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TRANSCRIPT
E2-E3
Finance
Labour Laws
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WELCOME
• This is a presentation for the E2-E3 Core Module for the
Topic: Contract Labour Act.
• Eligibility: Those who have got the Up gradation from E2
to E3.
• This presentation is last updated on 21-3-2011.
• You can also visit the Digital library of BSNL to see this
topic.
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BACKGROUND
• The system of employment of Contract Labour lends to various
abuses.
• Its abolition was under the consideration of Govt. for long time.
• In 2nd Five year plan , Planning commission has made
recommendations for the study of the problem.
• Tripartite Committee (State &Central.Govt.s) recommended
abolition of system wherever possible and practicable and
regulation of working conditions of labour where ever abolition
is not possible
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OBJECTIVE
• Object: To regulate the employment of Contract Labour
in certain establishments
• To provide for its abolishment in certain circumstances
and for matters connected therewith.
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APPLICABILITY
• To every establishment where 20 or more workmen are /
were employed on any day of preceding 12 months as
contract labour
• To every contractor who employs 20 or more workmen
on any day of preceding 12 months as contract labour
• Appropriate Govt. (Central / State ) is empowered to
extend it to any establishment or contractor employing
less than 20 workmen, after giving not less than 2
months notice by Gazette
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APPLICABILITY
• Is not applicable to an establishment of an intermittent
or casual nature.
• The appropriate Govt. will decide whether it is of an
intermittent or casual nature.
• It shall not be deemed as intermittent
• If work is performed for more than 120 days in
preceding 12 months .
• if it is seasonal and is performed for more than 60 days
in a year .
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Establishment
• Section 2(1)(e)
• Any office or Dept. of Govt. or a local authority .
• Any place where any industry, trade ,business
,manufacturing or occupation is carried on.
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Principal Employer
• In r/o Govt.: Office / Department / Local body , the head
of the office or Department.
• In a Factory: Owner or Occupier or a person named as
Manager under Factories Act-1948
• In other establishments: Any person responsible for the
supervision and control.
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Contractor
• A person who undertakes to produce a given result for
establishment ,( other than a mere supply of goods/
articles) through contract labour or who supplies
contract labour for any work of the establishment. It
includes a sub-contractor.
• The Contractor coming under purview should obtain
license from licensing officer for executing specific
contract.
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WORKMAN-Sec 2(1)
• Any person employed in or in connection with the work
of any establishment to do any skilled , semiskilled or
unskilled manual, supervisory, technical or clerical work
for hire or reward, whether the term of employment be
express or implied.
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Principal Employer
• The owner or occupier or the person who exercises ultimate
control and supervision and manages the affairs of
establishment.
• If establishment has more than one contractor with less than 20
workers , the Act will not applicable to the contractors but
applicable to the establishment if total number of workers
exceed 20.
• The principal employer should obtain registration certificate.
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Procedure for Reg. and licensing
• Application for Registration as Principal Employer (in form I) to the Registering Officer with DD for prescribed fee should be sent personally or by Reg. Post.
• Registering Officer shall give Reg. Certificate in form II containing name, address, Max.no of labour to be employed, nature of business / trade etc.
• Any change is to be intimated with in 30 days to the Registering Officer . In case of increase in number of labour extra amount has to be paid.
• Renewal application is to be made within 30 days in advance.
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LICENCE FOR CONTRACTOR-Rule 24
• No contractor to whom this Act applies shall execute any
work through contract labour except under a licence
issued by the Licensing Officer.
• The contractor is required to obtain licence for every
contract and to deposit security at the rate prescribed for
each workman employed by him.
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License
• Contractor having more than 20 employees shall make
an application in form IV to the licensing officer along
with certificate from Principal Employer. Prescribed fee
and security deposit for each labour at prescribed rates
has to be accompanied.
• Licence is valid for I year.
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LICENSE / REGISTRATION
• If Registration certificate or Licence is not granted /
renewed, an appeal can be made within 30 days, by
depositing required fee to the Appellate Authority.
• No such formality is required if the work is to last for less
than 15 days.
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Prohibition of Contract Labour -Sec.10
• The appropriate Govt. with consultation with Central /
State board may prohibit by notification in the Gazette,
employment of Contract Labour in any establishment .
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Absorption of Contract Labour
• The Contractor’s employees will not become Principal employers direct employees even if the Principal Employer did not obtain the Registration Certificate under Sec.7 or a Contractor has not obtained a licence under Sec.12, of the Act,
• But employing contract labour without registration and Licence is an offence under the Act.-Supreme Court .
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On Prohibhibition / Abolition
• On Abolition or prohibition of Contract Labour , the
employee / workers engaged through the contractor will
not automatically become the employees of Principal
Employers.
• -Steel Authority of India Ltd., Vs National Union, Water
Front Workers,2001.
• The Constitution Bench of S. Court set aside the earlier
judgment of Air India.
• Abolition or prohibition of Contract Labour can be done
by the appropriate Govt. But not by the Courts
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Payment of Wages
• Contractor is responsible for payment of wages to workmen before expiry of specific period.
• Principal Employer is required to nominate a representative to be present at the time of disbursement of wages.
• The Representative has to certify the amount paid as wages.
• If contractor fails to pay within prescribed period, or full wages ,the principal employer is liable to pay wages.
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Payment of Wages
• As per Rule.no 25(2)(iv), the rate of wages payable shall not be less Minimum wages Act wages as per location or rates fixed by agreement, settlement or award .
• As per Rule no.25(2)(v)(a) if workmen perform same/similar kind of work as the workmen directly employed by the principal Employer, the wage rates, holidays, hours of work and other conditions shall be as applicable to directly employed worker.
• In case of dispute the decision of Chief Labour Commisioner (central) is final
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Liabilities of Contractor / Principal Employer
• The Contractor has to provide facilities like wholesome drinking water, reasonable latrines, urinals, washing facilities, etc., If he fails, the responsibility shifts to Principal Employer to provide such facilities.
• First Aid box is also to be provided.
• Where >150 workers are likely to work for 6 months or more , Canteen facility is also to be provided by the contractor.
• All the expenses incurred by the principal Employer towards amenities may be deducted from the contractor payment .
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Penalties
• As per Sec.25(1)If a company commits offence ,the Company as well as person in charge of its business at the time of offence shall be deemed to be guilty and liable for punishment.
• If it is proved that the offence is committed with the consent or convenience or attributed to negligence of any Director, manager or managing Agent, they are liable for prosecution and punishment.
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Other Labour Acts Applicable to
Contractors / Establishments / Con.Labour
• Factories Act,1948: Definition Worker has no
discrimination between worker directly employed by the
Principal Employer and worker employed through
Contractor.
• Entitled to all privileges and benefits like weekly
holidays, Compensatory holidays, extra wages etc.
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EPF and Misc. Provisions Act, 1952
• Term Employee includes any person employed through
contractor for work of an establishment to which the Act
applies.
• Prescribed contributions have to be made in r / o
contract labour as in the case of directly employed
employees by the P.Employer.
• In the first instance P.Employer has to pay the
contribution and recover the same from the contractor
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ESI Act,1948
• Contract Labour is entitled for the benefits under the Act.
• The Principal Employer is liable to pay both the
employer’s and employee’s contribution of Contract
labour in the first instance but can be recovered from the
contractor .
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The Minimum Wages Act,1948
• The provisions of the Act are applicable to the Contract
Labour, if the employment in which they are engaged is
duly covered by the Act.
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Industrial Disputes Act, 1947
• The Act is also applicable to deal with any dispute
between the contractor and labour employed by him.
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Workmen’s Compensation Act, 1923
• The Principal Employer who engages contractor for work
connected with his business or trade is liable to pay
compensation to the worker of that contractor as he
would have paid to workers directly employed by him. It
can be recovered from the contractor.
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Registers to be maintained
• Principal Employer has to maintain Register of
Contractors( Form XII )
• Every contractor has to maintain Contract labour
Register for each establishment ( Form XIII)
• Each contractor has to issue employment card ( Form
XIV) to each worker. Service Certificate on termination.
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Registers to be maintained
• Contractor has to maintain for each worker
• 1).Muster roll
• 2).Register of Wages
• 3).Register of deductions
• 4).Reg.of Overtime
• 5).Register of Fines.
• 6).Register of Advances
• 7). Wage slips.
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OTHERS
• Display of notice in English Hindi and Local language.
(Rates of wages, hours of work, dates of payment,
names of inspectors etc.,)
• Half yearly returns ( Form XXIV ) have to be sent to the
Licensing Officer by the contractor. Not later than 30
days from the close of the half year.
• Principal Employer has to send Annual return in
duplicate to the Licensing Officer .
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