority to apply for a contract labor license and ensure compliance with the requirements of the act.

Secondly, security guards fall under the state act, and there is a provision in the state act for providing leave based on the total wages earned by them during the financial year.

Thanks & Regards,
Janardan

Security Agency Regulations Under State Acts

The security agency organization comes under the Shops & Commercial Establishments Act of the respective States. The guards are entitled to leaves, a weekly holiday, overtime, etc., as per those Acts.

Minimum Wages for Security Staff

If the State Government has fixed minimum wages (MW) for security staff separately as a scheduled employment, they shall be paid that MW, not the security board wages. If security services are not a scheduled employment in any state, the MW fixed for a commercial establishment shall be paid to them, subject to the conditions in that Government Order (GO).

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Regarding your query on the contract for inspection work, please proceed with the response provided by Tushar Ji.

Perspective on Security Guards

My perspective on your second question, concerning security guards, differs. I understand you are based in Delhi. There is no Guard Board Act in Delhi. The leave policies for your security personnel should align with the leave regulations applicable to your factory. It is important not to differentiate between the outsourced security staff and the leave policies of your factory.

Thank you.

Further to my above reply, I would like to say that your job of inspecting materials in stores on contract may fall under the category of "contract for service." If it is so, provisions of CLRA are not applicable.

Understanding "Contract of Service" and "Contract for Service"

What is "contract of service" and "contract for service" is discussed earlier in one of your threads, if I am not wrong.

Regards

Dear Koregaonkarji, please shed light on the differences between a "contract of service" and a "contract for service."

Regards,
Dilip Nandanwar

Dear Dilip ji, kindly go through the below-given link in which one of the learned members of this forum, Mr. B. Saikumar, has nicely explained what a "contract of service" and a "contract for service" entail. https://www.google.com/url?q=https:/...dp2COS3PE4yVGQ

How to Identify a Contract Employee

To determine whether an individual is a contract laborer (CL) or not, consider the following points:

1. Is the workman a manual worker (Unskilled, Semi-skilled, Skilled, Highly Skilled) or a technical or clerical worker?
2. Is the individual employed in a government office/department or at a place where industry, trade, occupation, or business is carried on?
3. Is the person employed by or through a contractor either for hire or reward?
4. Has the employer (contractor) undertaken to provide a specific result to an establishment or agreed to supply contract labor?
5. Is the individual employed by the contractor exclusively in connection with the work of a particular establishment?
6. Is there a master-servant relationship between the employer (contractor) and his workman (CL)?
7. Does the individual accept the master's right to supervise and control him or his work at the master's discretion?
8. Is the individual an outworker?
9. Is the person engaged by his employer for the supply of only goods or articles of a manufacturing establishment?
10. Is the work of the establishment either intermittent or casual in nature (within 3 months)?
11. Is the individual engaged in managerial, administrative, or supervisory work?
12. Is the person transferred from another office/project of the same contract/establishment?
13. Is the employer assigning the individual to work for some other establishment at the same time?
14. Does the individual come to the establishment as part of his duty assigned by a contractor engaged by another establishment?

Please check the above points.

Regards,
Sitansu Sekhar Rath
Senior Manager
M/s Odisha Power Generation Corp. Ltd
Bhubaneswar.

I hope that your query has been answered by Mr. Varghese Mathew. Please follow the same, which is the right way. Please note that if the contract workers' strength exceeds 20 or more on any working day, you must comply with the provisions of the Contract Labour Act.

Thanks to Mr. Varghese Mathew.

Regards,
Adoni Suguresh, Sr. Executive (Personnel, Administration & Industrial Relations) Labour Laws Consultant

Thank you all for your replies. Actually, the applicability of the CL Act is a matter that needs to be taken care of on a case-by-case basis, depending on the nature of the work. Recently in our organization, a few Safety Officers have been deployed through an agency to oversee safety issues and handle necessary reporting with recommendations. They are covered by PF & ESI, but they are not complying with the provisions of the CL Act. The question here is whether these Safety Officers fall under the purview of the definition of workmen under the CL Act.

Regards,
DG

As per the definition of 'workmen' in the CLRA Act, supervisory persons drawing a salary above Rs 500 per month or exercising managerial functions are not considered workmen. Therefore, you should assign them supervisory or managerial work.

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Thank you all for your replies. The applicability of the CL Act is a matter that needs to be considered on a case-by-case basis, depending on the nature of the work. Recently, in our organization, a few Safety Officers have been deployed through an agency to oversee safety issues and handle necessary reporting with recommendations. They are covered by PF & ESI but are not complying with the provisions of the CL Act. The question arises whether these Safety Officers fall under the purview of the definition of workmen under the CL Act.

Statutory Positions and Core Activities

Regarding a statutory position mandated by any legislation, it should be treated as a core activity of a permanent nature, and contract labor should not be engaged for core activities. To the best of my knowledge, a Safety Officer is a statutory position in accordance with Section 40B of the Factories Act 1948. If the Safety Officer is appointed to comply with the provisions of the Factory Act, any disputes may lead to complications.

If the safety responsibilities are outsourced to another agency while having an in-house Safety Officer overseeing the outsourced agency's work and the agency has deployed a few Safety Officers, then it may be acceptable. It could potentially fall within the scope of the CL (R&A) Act, subject to fulfilling other conditions.

Regards,
DG

I understand the area of concern related to outsourcing any statutory post to an agency. However, I still have doubts about issues such as personnel deployed by agencies for jobs like the inspection of materials or safety surveillance being covered under the definition of 'workmen' as per the CL(R&A) Act.

Regards,
DG

According to my view, personnel deployed by agencies for jobs like inspection of materials or safety surveillance will not be covered under the definition of 'workmen' under the CLRA Act since such contracts are of the category of "Contract for Service," in which an independent person provides their skill with tools and human resources and accomplishes a specific job in a specific duration without supervision and control by the principal.

In my view, a person who undertakes such a job is not a "Contractor" as defined under the CLRA Act. They are not producing any result through contract labor. They are producing the result themselves with the help of their tools and human resources. One can differ with my views.

There is a provision for paid leave of 1% in the wage structure of security guards. Can anyone clarify for how many days this 1% of wages is meant and which are these days? I believe these are meant to cover 3 National holidays, i.e., 15 Aug, 26 Jan, and 2nd Oct.