Hi
During an audit, we raised objection to use of contract labour in direct manufacturing work in a factory in Maharashtra on grounds that it was a core activity and work is of perrinial nature. As such, these jobs must be done by employees on the company's payroll not by contract labour
The factory manager has responded as be low :
“There is no bar in Maharashtra State under the Contract Labour Act, on employing contract labour in Core or Production related activities. Further they do not work under the Direct Supervision of company Employees. Hence they cannot claim Permanency in the company”.
We know that this is not allowed (the work IS supervised by floor mangers) but can't find the section, rule or provision that counters the above argument.
I will appreciate help from my colleagues on the site for any inputs on this matter.
From India, Mumbai
2396During an audit, we raised objection to use of contract labour in direct manufacturing work in a factory in Maharashtra on grounds that it was a core activity and work is of perrinial nature. As such, these jobs must be done by employees on the company's payroll not by contract labour
The factory manager has responded as be low :
“There is no bar in Maharashtra State under the Contract Labour Act, on employing contract labour in Core or Production related activities. Further they do not work under the Direct Supervision of company Employees. Hence they cannot claim Permanency in the company”.
We know that this is not allowed (the work IS supervised by floor mangers) but can't find the section, rule or provision that counters the above argument.
I will appreciate help from my colleagues on the site for any inputs on this matter.
From India, Mumbai
Hi Saswatabanerjee
Previously, to my recollection,the Form V under Maharastra Rules used to contain an udertaking by the principal employer that he will not engage contract labour in any work of perenniel nature etc. However the same condition is not there now.Though Sec.10 prohibits employment of contract labour in the work of perenniel nature (or core activity), it does not ipso facto ban contarct labour in core activities as there is a procedure to be followed under the said section.I also invite your attention to Sub-Rule(iv)(b) and (v)(b) of Rule 25 of Maharstra Rules under CLRA Act, which state that where the workmen, employed by contractor perform the same kind of work as the workmen directly employedby the principal empoyer, their wages shall be the same and their working hours and servcie conditions shall be the same.Incidentally Rule 25 deals with conditions for granting license.All these go to indicate or suggest that the contract labour can be assigned the same work as is done by the permamnet employees provide they are paid wages equally etc.Therefore there does not appear to be any provision expressly barring the employment of contarct labour even in a work of perenniel nature(core activity).
B.Saikumar
HR & labour Law advisor
Mumbai
From India, Mumbai
Previously, to my recollection,the Form V under Maharastra Rules used to contain an udertaking by the principal employer that he will not engage contract labour in any work of perenniel nature etc. However the same condition is not there now.Though Sec.10 prohibits employment of contract labour in the work of perenniel nature (or core activity), it does not ipso facto ban contarct labour in core activities as there is a procedure to be followed under the said section.I also invite your attention to Sub-Rule(iv)(b) and (v)(b) of Rule 25 of Maharstra Rules under CLRA Act, which state that where the workmen, employed by contractor perform the same kind of work as the workmen directly employedby the principal empoyer, their wages shall be the same and their working hours and servcie conditions shall be the same.Incidentally Rule 25 deals with conditions for granting license.All these go to indicate or suggest that the contract labour can be assigned the same work as is done by the permamnet employees provide they are paid wages equally etc.Therefore there does not appear to be any provision expressly barring the employment of contarct labour even in a work of perenniel nature(core activity).
B.Saikumar
HR & labour Law advisor
Mumbai
From India, Mumbai
People have been smart - they are giving some activity exclusively to contract labour.
I think the rule 25 is more concerned with permanent and contract employment in various non core activity (like loading, security)
So you agree with the contention that they can use contract labour for production related activity.
If you have any cases that I can check in support or against, I would appreciate.
Also what would be a by a court if a worker was file a case demanding permanency on grounds that he is doing core production work. Most licenses I have seen are not for production but worded vaguely so it looks like support work. Is the govt issuing licenses for production ?
From India, Mumbai
I think the rule 25 is more concerned with permanent and contract employment in various non core activity (like loading, security)
So you agree with the contention that they can use contract labour for production related activity.
If you have any cases that I can check in support or against, I would appreciate.
Also what would be a by a court if a worker was file a case demanding permanency on grounds that he is doing core production work. Most licenses I have seen are not for production but worded vaguely so it looks like support work. Is the govt issuing licenses for production ?
From India, Mumbai
It is not that I agree or disagree with the views of some employer. What I have pointed to you is the probable interpretation that can flow from Rule 25 so that when you object to outsourcing a core activity, you need to rebut such interpretations possibly advanced by an employer. You can contend as you said now, that what is meant in Rule 25 is not core activity.Then Rule 25 does not say it either.However the spirit of Sec.10 which is the soul of the CLRA is that it does not want contract labour in any work of perenniel nature or core activity. I have not come across any specific case. If you search for cases decided under Sec.10, you may get some inputs in support of your view.
As regards permanancy, the contract labour can very well raise a dispute undr the Industrial Disputes Act. the industrial Court will examine whether teh contract is sham/camouflage based on teh facts and evidence. If the contract is found sham, it may even direct absorption of the workers having regard to the tenure of engagement.I do not think a worker can win a case for merely he is doing a core job unless he proves that teh contarct is sham.There is no provision in the scheme of CLRA Act for issuing licenses for production but only for issuig licenses for enaging labour.
B.Saikumar
HR & Labour Law advisor
Mumbai
From India, Mumbai
As regards permanancy, the contract labour can very well raise a dispute undr the Industrial Disputes Act. the industrial Court will examine whether teh contract is sham/camouflage based on teh facts and evidence. If the contract is found sham, it may even direct absorption of the workers having regard to the tenure of engagement.I do not think a worker can win a case for merely he is doing a core job unless he proves that teh contarct is sham.There is no provision in the scheme of CLRA Act for issuing licenses for production but only for issuig licenses for enaging labour.
B.Saikumar
HR & Labour Law advisor
Mumbai
From India, Mumbai
One last query : contaract labour license is given for specific work (nature of activity)
In all licenses I see these are non core activity
So if the license is for non core activity but employment is in core activity. How will it affect the situation ?
From India, Mumbai
In all licenses I see these are non core activity
So if the license is for non core activity but employment is in core activity. How will it affect the situation ?
From India, Mumbai
In my view, it may affect the situation in three ways .
1)It may amount to violation of the conditions of license and may lead to cancellation of license.under Sec.14 of CLRA Act.
2)It may lead to the violation of the proviisos of the CLRA Act and may attract penal provisions.under Sec 23 .
3)It may build a case for the contract labour for claiming wages on par with the permamnet employee performing such work.
Any how you can check the following case where in the employment of contract labour in work of perenniel nature was held to be contrary to the principles of CLRA Act.
Larsen & Toubro Ltd, Bangalore V.staete of Krnataka 1999 II LLJ page 532 (division Bench of Karnataka High Court)
B.Saikumar
HR & labour law advisor
mumbai
From India, Mumbai
1)It may amount to violation of the conditions of license and may lead to cancellation of license.under Sec.14 of CLRA Act.
2)It may lead to the violation of the proviisos of the CLRA Act and may attract penal provisions.under Sec 23 .
3)It may build a case for the contract labour for claiming wages on par with the permamnet employee performing such work.
Any how you can check the following case where in the employment of contract labour in work of perenniel nature was held to be contrary to the principles of CLRA Act.
Larsen & Toubro Ltd, Bangalore V.staete of Krnataka 1999 II LLJ page 532 (division Bench of Karnataka High Court)
B.Saikumar
HR & labour law advisor
mumbai
From India, Mumbai
As per amendment CLA 2008/5824/LAB-10 of the Maharastra CL rules which came into force in June 2010 a new declaration (Form IA) has to be provided by the PE for new registration...Its only applicable to New Reg and hence a comp having an establishment license before 2010 need not give such a declaration. For any establishment which is reg after that...its tricky because if contractors are deployed after giving such a declaration penal provisions can be attracted under CLRA or the IPC...it is time some one challenges this amendment in court of law as this is defacto prohibition and none of the conditions envisaged in Sec 10 is satisfied
From India, Jamshedpur
From India, Jamshedpur
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Notification No G.S.R. 1128(E) Contract Labour (Regulation and Abolition) Central Amendment .pdf
LABOUR CONTRACT AGREEMENT.doc
Contract Labour Act.zip