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Contract Labour

(Querist) 28 July 2008 This query is : Resolved 
Can an employer directly employ contract labour or it needs to employ them thru a contractor.
Guest (Expert) 28 July 2008
If the employer employs labour directly they will not be contract labourers, they will become his employees. If the employers employs the labour through a contractor, they are not his employees and they become his contract labourers.
H. S. Thukral (Expert) 28 July 2008
One can employ contract labout directly in jobs which are for a specified period or for a specified project. As soon as the contract period is over or the project comes to end, employer can bring an end to the services of employees so engaged and he does not incur any laibility on termination. However during the period of employment, the employer is liable to pay benifits under social legislations. Care shoul be taken that the persons are not engaged in permanent nature of jobs.
Murali Krishna (Expert) 29 July 2008
Answer to your question can be had from Contract labour (regulation & abolition) Act.

Under the Act, contract labour can be employed where there is no prohibition of such work. This prohibition is published by Govt. of India by way of notification.

Contract labourers can be employed directly by employer, or through a contractor. The number of such contract workers shall be less than 20 at any time during the year.

If workers employer through contractor, he shall have a licence and if it is done by employer directly, he has to obtain licence.

Non following the provisions, does not make the workers become employees of the employer. It will attract only penal consequences. Refer to Constitutional Bench judgement in SAIL case.
Jaydeep Kurup (Querist) 29 July 2008
Thats right. However under the defintion section of the Act, it states that for a workman to be employed as "Contract Labour" he should be hired either by a contractor or thru a contractor.

Please refer the exact wordings in the act which is not available with me at present.

Please let me have your views ASAP.
Jaydeep Kurup (Querist) 30 July 2008
Whether benefits under social legislations need to be given to contract labourers. further whether social legislations here also include PF benefits. There have been contradictory judgments with regard to the same. PF Act states that the definition of employee includes persons employed by or thru a contractor.

On the other hand, there has been a judgement by the Rajasthan HC stating that Contract Labourer employed by contracter cannot be held as an employee of Principal employer in the absence of sufficient material thereby excluding such persons from the definition.

Pls clarify.
Murali Krishna (Expert) 30 July 2008
Yes, Jayadeep you are right. to be contract labour, he has to be hired by contractor or engaged through contractor. I feel that application of social benefits Acts may have to be worked out from the particular Acts.

As far as Rajastan High Court judgement is concerned, it is in line with SAIL judgement only, there is no ambiguity.
Murali Krishna (Expert) 30 July 2008
Yes, Jayadeep you are right. to be contract labour, he has to be hired by contractor or engaged through contractor. I feel that application of social benefits Acts may have to be worked out from the particular Acts.

As far as Rajastan High Court judgement is concerned, it is in line with SAIL judgement only, there is no ambiguity.


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