Preamble of the CONTRACT LABOUR ACT:

• An Act to regulate the employment of contract labour in

certain establishment and to provide for its abolition in
certain circumstances and for matters connected therewith.

• Act tends to regulate the conditions of service of contract

labour by providing certain safeguard and proper
mechanism to over see their welfare.

• In tends to abolish contract labour u/s 10(1) on consideration

of factors stated u/s 10(2) only; in certain circumstances viz.
work of perennial nature.

It provides for registration of PE and licence for contractor.

Government of India, CPWD Works Manual
2012 lays down Responsibilities of Contractor”
in Clause 34.5 as under:-

“(1) The contractor shall comply with all the

provisions of the Minimum wages Act, 1948,
Contract Labour (Regulation and Abolition) Act,
1970 and rules framed thereunder, and other
labour laws affecting contract labour that may
be brought into force time to time.”
WHO IS A CONTRACT LABOUR?

• A workman shall be deemed to be employed

as ‘contract labour’ in or in connection with
the work of establishment, 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
The contract employees

 They are indirect employees of establishment

 They are hired, supervised and remunerated by a contractor,

who in turn, is compensated by the establishment.

 Contract labour is neither borne on pay roll or muster roll of

establishment; nor wages are paid directly to it by the estb.

 If any activity which is outsourced to someone and is carried

outside the premises of the PE, it will be outside the purview
of the Act.
 Labor law compliance (Contractors)
1 ENTRY 2 WORK 3 EXIT

• GATE PASS • Monthly HR • Final bill clearance

system clearance • Exit formalities –
• CLMS • Self Audit once in a F&FS, Gate pass
SOFTWARE quarter cancel
• contractor meets • Form VI
Entry Monthly HR clearance Exit
 Important Documents checking  Document check on receiving of  Full and final settlement
• PO copy bill • Unpaid wages
• Form V issue • Copy of muster roll • Leave balance – payment
• WC copy • Wage sheet • Bonus till date
• Identity proof of workers • Bank payment statement • Gratuity till date
 Premedical check-up • PF ECR copy  Work completion certificate
 Safety induction • PF Deposit Challan from the user department
 Allow Gate pass  Release of payment  Issue of form VI-B
 Entry into CLMS software –  License cancel through Labour
registering the workers department
information
 Regular attendance capturing – 5
turnstile entry
License for the contract labor
LICENSING OF CONTRACTORS- Amended w.e.f.
15.11.18
R. 21(1). Application for license shall be made online in Form-II on web-site of
Shram Suvidha Portal

R. 21(2). Certificate in Form-III (earlier-Form V) to be uploaded along with

application (Format also amended wef 15.11.2018)

R. 21(4). Automated generation of acknowledgment

R. 21(5). Depositing of security by e-payment

Rule 26. Fee (Depending upon number of contract labour)

For registration : Rs. 60 to 1500/-;
For license : Rs. 15/- to Rs. 375/-

R. 27. Validity of license: Twelve months w.e.f. date of issue

Rule. 29. Renewal of license:-

To be made online in Form II at least 30 days before the expiry

of license.

If application for renewal is not received by LO within given

time, 25% excess fee (penalty) to be paid.

Same fee for renewal and grant of license.

Duplicate registration / license on fee of Rs. Five only

R. 25(2)(i). the license shall be non-transferable;
R. 25(2)(ii). contract labour shall not, on any day, exceed the
maximum number specified in the license;
R. 25(2)(iii). Fee for license : Is Non- refundable
R. 25(2)(iv). the rates of wages payable to the workmen by the
contractor shall not be less than the rates prescribed under the
Minimum Wages Act, 1948; or where the rates have been fixed by
agreement, settlement or award or appropriate Govt.
 Fees to be deposited- All e-payments w.e.f. 15.11.2018

No. of workmen Registration Rule 26(1) New or renewal of licence -Rule 26(2)
By PE By Contractor

For 20 workmen 60.00 15.00

21 to 50 150.00 37.50

51 to 100 300.00 75.00

101 to 200 600.00 150.00

201 to 400 1200.00 300.00

Above 400 1500.00 375.00

 Contract labor (R&A) act, 1970

Mandatory requirements as a contractor

• Section 5(1) - Payment of wages to be done before 7th of every
month considering wage period from 1st to 30th / 31st
• Section 21(4) - If contractor fails to pay – PE should pay and then
they could recover such amount from the contractor either by
deducting any amount payable to the contractor under any
contractor or as a debt payable by contractor
• Rule 23 (4) of the Minimum Wages (Central Rules) 1950 -
Contractors are not liable to pay the Wages for the weekly rest.
 Provident fund related

⇨ No contractor is to be engaged unless he is having independent PF/ESI Codes.

⇨ No bill of the contractors is to be allowed for payment unless ECRs for the previous
month have been verified on the system.
⇨ If the contractor is having independent PF Code, the Principal Employer is not liable to
pay the amount in case of default by the contractor.
⇨ The liability of un-registered contractors, would fall on the PE, in view of clause 30 of
the Employees Provident Fund Scheme, 1952. [2012 LLR 702]
⇨ Employees’ Provident Fund Authority is not entitled to recover either Provident Fund
Contribution or damages from the principal employer in respect of employees
engaged through the contractor, registered with the PF Department having
independent code number.
⇨ The liability to pay the Provident Fund is mainly on the principal employer and
thereafter it is open to the employer to recover from the contractor. Therefore, the fact
that the petitioners are covered by the Provident Fund Scheme, is not relevant for
deciding the status of the petitioners.
⇨ Principal Employer has discharged its obligation in paying the PF contribution of the
workers of the Contractor, it cannot be a ground for regularization of workers of the
Contractor, since Principal Employer can recover the amount paid from the Contractor.
⇨ Merely the Principal Employer has been depositing ESI/PF contribution, being the
statutory liability on the principal employer, will not be the factor for construing that the
relationship of employer & employee exists between the Principal Employer and the
workers as engaged through the Contractors
Liability to pay Bonus to Contract Labor, whether
Principal Employer Liable?

⇨ Bonus does not come with the purview of definition of wages

⇨ Principal Employer is not liable to make payment of Bonus

under Payment of Bonus Act 1965 to contract laborer as there
is no relationship of employer and employee between the
Principal Employer and the contract laborer.
 Liability to pay Gratuity to Contract Labor,
whether Principal Employer Liable?

⇨ Neither the CLRA Act nor The Payment of Gratuity Act provide that
employee engaged through contractor will be entitled to Gratuity
from Principal Employer. Principal Employer is not liable to pay
gratuity to employees of the contractor
⇨ Principal employer can be directed to pay gratuity to the employees
of the contractor. In turn the Principal Employer can recover gratuity
paid to the employees of the contractor from the contractor.
Liability to pay compensation to Contract Labor under the
Employee's Compensation Act: Whether it is of principal
employer?
⇨ Section 12 (1) of the Employee Compensation Act makes the principal
employer liable to pay compensation to contract labor for an injury or an
occupational disease arising out of and in the course of his employment as
if the employee had been immediately employed by him.

⇨ Under Section 12 (2) of the Employee Compensation Act, the principal

employer is empowered to be indemnified by the Contractor who would
normally pay for the compensation of the injured / deceased worker and
the onus would shift back to the contractor.

⇨ However, Principal Employer cannot escape his liability to pay

compensation to the employees of the contactor and in turn, the Principal
Employer can recover the amount paid by him, from the contractor.
Chapter V – Sec. 16 to 20 (read with Rules 40 to 58)

Welfare & health of contract labour. To be provided by Contractor.

Sec. 16. Canteen – if more than 100 con. labour & where work is likely to
continue for six months or more.
Rule 42 to 50. If contractor fails to provide, PE will provide within 60 days.
 Sufficient to accommodate 30 persons
 Separate counters for male / female
 On ‘No profit no loss basis’
 Furniture, utensils, crockery, equipments, hot water by PE
Sec. 17. Rest room. If work is likely to continue for more than 3 months &
workers are supposed to halt at night.
Rule 41. To be provided by contractor within 15 days. Failing which PE to
provide within next 15 days.
 Separate rooms for male an female at convenient distance from work
place with adequate ventilation etc.
 Protection from wind, rain, heat etc.
 With wholesome drinking water.
Sec. 18. Other facilities. 18(a). Wholesome drinking water at convenient
places

Sec. 18(b). Latrines/ urinals with water facility by means of tap.

Rule 51. Up to 100 workers. Separate for men and women @ one latrine for
25 workers. {Beyond 100 -- one for 50 workers}
Should be covered, with proper doors and partioned to secure privacy. Also
marked for Men and Women etc.

Sec. 18(c). Washing facility. No limit of CL employed. Separate for men and
women.

Sec 19. First-aid. At every place where cont. labour is employed. Under
charge of a trained person who is readily available.
Readily accessible during all working hours.
Minimum one box for every 150 workers with prescribed
Rule 59 prescribes different contents for contractors employing less than /
more than 50 cont. labour.
 Registers, Records & Notices by PE and Contractor

R-74. PE shall maintain a register of contractor in Form XII.

R-75. Contractor to maintain a register of persons employed by him
R-76 Contractor shall issue an employment card in Form XII to each worker within
three days of the employment of the worker
R-77. contractor to issue to workman a Service Certificate in Form VII on
termination of employment.
R-78. Contractor to maintain prescribed registers for each work:
(i) Muster Roll, Register of Wages, overtime, and advances.
(ii) Register of Deductions for damage or loss/ and fine
(b) If wage period exceeds one week, to issue wage slips to workmen at least a
day prior to disbursement of wages;
78(c). To obtain thumb impression / signatures of workers on register of wages.
Payment to be authenticated by the initials of contractor and verified by rep of
PE as specified in Rule 73.

18
Contractor shall display (NOTICES) :-

Rule-79. An approved abstract of Act and rules in English & Hindi: and in the language
spoken by the majority of workers.

Rule 80. Records to be kept within 3 KM of workplace

Rule 81(1)(i). PE & Contractor to display Notices showing rates of wages, hours of work,
wage periods, dates of payment, name & address of Inspector.

Returns: Rule 81(3). PE to submit return within 15 days of commencement or

completion of each contract work under each contractor in Form VII.

Rule 83. The Board, Committee, CLC or Inspector or other authority under the Act shall
have powers to call for any info or statistics in relation to contract labour from any
contractor / PE. They are legally bound to send info.

19
Returns : Rule 82 {amended w.e.f. 29 Dec 2017}

• “82 (1) Every principal employer and contractor shall file a Unified Annual Return
online in Form XIV annexed to the Rationalisation of Forms and Reports under
Certain Labour Laws Rules, 2017, on the Shram Suvidha Portal …. on or before
the 1st day of February following the end of the year to which it relates.”
CL cannot raise any ID against the PE. Employee-employer relationship is only between
contractor & contract labour.

If Contractor abandons the work, leaving the contract labour at work spot. There will be no
master-servant relationship between the PE and cont. labour.

What is a sham contract? Doctrine of “Lifting of Veil”

• When the agreement does not disclose the name, address of the contractor, the exact
nature of job to be assigned, nature of job to be performed and is against the norms
of judicial pronouncement/ statutory provisions, for victimization or unfair labour
practice or against or minimum wages. - Haryana State Electricity Board, v/s Suresh
(1999) 3 SCC 601
In case of ID between a contractor and contract labour
employed through contractor … the appropriate Govt. shall be
with relation to control over estb of PE.

CONTRACT LABOUR had no locus standi to espouse any ID

against the PE.

Hence, contractor should handle the industrial disputes between

him and the contract labour employed by him.

Contractual women employees are entitled to Maternity benefit

Scenarios of non-compliance
CLMS Software demo
Umang Software demo
 Celebrating best contractors!
Contractor of the Year awards to recognize their top five
participating contractors
• These contractors receive marketing benefits including a Contractor of
the Year program logo for their website and additional marketing
support. The program had been monitoring contractors’ work through
quantitative metrics
• Not only do these scores enable annual contractor recognition, but they
also allow the program to give contractors regular feedback and increase
contractor accountability.

AWARDS -
• MOST COMPLIANT CONTRACTORS – TOP 3
• MOST MANAGEMENT FRIENDLY CONTRACTORS – TOP 3
• BEST WELFARE PROVIDERS – TOP 3
• BEST EMPLOYERS (Survey score among workers)– TOP 3