Contract Labour (Regulation & Abolition) Act, 1970

Contract labourers are used in various industries varying from skilled to semi-skilled jobs. The major characteristics of contract labour are poor economic conditions of the workers, casual nature of employment, and lack of job security among others. The legislature enacted the Contract Labour (Regulation & Abolition) Act, 1970 (which came into force on 10.02.1971) to regulate the adequate functioning of the contract labourers and to prevent the exploitation of contract labourers by the hands of management.

Objective of the Act

  1. To prevent exploitation of contract labour
  2. To provide proper and habitable working conditions
  3. To regulate the functioning of the advisory boards
  4. To lay down the rules and regulations regarding the registration procedure of the establishments employing contract labour
  5. To state the necessary requirements and the procedure for licensing of contracts
  6. To provide the penal provisions in case of violation of offences under the Act

Applicability of the Act

Section 1(4) mentions the establishments where the Act will be applicable:

  1. Any establishment where twenty or more workmen are employed or were associated as contract labour on any day during the preceding twelve months
  2. Any contractor who employs or employed twenty or more workmen as contract labour on any day of the preceding twelve months
  3. The Act is also applicable to every establishment if the workmen are employed in the establishment as ‘contract labour’. Section 2(b) of the Act states that a workman is deemed to be employed as contract labour when he is hired in or in connection with such work by or through a contractor with or without the knowledge of the principal employer
  4. The Act does not apply to any organisation or establishments where any work of intermittent or casual nature is performed. The Act states that a work is deemed to be of intermittent nature if it is performed for less than 120 days in the preceding twelve months or if it is of non-seasonal character and is performed for less than 60 days in a year
  5. The Act is not applicable to a person who is appointed in an advisory or managerial capacity

Registration of establishments employing contract labour (Chapter III)

The Act lays down the appropriate method for registration of establishments employing contract labour. It mentions the limits, within which a registering officer shall exercise the powers and functions as conferred upon them under the Act. After completion of the application of registration, the registering office will register the establishment and grant the registration certificate to the principal employer.

  1. Registration of certain establishments [Section 7]
  1. The principal employer of an establishment must make an application to the registering office in a prescribed manner
  1. Prohibition of employment of contract labour [Section 10]
  1. Prohibition of employment of contract labour in any process, operation or other work in any establishment

Licencing of contractors (Chapter IV)

Chapter IV of the Contract Labour (Regulation & Abolition) Act, 1970 states the significant requirements and the procedure of licensing contracts. This Chapter lays down the required steps for granting, revoking, suspending and amending a licence.

  1. Grant of licences [Section 10]
    1. Any application for granting a licence under this Act must contain the particulars regarding the location of the establishment, the nature of the process, operation or work for which contract labour is to be employed
    1. The licence may be revoked, suspended or amended if a licence has been obtained through misrepresentation and suppression of any material fact among others

    Welfare and health of contract labour (Chapter V)

    The Contract Labour Act prescribes that the contractor shall provide certain amenities to the labour employed by it. The rules prescribe time periods within which such amenities may be provided. These facilities include canteen provisions, restrooms, and first-aid facilities among others.

    1. Canteens [Section 16]
      1. If the contractor is employing more than one hundred workmen by contract labour then one or more canteens must be provided
      1. The contractor must provide and maintain restrooms where contract labour is required to halt at night for work in an establishment
      1. The contractor is liable to provide facilities such as drinking water, latrines and urinals (separate for men and women), and washing facilities among others
      1. The contractor must provide and maintain a first-aid box equipped with the prescribed contents at accessible during all working hours
      1. The principal employer must provide any amenity within such time as may be prescribed that the contractor is not able to provide
      1. It is the responsibility of the contractor to pay the required wages to each worker employed under contract labour before the expiry of the stipulated period

      MAHARASHTRA CONTRACT labour (REGULATION AND ABOLITION) CENTRAL RULES, 1971

      The Maharashtra Contract Labour (Regulation and Abolition) Central Rules, 1971 are a set of rules established under the Contract Labour (Regulation and Abolition) Act, 1970. These rules provide guidelines and regulations for the employment of contract labour in establishments across various industries in India. They outline provisions related to the registration and licensing of contractors, welfare measures for contract labour, health and safety standards, working conditions, and other aspects concerning the employment of contract labour. The rules aim to protect the rights and interests of contract labourers and maintain fair and equitable working conditions.

      CHAPTER III: REGISTRATION AND LICENSING

      Application process for registration of establishments (Rule 17)

      (1) The application for registration of establishments, as mentioned in Section 7 of the parent act, should be submitted in triplicate using Form I to the registering officer of the area where the establishment is located.

      (2) Along with the application mentioned in sub-rule (1), a demand draft must be provided as proof of payment for the registration fees.

      (3) The application mentioned in sub-rule (1) can be delivered personally to the registering officer or sent via registered post.

      Certificate of registration issuance (Rule 18)

      The certificate of registration granted under section 7(2) of the parent act will be in Form II and shall include

      1. Name and address of the establishment.
      2. The maximum number of contract labourers to be employed in the establishment.
      3. Type of business, trade, industry, manufacture, or occupation conducted in the establishment.
      4. Any other relevant particulars concerning the employment of contract labour in the establishment.
      5. Any changes in the specified details mentioned should be mentioned to the Registering Officer within 30 days by the Principal Officer

      Rejection of incomplete registration applications (Rule 19)

      Incomplete registration applications will be returned to the principal employer, who will be asked to make necessary amendments. If the principal employer fails to amend the application, it will be rejected.

      Application for a license (Rule 21)

      1. Contractors must submit a triplicate application in Form IV to the licensing officer.
      2. The application must be accompanied by a certificate from the principal employer (Form V) confirming compliance with the Act and rules.
      3. The application can be delivered personally or sent by registered post.
      4. A demand draft should accompany the application, covering the required security deposit and fees.

      Security deposit and refund (Rule 24)

      Before issuing a license, the contractor must deposit an amount calculated at the rate of Rs. 500 for each contract labourer to be employed. This deposit serves as a guarantee for complying with license conditions and the Act. When the license period expires, the contractor can apply to the licensing officer for a refund of the deposited security.

      Forms, conditions, and validity of license:(Rule 25 & 27)

      1. Every license granted under section 12(1) is in Form VI.
      2. Licenses are non-transferable and have conditions including limits on the number of contract labourers employed and non-refundability of fees.
      3. The contractor must ensure that wages paid are not lower than the minimum rates set by the Minimum Wages Act, 1948, and are at least the same as those for directly employed workmen performing similar tasks for the principal employer.
      4. The license remains valid for twelve months from the date of issuance or renewal if
        1. Not revoked, suspended or amended by the Licensing officer
        2. The contractor pays the requisite annual fees

        Renewal of license (Rule 29)

        1. Contractors must apply for license renewal to the licensing officer.
        2. The application (Form VII) must be submitted in triplicate at least sixty days before the license expiration date.
        3. If the application is timely made, the license is considered renewed until the renewed license is issued.

        Grant of temporary certificate of registration and license (Rule 32)

        1. In situations where immediate employment of contract labour is required in an establishment due to certain conditions, and the duration of employment is estimated to be no more than fifteen days, the Principal Employer or contractor can apply for a temporary certificate of registration or license.
        2. The application should be made in triplicate using Forms VIII and X, respectively, accompanied by a demand draft for the appropriate fees and, in the case of a license, the required security amount.
        3. Upon receiving a complete application and being satisfied that the work necessitates immediate action and will be completed within fifteen days, the Registering Officer or Licensing Officer will promptly issue a certificate of registration (Form IX) or license (Form XI) for a maximum period of fifteen days.
        4. If a certificate of registration or license is not granted, the reasons for the decision will be recorded by the respective officer.
        5. Once the validity of the registration certificate expires, the establishment must cease employing contract labour associated with that certificate

        CHAPTER V WELFARE AND HEALTH OF CONTRACT labour

        Rest Rooms (Rule 41)

        1. Contractors must provide and maintain restrooms or suitable accommodations for contract labour staying overnight in establishments where their employment is expected to last for three months or more.
        2. Existing establishments have 15 days to comply, while new establishments must do so within 15 days of starting contract labour employment.
        3. If the contractor fails to provide the amenities, the principal employer must do so within 15 days after the deadline.
        4. Separate rooms for women employees.
        5. Adequate ventilation, lighting, and floor area of at least 1.1 sq. meter per person.
        6. Construction should protect against heat, wind, and rain.
        7. Convenient location with sufficient drinking water supply

        Canteens (Rule 42-50)

        1. Availability- Contractors must provide an adequate canteen for establishments where contract labour exceeds 100 workers and employment lasts for six months or more. Existing establishments have 60 days, and new establishments have 60 days from the start of contract labour employment to comply. If the contractor fails to provide the canteen within the specified time, the principal employer is responsible for providing it within 60 days after the contractor's deadline.
        2. Canteen Facilities: The canteen must have a dining hall, kitchen, store room, pantry, and separate washing areas for workers and utensils. Adequate lighting should be provided at all times when the canteen is accessible. The floor should be smooth and impermeable, and the inside walls should be lime-washed or colour-washed annually.
        3. Dining Hall: The dining hall should accommodate at least 30% of the contract labour working at a time. The floor area of the dining hall, excluding the service counter and furniture, should be at least one square meter per diner. Separate reserved areas should be provided for women workers, along with screened washing places for privacy. Sufficient tables, stools, chairs, or benches should be available for the number of diners.
        4. Equipment and Hygiene: Adequate utensils, crockery, cutlery, furniture, and other necessary equipment should be provided and maintained in a clean and hygienic condition. Clean clothes should be provided for canteen employees. The service counter should have a smooth and impermeable top. Facilities for cleaning utensils and equipment, including hot water, should be provided.
        5. Food and Pricing- The food served in the canteen should be in line with the normal habits of the contract labour. Charges for food, beverages, and other items in the canteen should be based on 'no-profit, no-loss' and displayed prominently. Certain expenses such as rent, depreciation, maintenance, equipment costs, water charges, and interest should not be considered in determining the prices.
        6. Records and Audit- Books of accounts, registers, and other documents related to the canteen should be made available to an Inspector upon request. The canteen accounts should be audited annually by registered accountants and auditors.

        Latrines and Urinals (Rule 51-56)

        1. In establishments covered by the Act, it is essential to provide appropriate latrines and urinals to ensure proper sanitation and hygiene for workers. At Least one latrine needs to be provided for every 25 male and female workers
        2. Each latrine should be well-designed with partitions, proper doors, and secure fastenings. In establishments where both male and female workers are employed, clear notices should be displayed outside each block of latrines and urinals, indicating whether they are designated for men or women.
        3. For establishments with up to 50 male workers, at least one urinal should be provided. For establishments with a larger workforce, one urinal should be provided for every 50 workers up to the first 500, and one for every 100 workers or part thereof thereafter.
        4. Proper maintenance of these facilities is necessary. Latrines and urinals should be conveniently located within the establishment premises, and adequate lighting should be provided, and regular cleaning and maintenance should be conducted to keep them in a sanitary condition. Additionally, a sufficient water supply should be available near or inside the latrines and urinals.

        First-Aid Facilities (Rule 58-62)

        1. In every establishment covered by the Act, first-aid boxes should be provided and easily accessible during all working hours with the rate of at least one first-aid box for every 150 contract labour or part thereof ordinarily employed. The first-aid boxes should be marked with a red cross on a white background
        2. The equipment in the first-aid box should include the following items:
          1. Small, medium, and large sterilised dressings
          2. Burn dressings.
          3. Alcohol solution of iodine.
          4. Salvolatile.
          5. Snake-bite lancet.
          6. Potassium permanganate crystals.
          7. Scissors.
          8. First-aid leaflet.
          9. Aspirin tablets.
          10. Ointment for burns.
          11. Surgical antiseptic solution.
          1. The first-aid box should be kept in the custody of a responsible person who is readily available during working hours.
          1. In establishments with 150 or more contract labour employed, the person in charge of the first-aid box should be trained in first-aid treatment.

          CHAPTER VI WAGES

          1. Rule 63- Contractors must establish wage periods for payment.
          2. Rule 64- Wage periods cannot exceed one month.
          3. Rule 65- Wages must be paid within 7 days (for less than 1000 workers) or 10 days (for more than 1000 workers) after the end of the wage period.
          4. Rule 66- If a worker's employment is terminated, their wages must be paid within 2 working days.
          5. Rule 67- Wage payments must be made on a working day at the workplace during working hours. If work is completed early, final payment must be made within 48 hours of the last working day.
          6. Rule 68- Wages must be paid directly to the worker or an authorised person.
          7. Rule 69- Wages must be paid in current coin or currency.
          8. Rule 70- Wages should be paid without deductions, except those specified by the Central Government or allowed under the Payment of Wages Act, 1936.
          9. Rule 71- A notice displaying the wage period, place, and time of wage disbursement must be posted at the workplace and sent to the principal employer.
          10. Rule 72- The principal employer must ensure their authorised representative is present during wage disbursement, and the contractor must disburse wages in their presence.
          11. Rule 73 The authorized representative of the principal employer must sign a certificate in the wage register confirming the payment of wages to workers.

          CHAPTER VII REGISTERs, RECORDS AND COLLECTION OF STATISTICS

          1. In this chapter, the following requirements and obligations are outlined regarding registers, records, and collection of statistics for contract labour:
            1. Register of contractors (Form XII): Principal employers must maintain a register of contractors for each registered establishment.
            2. Register of persons employed (Form XIII): Contractors must maintain a register of persons employed for each registered establishment where contract labour is engaged.
            3. Employment Card (Form XIV): Contractors must issue an employment card to each worker within three days of their employment, and it should be kept up to date with any changes in particulars.
            4. Service Certificate (Form XV): Contractors must provide a service certificate in case of employment termination, regardless of the reason.
            5. Muster Roll and Register of Wages (Form XVI and Form XVII): Contractors should maintain a muster roll and register of wages for each work engagement with contract labour. A combined register of wage-cum-muster roll (Form XVIII) is required for a wage period of a fortnight or less.
            6. Register of Deduction, Register of Fines, and Register of Advances (Form XX, Form XXI, and Form XXII): Contractors must maintain these registers to record deductions, fines, and advances related to contract labour.
            7. Register of Overtime (Form XXIII): Contractors should maintain a register of overtime to record the number of hours worked and wages paid for overtime work, if applicable.
            8. Wage Slips (Form XIX): Contractors must issue wage slips (where the wage period is one week or more) to workers at least one day before wage disbursement.
            9. Display of Abstract of Act and Rules: Every contractor must display an abstract of the Act and rules in English, Hindi, and the language spoken by most workers, in a form approved by the Chief Labour Commissioner (Central).
            10. Maintenance and Preservation of Records: All registers, records, and notices required under the Act and rules should be maintained complete, up-to-date, and preserved for three calendar years from the date of the last entry.
            11. Notices: Notices showing rates of wages, hours of work, wage period, dates of payment of wages, names and addresses of Inspectors, and date of payment of unpaid wages should be displayed in English, Hindi, and the local language understood by the majority of workers. Changes in the notices should be communicated to the Inspector.
            12. Half-Yearly and Annual Returns: Contractors need to submit half-yearly returns (Form XXIV) to the Licensing Officer within 30 days from the close of the half-year, and principal employers should submit annual returns (Form XXV) to the Registering Officer by 15th February following the end of the year.
            13. Power to Call for Information or Statistics: Authorities under the Act can order contractors or principal employers to provide information or statistics related to contract labour, and compliance is legally binding.