If there is a clause in a contract where the principal employer frees himself from all responsibilities as far as labour law is concerned and places the responsibility on the contractor, will it free itself from any liability arising thereon. Examine the following clause:
"Service Provider shall ensure that the workmen employed shall not raise any industrial dispute, either directly or indirectly with or against Company in respect of their service conditions or otherwise."
Now, the CLRA states that
20. LIABILITY OF PRINCIPAL EMPLOYER IN CERTAIN CASES. - (1) If any amenity required to be provided under section 16, section 17, section 18 or section 19 for the benefit of the contract labour employed in an establishment is not provided by the contractor within the time prescribed therefore, such amenity shall be provided by the principal employer within such time as may be prescribed.
(2) All expenses incurred by the principal employer in providing the amenity may be recovered by the principal employer from the contractor either by deduction from any amount payable to the contractor under any contract or as a debt by the contractor.
23. CONTRAVENTION OF PROVISIONS REGARDING EMPLOYMENT OF CONTRACT LABOUR. - Whoever contravenes any provision of this Act or of any rules made there under prohibiting, restricting or regulating the employment of contract labour, or contravenes any condition of a license granted under this Act, shall be punishable with imprisonment for a term which may extend to three months, or with fine which may extend to one thousand rupees, or with both, and in the case of a continuing contravention with an additional fine which may extend to one hundred rupees for every day during which such contravention continues after conviction for the first such contravention.
Can this clause mentioned above absolve the PE from liability?
Basically, can a contractual agreement transfer statutory liability to another?
In case of any default on the part of service provider, the liability lies with the principal employer. Service Provider is just a kind of contractor and in any eventuality, principal employer will be held responsible.
For Example : The principal employer is engaging employees through service provider. These employees are directly controlled by the principal employer and their day to day activities of work is directly monitored by the principal employer. In this sceneario, principal employer can not free itself from any dispute or any unfair labour practice under MRTU & PULP.