Understanding Contract Labour Laws in Maharashtra: How Do They Apply to Our 200-Strong Sales and Service Team?

Case Overview

The case is: An organization has a staff of 200 workers in Sales and Service Support in Maharashtra. They keep housekeeping directly on the company payroll for six months as a contract.

Need to Know

- Is the Contract Labour Act applicable in Maharashtra as the staff count is 200 with no direct workers in sales and service?
- Is it legal as there are no workers, making the Contract Labour (50 workers) not applicable?
- Is there an alternative way to employ housekeeping on a contract?

Applicability of the Contract Labour Act

For applicability, the total workforce will be counted. Therefore, if you have 200 employees, the Act (whether it be CLRA or another) will be applicable to that establishment. Now, the employer can only outsource or keep workers through a contractor in areas of operations that are not perennial in nature and not connected with the core business. Housekeeping is not a core activity, so you can have workers deployed through a contractor.

Outsourcing Housekeeping

The alternative to deploying workers for housekeeping is outsourcing the work of housekeeping to an independent contractor. In such an arrangement, a contract for service, the agency will provide workers sufficient to make the premises clean. For this purpose, they should use their own consumables, equipment, etc. You do not know who is engaged to do the work, how many are engaged, or who all are engaged. You will not supply toilet cleaners, disinfectants, brooms, brushes, vacuum cleaners, etc., but the agency will come with all the materials and equipment required to do the work. You are only concerned with getting the result, having your premises clean, and not concerned with how it happens, how many workers are engaged for that work, and who is engaged for that.

Hi Madhu Sir, thank you for providing clarity. Please help with the following questions regarding Housekeeping:

Hiring Housekeeping Staff

1. As housekeeping is not a core activity, can we hire as follows:
- 1.1 Can we appoint a housekeeping staff member on the company letterhead for a full-time, permanent position?
- 1.2 Can we appoint a housekeeping staff member on the company role or letterhead on a contract of 6 months or 12 months? (Is CLRA registration required for this?)
- 1.3 Can we appoint a housekeeping staff member on a Fixed-term contract (FTC) under the Standing Order Act amendment?

Thank you.

Appointing Employees Under Company Rolls

You can appoint any person on the rolls of the company. Appointing an employee under the rolls of the company is not restricted by any law. The restriction is with regard to engaging workers through a contractor for doing core work, and no such worker shall be engaged through a contractor. At the same time, you can also employ any person who is not directly related to the core business under your own rolls. As such, there is nothing wrong in appointing a housekeeping worker under your rolls by giving an appointment letter on the company letterhead.

Fixed-Term Contract (FTC) Employment

Any person can be appointed for 6 months or 12 months if the period of work is 6 months or 12 months, as the case may be. This appointment is called fixed-term contract (FTC) employment and has been widely applied across all industries since 2017. An employee under an FTC is directly employed by the employer, wages are paid by the employer directly, and as such, no CLRA will be applicable to him or the employer. CLRA will come into the picture only when somebody else, i.e., the contractor, is sending his employees to work for you on your premises. In this arrangement, the wages are paid by the contractor, and the employer only reimburses his costs.

Appointment Orders

Only when you employ persons under your rolls will you give an appointment order under your letterhead. The appointment orders of contract workers will be issued by the respective employer, i.e., the contractor.

Employing Housekeeping Workers on FTC

Yes, you can employ housekeeping workers on a fixed-term contract basis. This is permitted for work of a regular nature only if the Standing Orders provide for such a category of employees. Nowadays, even establishments not having any certified standing orders employ workers on an FTC basis.