Contract Labor Act Confusion: Are We Liable Without a "Manpower" Clause in Our Agreement?

Hi all,

If we engage a facility management and enter into an agreement on a lump sum or square feet basis, then the housekeeping workers deployed are to be covered under contract labor. Please suggest if the company is liable under the Contract Labor Act if the agreement does not mention the "manpower" clause. It is not avoiding...

Regards, Ramakrishnan

Application of the CLRA Act, 1970

The basic requirement for the application of the CLRA Act, 1970 to a Principal Employer (PE) and a Contractor is the engagement of a certain number of contract laborers in the establishment of the former by the latter in connection with the works of the establishment. Whatever the charges paid to the contractor by the PE for the services rendered as per their agreement include the wages of the contract laborers engaged in that work.

Due to the fact that the charges are determined on a lump sum basis or area basis, the contractor has the advantage of carrying out the work with any number of contract laborers at his discretion. However, such discretion cannot be arbitrary or impractical as it would certainly have a negative impact on the work's execution. The PE has vicarious liability to ensure payment of wages to the contract laborers and the provision of other facilities stipulated under the Act.

The registration of the PE and the licensing of the contractor under the Act are determined by the maximum number of contract laborers likely to be engaged in the contract work. Therefore, the absence of the specific number of contract laborers to be engaged in the work agreement due to the method of payment to the contractor for his services cannot be a valid reason to escape the application of the CLRA Act, 1970.

Regards

Legal Applicability Under the CL (R&A) Act, 1970

Umakanth sir has explained the legal applicability under the CL (R&A) Act, 1970. The Act is applicable to:

(a) Every establishment in which twenty or more workmen are employed or were employed on any day of the preceding twelve months as contract labor.

(b) Every contractor who employs or employed on any day of the preceding twelve months twenty or more workmen.

The Act has nothing to do with whether you have given a contract on a lump sum or square basis. If the facility management engaged 20 or more workmen on your premises on any day of the contract period, then your company and the contractor will be covered under the Act. It can be avoided only by restricting the number of contracts below 20.

Hope you will find it as per requirement. Experienced members can shed more light on this.

Thank you.