in a manufacturing unit if an organization have 50 employees are on company roles and rest of the 450 employees are contract workers. is there any legal provision against this.
From India, Chennai
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From India, Chennai
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In a manufacturing unit, if an organization has 50 employees on company payroll and the rest of the 450 employees are contract workers, is there any legal provision against this?
Dear Sowmyarekha, there is no specific provision regarding the distribution of employees between permanent and contract roles. The key aspect to consider is that all employees should receive equal benefits without discrimination based on their employment status.
Regards,
Tushar Swar
From India, Mumbai
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208Dear Sowmyarekha, there is no specific provision regarding the distribution of employees between permanent and contract roles. The key aspect to consider is that all employees should receive equal benefits without discrimination based on their employment status.
Regards,
Tushar Swar
From India, Mumbai
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Do you mean any remedy for this or something else to safeguard the interest of the employer? First of all, as per the Contract Labour (Regulation and Abolition) Act, you cannot have contract labour on works of perennial or recurring nature which is incidental to the main activities of the company. In your case, I think you are engaging the contract workers in core areas of operations, and it is understandable that you do not require housekeeping, security, or other casual workers ten times more than the employees employed for production. That means there is a clear violation of legal provisions in this regard. Therefore, you will not get the protection of law.
If you need a remedy for this, you can have it by taking all those who are engaged in routine, perennial, or works which require engagement of permanent workers into your rolls and start paying their wages directly. This is the only solution. By doing this, you become safe both in terms of law as well as financially because by engaging a contractor, you must be paying a good amount to him as his service charges in return for no service. You have to take care of the remittances of PF, ESI, payment of wages, Bonus, etc., and at the same time, you do not have any direct control over the workers. You cannot take any disciplinary action against any of them, and you cannot make them follow the HR or other policies or just Standing Orders of the company. If you put pressure on them legally, that will prove against you with issues of sham contract, etc. Then why should we go for an off-roll system? If they organize themselves, we should get involved in their negotiation, etc., and if we have to do that, the picture would become very clear that this arrangement is just a windscreen. That was why while delivering the verdict in Bhilwara Dugdh Utpadak Sahakari S. Ltd. Vs. Vinod Kumar Sharma Dead by LRS & Ors., the Supreme Court has said that “this new technique of subterfuge has been adopted by some employers in recent years in order to deny the rights of the workmen under various labour statutes by showing that the concerned workmen are not their employees but are the employees/workmen of a contractor, or that they are merely daily wage or short term or casual employees when in fact they are doing the work of regular employees. This Court cannot countenance such practices anymore. Globalization/liberalization in the name of growth cannot be at the human cost of exploitation of workers.”
Regards,
Madhu.T.K
From India, Kannur
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If you need a remedy for this, you can have it by taking all those who are engaged in routine, perennial, or works which require engagement of permanent workers into your rolls and start paying their wages directly. This is the only solution. By doing this, you become safe both in terms of law as well as financially because by engaging a contractor, you must be paying a good amount to him as his service charges in return for no service. You have to take care of the remittances of PF, ESI, payment of wages, Bonus, etc., and at the same time, you do not have any direct control over the workers. You cannot take any disciplinary action against any of them, and you cannot make them follow the HR or other policies or just Standing Orders of the company. If you put pressure on them legally, that will prove against you with issues of sham contract, etc. Then why should we go for an off-roll system? If they organize themselves, we should get involved in their negotiation, etc., and if we have to do that, the picture would become very clear that this arrangement is just a windscreen. That was why while delivering the verdict in Bhilwara Dugdh Utpadak Sahakari S. Ltd. Vs. Vinod Kumar Sharma Dead by LRS & Ors., the Supreme Court has said that “this new technique of subterfuge has been adopted by some employers in recent years in order to deny the rights of the workmen under various labour statutes by showing that the concerned workmen are not their employees but are the employees/workmen of a contractor, or that they are merely daily wage or short term or casual employees when in fact they are doing the work of regular employees. This Court cannot countenance such practices anymore. Globalization/liberalization in the name of growth cannot be at the human cost of exploitation of workers.”
Regards,
Madhu.T.K
From India, Kannur
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Thank you very much for your quick reply. In this case, the contractor is a sister concern of the company. To avoid union problems, the contractor came into existence. Can you suggest a remedy in this case?
Regards,
Sowmya
From India, Chennai
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Regards,
Sowmya
From India, Chennai
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Since the contractor has some kind of influence, the entire system seems to be a sham, and the only remedy is to take the employees under your rolls. Yes, there are a lot of companies, very big companies including public sector companies, who work like yours with a major chunk of employees under some other outsourcing agencies' rolls. But I cannot suggest a feasible solution for carrying out business like this. As already pointed out, if you want to do this just to avoid union involvements, you are mistaken; the contract labor can raise an industrial dispute, and in such a scenario, your standing orders will not help you too. Remember what happened in Maruti.
Regards,
Madhu.T.K
From India, Kannur
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Regards,
Madhu.T.K
From India, Kannur
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There is one more issue.The contract employees in core functions are more than the regular employees,the contractor/s can stall the functions of the company on a dispute. Varghese Mathew 09961266966
From India, Thiruvananthapuram
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From India, Thiruvananthapuram
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Please find the GO on Contract labour Appointment. Please go as per the Attached GO
From India, Vijayawada
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From India, Vijayawada
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Dear sir, in this case contractor is also running by principal employer
From India, Chennai
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From India, Chennai
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The answer is very simple. First, the Principal Employer should obtain Form V under CLRA. Thereafter, the Contractor will obtain the CL Licence. If the CL Licence permits the employment of 450 workers, then it is legal. If not, you need to acquire the license to deploy the 450 contract workers.
From India, Chennai
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From India, Chennai
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Extracting Rule 18 of the CLRA Rules
18. Grant of Certificate of Registration
(1) The certificate of registration granted under sub-section (2) of Section 7 shall be in Form II.
(2) Every certificate of registration granted under sub-section (2) of Section 7 shall contain the following particulars, namely:
• (a) The name and address of the establishment;
• (b) The maximum number of workmen to be employed as contract labour in the establishment;
• (c) The type of business, trade, industry, manufacture, or occupation which is carried on in the establishment;
• (d) Such other particulars as may be relevant to the employment of contract labour in the establishment.
(3) The registering officer shall maintain a register in Form III showing the particulars of establishments in relation to which certificates of registration have been issued by him.
(4) If, in relation to an establishment, there is any change in the particulars specified in the certificate of registration, the principal employer of the establishment shall intimate to the registering officer, within thirty days from the date such change takes place, the particulars of, and the reasons for, such change.
Therefore, under Rule 18 (2) (b), the maximum number will be specified. If in the Registration Certificate 450 is permitted, then its deployment will be legal.
From India, Chennai
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18. Grant of Certificate of Registration
(1) The certificate of registration granted under sub-section (2) of Section 7 shall be in Form II.
(2) Every certificate of registration granted under sub-section (2) of Section 7 shall contain the following particulars, namely:
• (a) The name and address of the establishment;
• (b) The maximum number of workmen to be employed as contract labour in the establishment;
• (c) The type of business, trade, industry, manufacture, or occupation which is carried on in the establishment;
• (d) Such other particulars as may be relevant to the employment of contract labour in the establishment.
(3) The registering officer shall maintain a register in Form III showing the particulars of establishments in relation to which certificates of registration have been issued by him.
(4) If, in relation to an establishment, there is any change in the particulars specified in the certificate of registration, the principal employer of the establishment shall intimate to the registering officer, within thirty days from the date such change takes place, the particulars of, and the reasons for, such change.
Therefore, under Rule 18 (2) (b), the maximum number will be specified. If in the Registration Certificate 450 is permitted, then its deployment will be legal.
From India, Chennai
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The license at present is for 350 workers. We are amending it for another 100, then it's legal. Right? Doing the same, thank you.
From India, Chennai
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From India, Chennai
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Understanding Contract Labour Regulations
First of all, as per the Contract Labour (Regulation and Abolition) Act, you cannot have contract labour on works of a perennial or recurring nature which are incidental to the main activities of the company. In your case, I think you are engaging the contract workers in core areas of operations, so it is understandable that you do not require housekeeping, security, or other casual workers ten times more than the employees employed for production. That means there is a clear violation of legal provisions in this regard. Therefore, you will not get the protection of the law. If you need a remedy for this, you can have it. Just take all those who are engaged in routine, perennial, or works which require the engagement of permanent workers into your rolls and start paying their wages directly. This is the only solution.
Our Senior Member/Super Moderator, Madhu ji, has given an answer to your query in very certain words, in very simple language. Still, you are not clear on the subject. You need to enhance your knowledge by working under Senior Professionals, reading a lot, and interpreting the provisions of the law in the proper sense. Sorry. I normally avoid such comments.
Regards
From India, Mumbai
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First of all, as per the Contract Labour (Regulation and Abolition) Act, you cannot have contract labour on works of a perennial or recurring nature which are incidental to the main activities of the company. In your case, I think you are engaging the contract workers in core areas of operations, so it is understandable that you do not require housekeeping, security, or other casual workers ten times more than the employees employed for production. That means there is a clear violation of legal provisions in this regard. Therefore, you will not get the protection of the law. If you need a remedy for this, you can have it. Just take all those who are engaged in routine, perennial, or works which require the engagement of permanent workers into your rolls and start paying their wages directly. This is the only solution.
Our Senior Member/Super Moderator, Madhu ji, has given an answer to your query in very certain words, in very simple language. Still, you are not clear on the subject. You need to enhance your knowledge by working under Senior Professionals, reading a lot, and interpreting the provisions of the law in the proper sense. Sorry. I normally avoid such comments.
Regards
From India, Mumbai
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Thank you very much for sharing this piece of Gazette of the Govt. of AP. In addition to clicking on "Appreciate and Validate" your post, I would like to quote it here so that the members will open the attachment and read it to increase their knowledge, hopefully. The core activity defined therein may help us in engaging contract laborers.
Regards,
From India, Mumbai
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Regards,
From India, Mumbai
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As you mentioned, we cannot engage contract workers in core activities and work that is perennial in nature. Please explain what is "perennial in nature." Are housekeeping and security roles considered perennial in nature?
Secondly, I would like to inquire whether we can engage contract workers in the HR and Accounts Departments, where we already have some employees on the company's payroll. Please provide clarification.
Regards,
Dinesh Kumar
From India, New Delhi
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Secondly, I would like to inquire whether we can engage contract workers in the HR and Accounts Departments, where we already have some employees on the company's payroll. Please provide clarification.
Regards,
Dinesh Kumar
From India, New Delhi
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You have asked to explain what is "Perennial in Nature." I suggest you go through the Gazette Notification of the Government of AP, which has been shared and posted by Sudhakar Sir on the ongoing thread. The notification has well-defined the "Core Activities," where the engagement of contract labor has been prohibited in the state as the employment in those activities is considered perennial in nature. It has covered almost all the activities where normally contract labor is engaged. Housekeeping and security are also included and have been treated as employment of perennial in nature.
Section 10(2) of the Act also lays down certain guidelines, which are required to be kept in mind while deciding the employment of contract labor in any process, operation, or other work in any establishment. The Supreme Court of India, in the case of Standard Vacuum Refinery Company Vs. their workmen, has observed that contract labor should not be employed where:
- The work is perennial and must go on from day to day;
- The work is incidental to and necessary for the work of the factory;
- The work is sufficient to employ a considerable number of whole-time workmen; and
- The work is being done in most concerns through regular workmen.
A plain dictionary meaning of perennial employment is "lasting throughout the year or through many years." Seasonal employment or employment to clear the pending work or handle unforeseen work for a short duration, etc., are allowed.
With regards to your second query about the engagement of contract workers in the HR and Accounts Department, in which you already have some employees on the company roll, it is clarified that there is no bar for such employment as long as you are fulfilling the conditions of the license mentioned under Central Rule 25(2)(v)(a), which is as under:
Rule 25(2)(v)(a) - in cases where the workmen employed by the contractor perform the same or similar kind of work as the workmen directly employed by the principal employer of the establishment, the wage rates, holidays, hours of work, and other conditions of service of the workmen of the contractor shall be the same as applicable to the workmen directly employed by the principal employer of the establishment on the same or similar kind of work.
Regards,
BS Kalsi
Member since Aug 2011
From India, Mumbai
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Section 10(2) of the Act also lays down certain guidelines, which are required to be kept in mind while deciding the employment of contract labor in any process, operation, or other work in any establishment. The Supreme Court of India, in the case of Standard Vacuum Refinery Company Vs. their workmen, has observed that contract labor should not be employed where:
- The work is perennial and must go on from day to day;
- The work is incidental to and necessary for the work of the factory;
- The work is sufficient to employ a considerable number of whole-time workmen; and
- The work is being done in most concerns through regular workmen.
A plain dictionary meaning of perennial employment is "lasting throughout the year or through many years." Seasonal employment or employment to clear the pending work or handle unforeseen work for a short duration, etc., are allowed.
With regards to your second query about the engagement of contract workers in the HR and Accounts Department, in which you already have some employees on the company roll, it is clarified that there is no bar for such employment as long as you are fulfilling the conditions of the license mentioned under Central Rule 25(2)(v)(a), which is as under:
Rule 25(2)(v)(a) - in cases where the workmen employed by the contractor perform the same or similar kind of work as the workmen directly employed by the principal employer of the establishment, the wage rates, holidays, hours of work, and other conditions of service of the workmen of the contractor shall be the same as applicable to the workmen directly employed by the principal employer of the establishment on the same or similar kind of work.
Regards,
BS Kalsi
Member since Aug 2011
From India, Mumbai
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Legal Clarification on Absconding Employee, Contract Labour Engagement & Leave Entitlement Ammen.pdf
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