Civil Engineering Department

Institute of Technology
Nirma University
2CL401 Construction Project Management
B. Tech Sem VII

12. Labour Laws in Construction

INTRODUCTION:

India’s share in world construction market is less than 10%, and is continuously increasing. With
the entry of multinationals in the Indian construction industry, there is a tough
competition.There are about 8.5 million building and other construction workers
in India as per the estimates of National Sample Survey (1987-88). These
workers are one of the most numerous and vulnerable segments of the
unorganised sector in India. The building and other construction works are
characterised by their inherent risk to the life and limb of the workers. The
work is also characterised by its casual nature, temporary relationship between
employer and employee, uncertain working hours, lack of basic amenities and
inadequacy of welfare facilities. Although the provisions of various Labour Laws
i.e., Minimum Wages Act 1948, Contract Labour (Regulation & Abolition)
Act1970 and Inter-State Migrant Workmen (Regulation of Employment &
Conditions of Services) Act 1979 etc., are applicable to the building and other
construction workers, a need was felt for a comprehensive Central Legislation
for this category of workers. Towards the above goal the following two
enactments have come on the Statute Book w.e.f. 20.8.96, initially brought in
as ordinances on 3.11.95

◦ The Building & Other Construction Workers (Regulation of Employment and

Conditions of Service) Act,1996; and
◦ The Building & Other Construction workers’ Welfare Cess Act, 1996 .

AIMS AND OBJECTIVES

The above law aims to provide for regulation of employment & conditions of
service of the building and other construction workers as also their safety,
health and welfare measures in every establishment which employs or
employed during the preceding year ten or more workers. The exception made
is only in respect of residential houses for own purpose constructed with a
cost not exceeding Rs. 10 lakh and such other activities to which the
provisions of Factories Act, 1948 and Mines Act, 1952 apply. Some of the
other main provisions of the Main Act are given below:

1. Provision for an Advisory Committee at the Central and the

State levels with the function to advise the Governments concerned
on such matters arising out of the administration of the Act as may
be referred to it.
 2. Provision for registration of each establishment within a period
of sixty days from the commencement of work to ensure that there
are no malpractices and to discourage non-compliance of law by
circumventing.

3. Provision for registration of building workers as beneficiaries

under this Act.

4. Provision for constitution a Building and Other Construction

Workers’ Welfare Board by every State Government to exercise the
powers conferred on, and perform the functions assigned to it,
under the Act.

5. Provision for immediate assistance in case of accidents, old age

pension, loans for construction of house, premia for group
insurance, financial assistance for education, to meet medical
expenses, maternity benefits etc.

6. Provision for health and safety measures for the construction

workers in conformity with ILO convention No.167 concerning
safety and health in construction revising the Safety Provisions
(Building) Convention, 1937. For this purpose comprehensive
Central Rules i.e. Building and other Construction Workers
(Regulation of Service and Conditions of Service) Central Rules,
1998 have been notified by the Central Government.

7. Provision for constitution of safety committees in every

establishment employing 500 or more workers with equal
representation from workers and employers in addition to
appointment of safety officers qualified in the field.

8. Provision for Penalties of fine and imprisonment for violation and

contravention of the Act

FUNDING
To raise the Funds for provision of various welfare measures, the Main Act
provides for constitution of Welfare Boards. The major source of the Funds shall
be collection of cess at rates not exceeding 2% of the cost of construction
incurred by an employer. The collection of funds and administration of the
Welfare Boards would be the responsibility of concerned State Governments.

GOVERNMENT POLICY
Government’s policy is to ensure that the intended benefits and advantages reach the
construction workers at the earliest and in full measure. The difficulties experienced in
implementation of these Act(s) will become more evident once the implementation of various
provisions of the Act(s) and Rules by the Central as well as State Governments pick up
momentum. Based on the experience gained by way of implementation of the Act(s) and Rules,
corrective steps, if any, will be taken to make them more responsive to the welfare needs of the
construction workers.

ENFORCEMENT
The Building & Other Construction Workers’ Welfare Cess Act, 1996 .
( 28 of 1996 )

An Act is provided for the levy and collection of a cess on the cost of construction
incurred by employers with a view to augmenting the resources of the Building &
Other Construction Workers’ Welfare Boards constituted under the Building &
Other Construction Workers (Regulation of Employment and Conditions of
Service) Act,1996. It extends to the whole of India and come in to force on the 3 rd
day of November, 1995.

Under the Act 1% cess shall be collected from every employer where the cost of
construction is more than Rs. 10 lakhs. The proceeds of the cess so collected
shall be paid by the local authority or the State Government collecting the cess
to the Board after deducting the cost of collection of such cess not exceeding 1%
0f the amount collected.

Further, the Central Government may, by notification in the Official Gazette,

exempt any employer or class of employers in a State from the payment of cess
payable under this Act where such cess is already levied and payable under any
corresponding law in force in that State.

Responsibility for enforcement of the Act primarily lies with the State
Governments/UTs.

LEGISLATIVE FRAMEWORK

The Government of India has been deeply concerned about the exploitation
of workers under the contract labour system. With a view to removing the
difficulties of contract labour and bearing in mind the recommendations of
various commissions and committees and the decisions of the Supreme
Court, particularly in the case of Standard Vacuum Refining Company in
1960, the Contract Labour (Regulation and Abolition) Act was enacted in
1970. This Act seeks to regulate the employment of contract labour in
certain establishments and to provide for its abolition under certain
circumstances.

Contract Labour, by and large, is neither borne on pay roll or muster roll nor is paid wages
directly. The establishments, which farm out work to contractors, do not own any direct
responsibility in regard to their labourers. Generally, the wage rates to be paid and observance
of working conditions are stipulated in agreements but in practice they are not strictly adhered
to.

The Main Features of the Act

The main features of the Act can be summarised thus:-

The Act applies to every establishment in which 20 or more workmen are

employed or were employed on any day on the preceding 12 months as
contract labour and to every contractor who employs or who employed on
any day of the preceding 12 months 20 or more workmen. It does not apply
to establishments where the work performed is of intermittent or casual
nature. The Act also applies to establishments of the Government and local
authorities as well.

The Central Government and the State Governments are required to set up
Central Advisory Board and State Advisory Boards, which are authorised to
constitute Committees as deemed proper. The functions of the Boards are
advisory, on matters arising out of the administration of the Act as are
referred to them. The Boards carry out the functions assigned to them under
the Act.

The establishments covered under the Act are required to be registered as

the Principal Employer. Likewise, every contractor to whom the Act applies
is required to obtain a licence and not to undertake or execute any work
through contract labour except under and in accordance with the licence
issued.

The Act has provided for establishment of canteens. For the welfare and
health of contract labour, provision is made for restrooms, first aid,
wholesome drinking water, latrines and urinals. In case of failure on the
part of the contractor to provide such facilities, the Principal Employer is
made liable to provide the amenities.

The contractor is required to pay wages and a duty is cast on him to ensure
disbursement of wages in the presence of the authorised representative of
the Principal Employer. In case of failure on the part of the contractor to pay
wages either in part or in full, the Principal Employer is liable to pay the
same. In case the contract labour perform same or similar kind of work as
regular workmen, they will be entitled to the same wages and service
conditions as regular workmen as per the Contract Labour (Regulation and
Abolition) Central Rules, 1971.

The Act makes provision for the appointment of Inspecting staff, for
maintenance of registers and records, for penalties for the contravention of
the provisions of the Act and Rules made thereunder and for making Rules
for carrying out the purpose of the Act. In the central sphere, officers of the
CIRM have been appointed as Inspectors.

Apart from the regulatory measures provided under the Act for the benefit of
the contract labour, the ‘appropriate government’ under section 10(1) of the
Act is authorised, after consultation with the Central Board or State Board,
as the case may be, to prohibit, by notification in the official gazette,
employment of contract labour in any establishment in any process,
operation or other work.
 Sub-section (2) of Section 10 lays down sufficient guidelines for deciding
upon the abolition of contract labour in any process, operation or other work
in any establishment and the ‘appropriate government’ while taking action
under this Section will have to take an overall picture of the industry
carrying on similar activities. The guidelines furnished under sub-section (2)
oblige the ‘appropriate government’ to consider, as relevant data, the
material to which it must have regard. The Central Government on the
recommendations of the Board has abolished contract labour system in a
number of jobs in different industries and so far 76 notifications have been
issued.

1. Discuss in detail: Contract Labour (Regulation and Abolition) Act, 1970 and
Workmen’s Compensation Act, 1923.

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