Contract labour act - can we use contract manpower for the production activities on condition that we will pay?

Hi seniors, I have some clarification about the Contract Labour Act. According to the act, we cannot use contract labour for core activities. My doubt is: can we use contract manpower for production activities under the condition that we will pay skilled labour wages as per the Minimum Wage Act?

The industry is fabrication, and we are considering using a welder for the contract role. Please advise if we can use a welder for the contract role. If you have any notifications, please share them.

Please help me with this.

No, you can't use contract workers in production activities. You may engage contract workers in supportive roles such as production helpers, assistants, and loading and unloading activities. Please note that even if you engage contract workers, you have to comply with minimum wages as per your industry schedule under the Minimum Wages Act.

On the other hand, most engineering industries use contract workers in production areas and are registered under the Contract Labour Regulation and Abolition Act. They may categorize them as helpers. The only thing you need to manage is when the factory inspector visits.

Thank you.

Dear Ramesh Sri,

Thank you so much for your reply. I agree with your point. The Contract Act states that we should not engage contract manpower in core activities, but the Minimum Wage mentions that welder people come under the semi-skilled category. If we pay the wage more than the minimum wage, can we be safe? In which way can we use contract manpower for welding activities?

Thank you.

Dear Mr. Rajiv,

I would like to add, if you deploy 20 or more contract laborers on a single site, then you have to obtain a Labor License from the DLC office in your area.

As per my opinion, deploying a welder should not be an issue. According to the CLA (R&A) Act of 1970, "The contractual workman should not perform the same or similar kind of work as the workmen directly employed by the establishment."

The main point here is that there should not be any welder in your role who is doing similar work. In your company's role, keep only managerial staff who will oversee the contractual staff, focusing on strategic and supervisory areas only.

Also, note that paying minimum wages has nothing to do with the Contract Labor Act. You are obligated to pay minimum wages to staff, whether within your scope or the contractual scope.

Even if you engage a contractor, please ensure that the payment to laborers is not less than the minimum wage. The ultimate liability always rests with the Principal Employer.

I hope the points are clear now. Senior members can correct me if necessary.

Dear Rajiv,

Upon reviewing your post, it is evident that you are seeking to employ workers for regular production activities at lower wages than regular employees. Authorities and courts have expressed differing views on this practice, which does not allow for such an arrangement. This has been labeled as camouflage, and you must regularize the services of so-called contractor laborers in case they raise concerns. You can consider reclassifying the workers' category, employing less experienced personnel, paying minimum wages, providing PF, etc., and making production management decisions based on cost-benefit analysis.

Regards,
RDS Yadav
Labour Law Adviser

Dear RDS Yadav,

Thank you so much for your kind reply. I understand that it is a high risk for the contract to carry out the core activities. Could you please guide me on whether we can obtain approval from the Labour Commissioner for the requirement of manpower for loading, unloading, and welders? Will they approve the welder category, or is there another way we can seek approval? Your expertise in legal matters would be greatly appreciated.

Thank you for your ongoing support.

Regards,
Rajiv

Hi Rajiv,

This refers to your post above. Loading and unloading can be outsourced through a contractor. You have to obtain registration under CLRA Act to appoint a contractor. I request you to call me at 08439811539 in order to develop clarity and suggest precautions, but before that, clarity is a must on both sides - for you and me.

Regards,
RDS Yadav
Labour Law Adviser
Director - Future Institute of Management and Technology
navtaranghrs@gmail.com

Recently, I attended a workshop organized by NIPM Coimbatore Chapter. Mr. GERA from DELHI was the faculty. He is an authority in CL (R&A) Act. We were surprised to learn many things. One important message is that there is no bar to engage Contract Labour in core activities in a factory. Section 10 is for the Advisory Board and not for factories or establishments. A company can function purely with Contract Labour. The Registration Authority cannot deny registration, nor can the Licensing Authority deny a license on this ground. Contract Labour engagement should have been abolished, and that is possible only by the Government. Until the government notifies that the engagement of Contract Labour has been abolished in respect of that company, both the aforementioned authorities have no role to deny. Read the 2012 SUPREME COURT JUDGMENT. It is not wrong. I know at least a couple of factories where a license is granted, registration is obtained, and Contract Labour is engaged in production.

Dear Rajiv,

Please note once again, you will be liable for RC only if you deploy 20 or more Contract Labour in a single site; the contractor has to obtain a Labour Licence. However, the documents and process for RC and Licence could vary from state to state.

In Delhi, there is a new rule for creating a website for the particular contract work (either by the PE or by the contractor) in which the details of Contract Labour should be uploaded on a monthly basis. As a PE, you need to obtain RC and submit an Annual Return regarding contract labour.

If you need more clarification, please feel free to contact me. I am handling around 10 Labour Licences for Delhi Units of my company.

PAN SINGH DANGWAL
9560476777
pansingh_dangwal@yahoo.co.in

I agree with Mr. Maharakav Ji. Under the Contract Labour Act, it does not have any relevance to the type of work or activity that should go on contract and which should not. The idea is that the management of the company has to decide which activities of the company should be considered for contracting and outsourcing. However, as per the relevant law/act, the conditions of the contract need to be complied with in the legal framework. Be it the wages or any other compliance, it will be applicable to all who fall under the limits of the applicable statute/compliance. It is the principal employer who will be solely responsible for ensuring that all such compliance is followed meticulously or not.

One more important fact I would like to share is that the very purpose of the Contract Labour Act needs to be understood; it is for the welfare of contract workers and the control of contractors engaging these workers.

Contract labor management plays a vital role in the manufacturing industry.