Dear HR Professionals,
Kindly suggest, can we give an on-job contract rather than a labor contract to a contractor who is hiring daily laborers to complete the job? He typically has fewer than 20 laborers each day, and they are not fixed as he recruits them from the roadside. As a principal employer, are we required to adhere to any statutory compliance in this scenario? Additionally, is the contractor complying with any statutory regulations? Please advise.
Thank you.
From India, Mumbai
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Kindly suggest, can we give an on-job contract rather than a labor contract to a contractor who is hiring daily laborers to complete the job? He typically has fewer than 20 laborers each day, and they are not fixed as he recruits them from the roadside. As a principal employer, are we required to adhere to any statutory compliance in this scenario? Additionally, is the contractor complying with any statutory regulations? Please advise.
Thank you.
From India, Mumbai
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What do you mean by Job Contract and how does it differ from Labour contract?
If the contractor is to supply manpower, then you should comply with the provisions of the CLRA Act. Though a single contractor may be supplying less than 20 workers, if you have 20 or more such workers through different contractors, you should obtain registration under the CLRA. Even otherwise, the responsibility of a principal employer towards ESI, PF, and payment of minimum wages cannot be ruled out.
From India, Kannur
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4769If the contractor is to supply manpower, then you should comply with the provisions of the CLRA Act. Though a single contractor may be supplying less than 20 workers, if you have 20 or more such workers through different contractors, you should obtain registration under the CLRA. Even otherwise, the responsibility of a principal employer towards ESI, PF, and payment of minimum wages cannot be ruled out.
From India, Kannur
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On a job contract, it means you have a quantum of work that you are giving to a contractor to complete the work, irrespective of how many laborers he will deploy. It's purely the completion of the job, similar to how we give a contract for the renovation of our house. I need expert advice on this.
From India, Mumbai
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From India, Mumbai
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If such contractor is using the materials that you supply and is making it by engaging his workers in your premises, the supervision is established and as such the provisions of CLRA Act and Acts like ESI and EPF will apply. On the other hand, if he is making it from his own premises using the materials purchased by him according to the specifications that you give, and then 'selling' it to you, then it will be outside the purview of labor Acts. In the former case, intermittent supervision of the quality will be available whereas in the latter case, only final inspection of quality will be available.
Court verdicts on the subject show that it is very important to establish supervision over the work other than final inspection to prove master-servant relationship to bring in the application of labor laws in an outsourcing activity.
From India, Kannur
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Court verdicts on the subject show that it is very important to establish supervision over the work other than final inspection to prove master-servant relationship to bring in the application of labor laws in an outsourcing activity.
From India, Kannur
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Dear Sanjay,
The definition of contract labor basically states that any person working on your premises under an agreement with their direct employer to deliver a result, other than the pure sale of goods, is a contract worker (except those in part-time or purely administrative roles).
Regardless of whether the individual has a labor supply contract or a job contract, the responsibility and liability remain the same for the Principal Employer (PE). The determining factor for applicability is whether the workers (not necessarily the same individual) regularly work on your premises.
In Maharashtra, the threshold for license applicability has been raised from 20 to 50 workers, eliminating the need for a license. There is an ongoing debate (not yet resolved by courts) regarding whether the act applies even when a license is not required. To safeguard yourself, ensure verification of fair wage payment (including minimum wages), overtime at double rates, provision of required leaves and holidays as per the law, and payment of all statutory dues.
Additionally, ensure compliance with safety regulations and, if ESIC (Employees' State Insurance Corporation) does not apply, confirm the presence of a workmen's compensation insurance policy. As mentioned by Madhu-ji, avoid direct involvement in controlling or managing the contractor's employees, except as necessary for quality control purposes.
By adhering to the above guidelines, you are less likely to encounter issues.
From India, Mumbai
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The definition of contract labor basically states that any person working on your premises under an agreement with their direct employer to deliver a result, other than the pure sale of goods, is a contract worker (except those in part-time or purely administrative roles).
Regardless of whether the individual has a labor supply contract or a job contract, the responsibility and liability remain the same for the Principal Employer (PE). The determining factor for applicability is whether the workers (not necessarily the same individual) regularly work on your premises.
In Maharashtra, the threshold for license applicability has been raised from 20 to 50 workers, eliminating the need for a license. There is an ongoing debate (not yet resolved by courts) regarding whether the act applies even when a license is not required. To safeguard yourself, ensure verification of fair wage payment (including minimum wages), overtime at double rates, provision of required leaves and holidays as per the law, and payment of all statutory dues.
Additionally, ensure compliance with safety regulations and, if ESIC (Employees' State Insurance Corporation) does not apply, confirm the presence of a workmen's compensation insurance policy. As mentioned by Madhu-ji, avoid direct involvement in controlling or managing the contractor's employees, except as necessary for quality control purposes.
By adhering to the above guidelines, you are less likely to encounter issues.
From India, Mumbai
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Many principal employers have come up with the idea of a job contract instead of a work contract to save them from the liabilities of labor laws. However, this is not the correct system. For example, a principal employer makes an agreement with the contractor to clean a certain square footage area, and rates are fixed based on the area cleaned without considering the requirement of workers for specific tasks. By implementing such a provision, the principal employer believes they can avoid responsibilities under labor laws such as payment of minimum wages, PF, ESI, etc.
The definitions of the contractor, contract labor, and principal employer cover all job contracts where contract laborers are employed for any work, with or without the knowledge of the principal employer. The contractor is responsible for paying minimum wages to the contract laborers employed at their premises for the contracted work. If the workers are covered under PF and ESI, LWF, PT, all dues must be paid/deposited with the relevant authorities, and the principal employer cannot evade its responsibilities.
From India, Pune
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The definitions of the contractor, contract labor, and principal employer cover all job contracts where contract laborers are employed for any work, with or without the knowledge of the principal employer. The contractor is responsible for paying minimum wages to the contract laborers employed at their premises for the contracted work. If the workers are covered under PF and ESI, LWF, PT, all dues must be paid/deposited with the relevant authorities, and the principal employer cannot evade its responsibilities.
From India, Pune
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The most important thing to note to differentiate a contract that will attract labor laws and one that will not attract labor laws is in its nature itself. A contract for service is a contract in which the master-servant relationship is absent, whereas a contract of service is one in which the element of the master-servant relationship is present.
From India, Kannur
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From India, Kannur
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Job contracts are helpful for the employer concerning the work that needs to be done by the contractor. There are advantages to the same, but for the applicability of labor law compliance - all labor law compliances will be applicable with respect to the job contract done by the contractor.
From Radius Enterprise Solutions, Mumbai. We provide HR & Labor Law Compliance Management Services to different companies in Mumbai and outside Mumbai. For more details, you can visit our website - https://square-jobs.com/hr-services/. Email ID -
. Mobile number - 9819228732.
From India
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From Radius Enterprise Solutions, Mumbai. We provide HR & Labor Law Compliance Management Services to different companies in Mumbai and outside Mumbai. For more details, you can visit our website - https://square-jobs.com/hr-services/. Email ID -
From India
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