CHAPTER 10

CONTRACT LABOUR (REGULATION & ABOLITION) ACT, 1910

Learning Objective
After completion of this Chapter, the student is able to understand,
students will be acclimatized with the legal frame work stipulated under the Contract
Labour (Regulation and Abolition) Act, 1970.
The liability to ensure payment of wages and other benefits is primarily that of the
contractor, and in case of default, that of the principal employer.
Contract Labour is a significant and growing form of employment. It is prevalent
in almost all industries and allied operations and also in service sector. It generally
refers to workers engaged by a contractor for user enterprise.
UNIT STRUCTURE
10.1 Introduction:
10.2 Applicability
10.3 The Advisory Boards
10.4 Registration Of Establishments On Which Act Is Applicable:
10.5 Revocation Of Registration :
10.6 Effect Of Non-Registration
10.7 Prohibition Of Employment Of Contract Labour
10.8 Prohibition On Employment Of Contract Labour
10.9 Licensing Of Contractors
10.10 Grant Of Licences
10.11 Revocation, Suspension And Amendment Of Licences
10.12 Welfare And Health
10.13 Maintenance Of Registers And Records
10.14 Welfare, Health & Payment Of Wages
Summary
Review Questions

10.1 Introduction:
The Contract Labour (Regulation & Abolition) Act, 1970 has been enacted to regulate the
employment of contract labour and to provide for its abolition in certain circumstances and for
matters connected therewith. It extends to the whole of India. It came into force on 7th
September, 1970.
10.2 APPLICABILITY
Act Applies : Section 1(4)
Every establishment in which twenty or more workmen are employed or were employed
on any day of the preceding twelve months as contract labour.
To every contractor who employees or who employed on any day of the preceding twelve
months twenty or more workmen.

Act Not Applies : Section 1(5)

Intermittent/Casual nature of work
Work not performed for more than 120 days
Seasonal nature is performed for more than 60 days in a year.
Establishments situated in SEZ
The Appropriate Government may, after giving not less than 2 months notice in the Official
Gazette apply this Act to any establishment or contractor employing workmen : less than 20.
Contract Labour :Section 2 (1) (b)
A workmen 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. It makes no difference whether he is employed with or without the knowledge of the
principal employer.
Contractor:Section 2 (1) (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.
Principal Employer: Section 2 (1) (g)
In 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 may
specify in this behalf.

 In a factory: The owner or occupier of the factory and a person named as the manager of
the factory under the Factories Act, 1948.
In a mine: The owner or agent of the mine and a person named as the manager of the
mine.
In any other establishment: Any person responsible for the supervision and control of
the establishment.
Workman: Section 2 (1) (i_)
Workman means any person employed in or in connection with the work of any establishment to
do any skilled, semi-skilled or unskilled, manual, supervisory, technical or clerical work for hire
or reward, whether the terms of employment be expressed or implied, but does not include any
such person :
Who is employed mainly in a managerial or administrative capacity, or
Who, being employed in a supervisory capacity draws wages exceeding Rs. 500 per
mensem or exercises functions mainly of a managerial nature, or
Who is an out-worker that is to say a person to whom any articles or materials are given
out for certain process to return them back
10.3 THE ADVISORY BOARDS
Central Advisory Board
Section 3 requires the Central Government to constitute a Central Advisory Contract Labour
Board to advise the Central Government on such matters arising out of the administration of
the Act as may be referred to it and to carry out other functions assigned to it under the Act.
State Advisory Boards
Section 4 similarly requires the State Government to constitute the State Advisory Contract
Labour Board to advise the State Governments on such matters arising out of the
administration of the Act as may be referred to it and to carry out other functions assigned to it
under the Act.
Power to constitute committees [Section 5]: The Central or State Board may constitute such
committees and for such purpose or purposes as it may think fit.
Observe rules of procedure : Such committee shall meet at such times and places and shall
observe such rules of procedure in regard to the transaction of business at its meetings as may be
prescribed.
Fees and Allowances : The members of a committee shall be paid such fees and allowances for
attending its meetings as may be prescribed:.

Member : Provided that no fees shall, be payable to a member who is an officer of Government
or of any corporation established by any law for the time being in force.

10.4 REGISTRATION OF ESTABLISHMENTS ON WHICH ACT IS APPLICABLE:

Registering Officer (Section 6): Every principal employer of an establishment to which this Act
applies shall, make an application to the registering officer in the prescribed manner for
registration of the establishment
Registration of establishments (Section 7) :If the application for registration is complete in all
respects, the registering officer shall register the establishment and issue to the principal
employer of the establishment a certificate of registration certificate of registration in Form II
containing such particulars as may be prescribed. A registration fee varying from Rs. 60 to Rs.
1500 which is related to the number of workmen employed as contract labour, is payable.
10.5 REVOCATION OF REGISTRATION :
Section 8: If the registering officer is satisfied that, the registration of any establishment has been
obtained by Misrepresentation or Suppression of any material fact, or that for any other reason
the registration has become useless or ineffective.
In both the cases, the registering officer shall give an opportunity to the principal employer of
the establishment to be heard. He will also obtain previous approval of the appropriate
Government in case the registration is to be revoked.

10.6 EFFECT OF NON-REGISTRATION

Section 9 : If the establishment to which this act applies does not register or registration is
revoked on any grounds mentioned above than that establishment cannot employ the contract
labour.
10.7 PROHIBITION OF EMPLOYMENT OF CONTRACT LABOUR
Section : 10 - The appropriate Government may, after consultation with the Central Board or, as
the case may be, a State Board, prohibit, by notification in the Official Gazette, employment of
contract labour in any process, operation or other work in any establishment.

The appropriate Government shall have regard to the conditions of work and benefits provided
for the contract labour in that establishment and other relevant factors, such as :

 Whether the process, operation or other work is incidental to, or necessary for the
industry, trade, business, manufacture or occupation that is carried on in the
establishment
Whether it is of perennial nature, that is to say, it is of sufficient duration having regard to
the nature of industry, trade, business, manufacture or occupation that is carried on in that
establishment
Whether it is done ordinarily through regular workmen in that establishment or an
establishment similar there off
Whether it is sufficient to employ considerable number of whole-time workmen

10.8 PROHIBITION ON EMPLOYMENT OF CONTRACT LABOUR

Contract labour system in any establishment be abolished and by whom?
This is the most significant provision in the Act. Section 10 provides that the Appropriate
Government may, after consultation with the Central or State Board prohibit by notification in
the Official Gazette, employment of contract labour in any process, operation or other work in
any establishment. Before issuing such notification the Appropriate Government shall have
regard to the conditions of work and benefits provided for the contract labour in that
establishment and following relevant factors:
Whether the process, operation or other work is incidental to, or necessary for the
industry, trade, business, manufacture or occupation that is carried on in the
establishment.
Whether it is of perennial nature (sufficient duration) having regard to the nature of
industry, trade, business, manufacture or occupation carried on in that establishment.
Whether it is done ordinarily through regular workmen in such type of establishments
Whether it is sufficient to employ considerable number of whole-time workmen.

Case Laws:
GEA v. Union of Indiu Lab IC 1701 Born.
Where the government fails to disclose the basis for refusing to abolish contract labour, it
amounts to non-application of mind to the requirements of Section 10 (2) and the Court can order
abolition of contract labour.
Jurisdiction of Industrial Tribunal to abolish contract labour :
Case Law: Vegolis (1') Ltd. v. The Workmen (1971) II-LLJ p. 567J
It has been held by the SC that after enforcement of Act, the sole jurisdiction for abolition of
contract labour in any particular operation vested with the Appropriate Government and therefore
the Tribunals have no jurisdiction to abolish contract labour.
After effect of abolition of contract labour
Case Law: Steel Authority of India v. National Union of Water Front Workers & Others,
AIR 2001 SC .3527
The Supreme Court had held that neither Section 10 nor any other provision in the Act whether
expressly or by necessary implication provides for automatic absorption of contract labour on
issuing a notification by the Appropriate Government u/s 10 prohibiting employment of contract
labour in any process or operation or other work in any establishment. Consequently, the
principal employer cannot be required to order absorption of contract labour working in the
concerned establishment.
10.9 LICENSING OF CONTRACTORS
With effect from such date as the appropriate government shall undertake or execute any work
through contract labour except under and in accordance with a licence issued in that behalf by
the licensing officer.
Provisions of this act may contain such conditions including,
Hours of work
Fixation of wages
Other essential amenities

10.10 GRANT OF LICENCES

Section 13
Prescribed Form: An application for the grant of license has to be made in the prescribed
form.
Particulars: It should contain particulars regarding the location of establishment, nature of
process, operation or work for which contract labour is to be employed and such other
particulars as may be prescribed.
Investigation: The license is issued after necessary investigation by the licensing officer.
Renewal: It is valid for the period specified therein (12 months under the Central Rules)
and may be renewed from time to time for such period and on payment of such fees and
on such conditions as may be prescribed.
10.11 REVOCATION, SUSPENSION AND AMENDMENT OF LICENCES
Section 14: If the licensing officer is satisfied, either on a reference made to him in this behalf or
otherwise, that:
Obtained by misrepresentation or suppression of any material fact
Failed to comply with the conditions subject to which the licence has been granted
The licensing officer may vary or amend a licence granted under Section 12.
Appeals [Section 15]: The aggrieved person may within 30 days from the date on which the
order is communicated to him prefer an appeal to an Appellate Officer who shall be a person
nominated in this behalf by the Appropriate Government.
The Appellant Officer may entertain an appeal even after the expiry of 30 days, if he is satisfied
that there was sufficient cause for the delay. The Appellant Officer shall after giving the appellant
an opportunity of being heard dispose of the appeal as expeditiously as possible.

10.12 WELFARE AND HEALTH

Canteen :Section 16
Appropriate Government may make rules on such establishments to which this Act applies,
wherein contract labour numbering one hundred or more is ordinarily employed by a contractor,
one or more canteens shall be provided and maintained by the contractor
Without prejudice to the generality of the foregoing power, such rules may provide for:-

 The date by which the canteens shall be provided;

The number of canteens that shall be provided, and the standards in respect of
construction, accommodation, furniture and other equipment of the canteens
The foodstuffs which may be served therein and the charges which may be made thereof.
Rest-rooms:Section 17
In every place wherein contract labour is required to halt at night in connection with the work of
an establishment to which this Act applies, and in which work requiring employment of contract
labour is likely to continue for such period as may be prescribed, The rest rooms or the
alternative accommodation to be provided under subsection shall be sufficiently lighted and
ventilated and shall be maintained in a clean and comfortable condition.
Other facilities:Section 18
It shall be the duty of every contractor employing contract labour to provide and maintain:
Sufficient supply of wholesome drinking water
Sufficient number of latrines and urinals situated as to be convenient and accessible to the
contract labour.
Washing facilities
First-aid facilities:Section 19

There shall be provided and maintained by the contractor so as to be readily accessible

during all working hours a first-aid box equipped with the prescribed contents at every
place where contract labour is employed by him.

Liability Of Principal Employer In Certain Cases:Section 20

Within the time : If any amenity required to be provided for the benefit of the contract labour
employed in an establishment is not provided by the contractor within the time prescribed
thereof, such amenity shall be provided by the principal employer within such time as may be
prescribed.
Amenity recovered by the Principal employer : 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 payable by the contractor.
Responsibility For Payment Of Wages :Section 21
A contractor shall be responsible for
Payment of wages to each worker employed by him

 Shall be paid before the expiry of such period as may be prescribed.

Duty of principal employer
Shall nominate a representative to be present at the time of disbursement of wages
Shall be the duty of such representative to certify the amounts paid as wages in such
manner
It shall be the duty of the contractor to ensure the disbursement of wages in the presence of the
authorized representative of the principal employer.
In case the contractor fails to make payment of wages within the prescribed period or makes
short payment,
Then the principal employer shall be liable to make payment of wages in full or the
unpaid balance due,
Recover the amount so paid from the contractor either by deduction from any amount
payable to the contractor under any contract or as a debt payable by the contractor.
Penalties
Section: 22
Obstructing the inspector or failing to produce registers etc., 3 months imprisonment or fine
upto Rs.500, or both.
Section: 23
Violation For violation of the provisions of Act or the Rules, imprisonment of 3 Months or fine
upto Rs.1000 and on continuing the offence additional fine upto Rs.100 per day shall be charged
INSPECTORS
Section 28: The appropriate government may, by notification in the Official Gazette, appoint
such persons as it thinks fit to be inspectors for the purposes of this Act, and define the local
limits within which they shall exercise their powers under this Act.
Subject to any rules made in this behalf, an inspector may, within the local limits for
which he is appointed.
He can examine any person, seize and take copies of such register, record of wages as he
thinks relevant for the purpose of inspection.

10.13 MAINTENANCE OF REGISTERS AND RECORDS

Section 29
Register of Contractors: Every Principal Employer to maintain in respect of each
registered establishment, an up to date and complete register of contractors.
All the notices should be displayed
Returns must be submitted by the principal employer & contractor to the registering
officer/licensing authority
10.14 WELFARE, HEALTH & PAYMENT OF WAGES
Provisions of the Contract Labour (Regulation & Abolition) Act, 1970 relating to welfare and
health of contract labour?
The contractors are required to take certain specific measures for the welfare and health of
contract labour. The relevant provisions are as follows:
Canteens [Section 16]: The Appropriate Government has powers to make rules requiring
contractor to provide one or more canteens for the use of contract labour. This provision is
applicable to every establishment to which the Act applies and where 100 or more contract
labours are ordinarily employed by a contractor and the employment of the contract labour is
likely to continue for prescribed period,. The rules may provide for:
The date by which the canteen shall be provided.
The number of canteens and the standards in respect of construction, accommoda-tion,
furniture and other equipment of the canteens .
The food stuffs which may be served therein and the charges which may be made.
Rest Rooms [Section 17]: If contract labour is required to halt at night for work of an
establishment to which the Act applies and such work is likely to continue for prescribed period,
then rest room facility shall be provided and maintained by the contractor for the contract labour.
The rest room to be provided: Shall be sufficiently lighted and ventilated.
Shall be maintained in a clean and comfortable condition.
Other Facilities [Section 18]: It shall be the duty of every contractor employing contract labour
to provide and maintain for the contract labour certain other facilities mention below: Supply of wholesome drinking water.
Sufficient number of latrines & urinals .
Washing facilities

First Aid Facilities [Section 19]: The contractor is required to provide and maintain a first aid
box equipped with the prescribed contents where contract labour is employed by him. The first
aid box should be readily accessible during working hours.
Liability of the principal employer in certain cases [Section 20]: If the prescribed amenities
(canteens, rest rooms and other facilities, first aid box) are not provided by the contractor then
such amenities shall be provided by the principal employer. All expenses incurred by the
principal employer in providing the amenity may be recovered by him from the contractor either
by deduction from any amount payable to the contractor under any contract or as a debt payable
by the contractor.
Provisions regarding responsibility for payment of wages to contract labour under the
Contract Labour (Regulation & Abolition) Act, 1970?
A common complaint against the contractors has been that some of them do not pay proper
wages to the contract labourers or those payments are not made in time or that arbitrary
deductions are made from wages. To take care of such malpractices, Section 21, has been
incorporated which is discussed as below:
A contractor shall be responsible for payment of wages to each contract labour before the
expiry of prescribed period.
Every principal employer shall nominate a representative who shall be present at the time of
payment of wages by the contractor.
It shall be the duty of the contractor to ensure that wages are paid in the presence of the
authorised representative of the principal employer.
If the contractor fails to make payment of wages within the prescribed period or makes short
payment, then the principal employer shall be liable to make payment of wages and recover the
amount so paid from the contractor. Such amount can be recovered either by deduction from
amount payable to the contractor or as a debt payable by the contractor.
A contractor made short payment of wages to a worker employed by him as contract
labour. The worker sought the amount due from the principal employer. Will he succeed?
As per Section 21, if the contractor fails to make payment of wages within the prescribed period
or makes short payment, then the principal employer shall be liable to make payment of wages
and recover the amount so paid from the contractor. Such amount can be recovered either by
deduction from amount payable to the contractor or as a debt payable by the contractor.
SUMMARY
The Act applies to every establishment in which 20 or more workmen are employed or
were employed on any day on the preceding 12 months as contract labour and to every

contractor who employs or who employed on any day of the preceding 12 months 20 or
more workmen. It does not apply to establishments where the work performed is of
intermittent or casual nature. The Act also applies to establishments of the Government and
local authorities as well. The Central Government and the State Governments are required
to set up Central Advisory Board and State Advisory Boards, which are authorised to
constitute Committees as deemed proper. The establishments covered under the Act are
required to be registered as the Principal Employer. Likewise, every contractor to whom the
Act applies is required to obtain a licence and not to undertake or execute any work through
contract labour except under and in accordance with the licence issued. The Act has
provided for establishment of canteens. For the welfare and health of contract labour,
provision is made for restrooms, first aid, wholesome drinking water, latrines and urinals.
In case of failure on the part of the contractor to provide such facilities, the Principal
Employer is made liable to provide the amenities. The Act makes provision for the
appointment of Inspecting staff, for maintenance of registers and records, for penalties for
the contravention of the provisions of the Act and Rules made hereunder and for making
Rules for carrying out the purpose of the Act.

REVIEW QUESTIONS

1. Define the following:

(a) Contract Labour;
(b) Contractor;
(c) Principal Employer;
(d) Workmen.
2. To which establishments the Contract Labour (Regulation and Abolition) Act, 1970 applies,
and which establishments are excluded?
3. Explain the powers of Inspectors appointed under the Act.
4. What provisions have been made under the Act regarding payment of wages of contract labour?
5. What amenities are to be provided by contractors to other workmen in terms of the Contract
Labour (Regulation and Abolition) Act, 1970? What are the liabilities of the Principal
Employer if the contractor fails to provide the above amenities?