Prudential Education

Siddharth S Jain

Chapter 2: Contract Labour (Regulation and Abolition) Act, 1970

Purpose/ Objective of the Act
The purpose of the Act is to regulate the employment of contract labour and to provide for abolition of contract labour in
certain cases.
Applicability of the Act
The Act is applicable to every establishment in which 20 or more workmen are employed as contract labour or were so
employed on any day of the preceding 12 months.
Meaning of Establishment
- Establishment means any office or department of Government or a local authority or any place where any industry,
trade, business, manufacturing, or occupation is going on.
- Every such establishment is required to get itself registered under the Act.
Meaning of Contract Labour
- A Workman is deemed to be employed as contract labour in or in relation to the work of the establishment if
-- He is hired for such work by or through a contractor, with or without the knowledge of the principal employer.
Contractor
- The Act applies to every contractor who employs 20 or more workmen. The contractor covered under this Act is
required to obtain a license under this Act.
- A contractor is required to maintain Muster Rolls and Register of Wages.
- He is required to pay wages to Workman in time and in the presence of authorizer representative of principal employer.
- If the contractor fails to make payment of wages, principal employer is liable to make payment to contract labour.
- However, he can recover this amount from the contractor.
- A contractor is also required to provide certain facilities to the contract labour such as canteen facilities, rest rooms,
first aid, drinking water, toilets, etc.
- Under Section 21(4) of the Act, it has been provided that
-- If the contractor fails to make payment of wages
-- Within the prescribed period or makes short payment, then the
-- Principal employer shall be liable to make payment of wages in full or the unpaid balance due, as the case may be,
-- To the contract labour employed by the contractor and
-- Recover the amount so paid from the contractor either by deduction from any amount payable to the contractor
under any contract or as a debt payable by the contractor.

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Prudential Education

Siddharth S Jain

Prohibition on Employment of Contract Labor

Appropriate Government can prohibit employment of contract labour in any process, operatic; or work in any
establishment, by issuing a notification. Before issuing such order in respect of any establishment, appropriate
Government will consider the following factors:
1) Conditions of work and benefits provided to contract labour,
2) Whether process, operation or work is incidental or necessary for the industry, trade, or business,
3) Whether such work is done ordinarily through regular workmen of contract labour in other similar establishments.
Applicability of Other Laws to Contract Labor
Besides Contract Labor (Regulation and Abolition) Act, following Acts are also applicable to contract labour:
1) Factories Act,
2) Industrial Disputes Act
3) Workmens Compensation Act,
4) Employees State Insurance Act,
5) Payment of Wages Act,
6) Employees Provident Fund Act.
Important Point: It has been held that there is no provision in the Contract Labour (Regulation and Abolition) Act, 1970,
which requires the employer to absorb the contract labour as a regular employee, if the contract labour has been
abolished by the government in such organizations. [SAIL v. National Union of Water Front Workers]

Industrial, Labour & General Laws

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