Are Industrial Standing Orders Relevant for Contract Labor with Less Than 50 Workers?

Hello friends, please confirm whether the provisions of the Industrial Employment Standing Orders are applicable to contract labor if the labor force is 50 and above, in cases where the appropriate government is the Central Government under the ID Act. What rules will be applicable when the deployment of labor is less than 50?

Applicability of Standing Orders to Contract Labor

There is no contract of employment between the principal employer and the contract labor. Therefore, the Standing Orders of the principal employer's establishment are not applicable to the contract labor engaged therein.

License Requirement for Contract Labor

If the number of contract labor falls below 50, which is the threshold, the contractor need not be required to obtain a license for the deployment of contract labor.

Applicability of Model Industrial Employment Standing Orders

Thank you for providing inputs. I still have doubts.

In our establishment (where the appropriate government is the Central Government), we have our own certified Standing Orders applicable to our workmen. There is a contractor in our establishment who has deployed more than 50 contract laborers. Will the Model Industrial Employment Standing Orders be applicable to the contractor's establishment?

In another case, there is a contractor who has deployed less than 50 workmen. How will their employment conditions be regularized?

Kindly provide some information or judgment in this regard.

Regards, Trapti Sachan
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The company's certified standing orders won't be applicable to the contractor's workers. However, with the strength of the contract labor being more than 50, the Industrial Employment Standing Orders Act/Rules are applicable, and hence the Model Standing Orders contained therein will also apply.

Regards, Vinayak Nagarkar HR and Employee Relations Consultant

Sorry to differ, Mr. Vinayak. Irrespective of the number of contract laborers, the Principal Employer has no disciplinary control over the contract labor. As such, it is for the contractor to have their own Standing Orders certified or to follow the Model Standing Orders (MSO) in case of any necessity.

There is no employer-employee relationship between the principal employer and contract employees. Hence, how will the Industrial Employment (Standing Orders) Act apply to contract labor?

Dear Mr. Umakanthan, the query was whether the contractor is engaging 50 or more workers, and if the provisions of the IE SO Act are applicable to the contractor's workers, to which I replied in the affirmative. I nowhere mentioned that the disciplinary action for contract labour is to be taken by the PE. I am well aware that in the context of the applicability of the said Act/Rules to the contractor, the contractor is responsible for taking the action. I did not touch upon this point as the query was only related to the applicability or otherwise of SO and the contractor's responsibility; therefore, it obviously follows.

Maybe my limited answer and presumption about this aspect have misled you, Sir, which was not my intention.

Regards, Vinayak Nagarkar HR and Employee Relations Consultant

If the contractor is engaging 50 or more workers in the Principal Employer's premises, his establishment will be covered under the State Shops and Establishment Act. Therefore, the Industrial Employment Standing Orders Act/Rules will apply to his establishment.

Regards,
Vinayak Nagarkar
HR and Employee Relations Consultant

Dear Mr. Nagarkar, I have a different opinion. If the establishment's strength is 50 or more, Standing Orders can be applied (in states like Kerala) prior to the introduction of the new code. In some states, employee strength should have become 100 or more. However, now with the recent introduction of the new Labour Code, the strength requirement has been increased to 300.

I would like to further add that the contractor can definitely adhere to model standing orders if he desires to do so, but it is not mandatory.

I express my thanks to all who put forth their views.

Clarification on PE Establishment

I will clarify here that the establishment of PE is a factory having its own Certified IE standing orders. My query was whether if a contractor deploys more than 50 workers in the establishment of PE, do the provisions of Model IE Standing Orders apply regarding the age of superannuation for contract labor.

Tender and Bid Requirements

When inviting tenders or bids, PE has specified that laborers deployed by the contractor should be physically and mentally fit and should be in the age group of 18 to 60 years.

Regards, Trapti Sachan

I am very sorry to differ. Usually, I don't read other answers, but I wish to clarify the issue of what is going on in practice at the ground level.

The Industrial Standing Orders Act

The Industrial Standing Orders Act is an old phenomenon. It never stops the principal employer's liability on the welfare of workers, including contract labor, whether they are below 50 or above fifty. These number games are applicable for online payment of license registration and at the time of renewals only. If any accident occurs in a factory where a contract laborer is injured or dies, unfortunately, the principal employer never escapes his liability to pay compensation under the EC (WC) Act. Similarly, all acts of the law of the land are applicable to a factory that has regular or contract labor, with or without a necessary license. All labor acts apply there, and preferably the principal employer's liability on the safety and welfare of workers working on the company's premises or workers engaged by the company for outside works like marketing and transport. The principal employer never escapes his liability as the owner of the company. When the company is his ownership, all the working force is also his people.

Recent Incident Example

Recently, there was an ammonia gas leakage in a company where two were affected; unfortunately, one contract laborer died, and one was injured. They were working under a contractor without a necessary license. That factory has standing Industrial Orders applicability. However, the labor department issued notices. The principal employer attended the court and paid compensation through his contractor. An IPC case is already registered by the police, and the case is ongoing. So, I think I have cleared your doubts. The principal employer never escapes his liability by showing the Industrial Standing Orders document. No doubt, it is useful for recruitments, disciplinary actions, salary hikes, promotions, union elections, dispute settlements, and a timetable plan of action for the day-to-day running of the factory; it is useful like a manifesto. However, it is not for evading the safety and security of his company workers in any way.

Another Example

I wish to add one example from a few years back. One factory employer engaged two outside workers to cut overgrown trees  in his factory. Unfortunately, one worker was injured and later died. The labor department was involved, and the principal employer paid 5 lakhs compensation to the bereaved family. The employer purely personally engaged them for a day's work. The employer's liability on safety and welfare remains unaffected, irrespective of applicability under different acts.

Thank you, please .

What you have pointed out is correct, Mr. Vinayak. I misunderstood the question to be about the application of the PE's CSO to the contract labor engaged by him. Sometimes, hasty presumptions like this lead to inappropriate responses and divert the focus from the real issues. Anyway, thank you for your correction.

Thank you for sharing your knowledge. So far, we have been following the same. The company's certified Standing Orders are applicable to the company's employees.

For contract workers employed by your establishment, they should be considered as a separate entity. If they exceed the threshold limit for the Industrial Standing Orders Act, either the Model Standing Orders or the Certified Standing Orders apply to the respective contractor. This issue becomes crucial, especially when the contractor's workers are subject to an inquiry or disciplinary action.

Regards, Shailesh Parikh

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