We need to highlight when in 1970 the Contract Labour (Abolition & Regulation Act was passed by Parliament all Outsourcing activities can be brought within the realm of the Act .For example the definition of
(i) “workman” means, any person employed, in or in connection with the work of any establishment to do any skilled, semi-skilled or un-skilled manual, supervisory, technical or clerical work for hire or reward, whether the terms of employment be express or implied but does not include any such person – (A) who is employed mainly in a managerial or administrative capacity;
The definition is so wide that it will include any contract employee or Temp employed in connection with the work of any establishment to do any skilled, semi-skilled or un-skilled manual, supervisory, technical or clerical work for hire or reward.
Additionally the following explanatory definition is also included :
(b) a workman shall be deemed to be employed as "contract labour" in or in connection with the work-of:-an 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;
This is where the catch is .In case a Temp is employed as "contract labour" in or in connection with the work-of:-an establishment and 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. Even it be termed as a Service Level Agreement where the PE will feign ignorance of the Temp the Temp will be reckoned as a Contract worker.
The other definitions are also wide:-
(c) “contractor”, in relation to an establishment, means a person who undertakes to produce a given result for the establishment, other than a mere supply of goods or articles of manufacture to such establishment, through contract labour or who supplies contract labour for any work of the establishment and includes a sub-contractor;
Again here too the definition is wide .Whatever name you may call the Agreement the term "Contractor "in relation to an establishment, means a person who undertakes to produce a given result for the establishment, other than a mere supply of goods or articles of manufacture to such establishment, through contract labour or who supplies contract labour for any work of the establishment.
Similarly the definition of Principal Employer is also wide and linked to the head of that office or department :-
(g) “principal employer” means – (i) in relation to any office or department of the Government or a local authority, the head of that office or department or such other officer as the Government or the local authority, as the case may be, may specify in this behalf,
(ii) in a factory, the owner or occupier of the factory and where a person has been named as the manager of the factory under the Factories Act, 1948 (63 of 1948), the person so named,
(iii) in a mine, the owner or agent of the mine and where a person has been named as the manager of the mine, the person so named,
(iv) in any other establishment, any person responsible for the supervision and control of the establishment.
Since the PE is linked to the term “establishment” one needs to see its definition :-
(e) “establishment” means – (i) any office or department of the Government or a local authority, or
(ii) any place where any industry, trade, business, manufacture or occupation is carried on;
Strikingly the definition of "establishment " is also all inclusive and means any place where any industry, trade, business, manufacture or occupation is carried on.
With Regards
V.Sounder Rajan
Advocate -Labour & HR & Consumer Law Consultant -Chennai
Legal Consultant for Indian Staffing & Recruiting Industry
