Is Your Employee Bus Service Covered by the CLRA Act? Let's Discuss the Legalities

Many organizations engage private bus operators for the conveyance of their employees to and from the factory or office. Status of the Bus Transporter What is the status of the bus transporter? Does the CLRA Act come into operation to require a registration certificate by the principal employer and a license by the transporter? If not, under what statute are all these activities covered?

Understanding the Role of Bus Transporters in Organizations

This question has been answered many times already. I believe that the buses are rented out to the organization that engages the services of the transporter, and the buses are operated by the crew employed by the transporter. There is not just a supply of indirect labor to the organization that hires the buses owned by the transporter.

Application of the CLRA Act, 1970

If the buses are owned by the organization and the drivers and conductors are supplied by the transporter, the CLRA Act, 1970 would come into play, creating the roles of principal employer and contractor, respectively.

Therefore, this arrangement falls under the general contract for transportation services under the Indian Contract Act, 1872 only.

The Contract Labour regulations will apply if the contractor's employees are working inside your premises. Otherwise, it is not applicable.

What are your bus drivers, cleaners, and conductors doing?

If they just get the people and go away, then they are not under CLRA. If the buses come inside your premises but only to drop and pick up and leave immediately, then also CLRA will not apply. If the buses are staying inside your premises, if the driver and other staff stay inside, then CLRA may apply. So it depends on the circumstances.

Check the Motor Transport Workers Act

However, do check out the Motor Transport Workers Act and see if it is applicable to you. Further, it is always a good idea to ensure that the bus contractor pays its driver well, at least above the minimum wages, provides holidays and paid leave, and in general follows the law. Even if CLRA does not apply, the impact of non-compliance comes on you, and you may be able to fight it in court. Believe me, your lawyer's fees will make the entire thing a punishment in itself.

I have a different opinion on the point raised by Saswata that, "The Contract Labour regulations will apply if the contractor's employees are working inside your premises. Otherwise, it is not applicable." Is it that the CLRA Act applies only to such circumstances where the employees work inside the compound of the principal employer?

In this case, the CLRA Act will not apply because the vehicle is not owned or maintained by the principal employer. The contractor (transporter) charges per passenger or per kilometer, and for that, he is raising an invoice, and the employer is booking it as a purchase (of service).

On the other hand, if the vehicle is owned or taken on lease by the principal employer, he fills fuel, takes care of its maintenance, etc. But he does not have his own drivers but takes the drivers of the transporter to run the vehicle and pays the driver's salary through the transporter. In this case, the transporter becomes a contractor for the supply of driver (manpower) and the CLRA Act will come into the picture. The drivers are contract laborers for you even though they do not enter your establishment premises but take your employees from their residence and drop them at the gate of the establishment and again pick them up from the gate point and drop them back home.

In the former case, it is just like hiring a taxi or truck for carrying goods. The amount that you pay is a fee based on running kilometers, and you need not worry about the wages paid to the driver or others.

Hi Madhu,

My contention comes from the definition of a worker as quoted below:

(i) "workman" means any person employed in or in connection with the work of any establishment to do any skilled, semi-skilled, or unskilled manual, supervisory, technical, or clerical work for hire or reward, whether the terms of employment are express or implied, but does not include any such person:

(A) who is employed mainly in a managerial or administrative capacity; or

(B) who, being employed in a supervisory capacity, draws wages exceeding five hundred rupees per mensem or exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature; or

(C) who is an outworker, that is to say, a person to whom any articles and materials are given out by or on behalf of the principal employer to be made up, cleaned, washed, altered, ornamented, finished, repaired, adapted, or otherwise processed for sale for the purposes of the trade or business of the principal employer and the process is to be carried out either in the home of the outworker or in some other premises, not being premises under the control and management of the principal employer.

Item C refers to an outworker, that is a person who does not work within the premises controlled by the Principal Employer. It would be logical to extend the section to services also. So if it is not provided within the premises of the Principal Employer, the person would be excluded from the definition of a worker and therefore from the protection of the act.