What is Contract Labour (Regulation and Abolition) Act, 1970?

1 min read
What is Contract Labour (Regulation and Abolition) Act, 1970? Blog Image


The Supreme Court recently observed that the workers employed to perform perennial/permanent nature of work couldn't be treated as contract workers under the Contract Labour (Regulation & Abolition) Act, 1970 to deny them the benefit of regularization of a job.

What is Contract Labour?

  • A workman is deemed to be employed as contract labour when he is hired in connection with the work of an establishment by or through a contractor. 
  • They are indirect employees.
  • Contract labour differs from direct labour in terms of the employment relationship with the establishment and method of wage payment. 
  • Contract labour, by and large, is not borne on pay roll nor is paid directly.
  • The contract workers are hired, supervised and remunerated by the contractor, who in turn, is remunerated by the establishment hiring the services of the contractor.
  • A contractor is a person who takes over the responsibility to produce a given result for the establishment, other than a supply of goods or services of manufacture to such establishment, through contract labour or the person who provides contract labour for any work of the establishment and includes a sub-contractor.

About Contract Labour (Regulation and Abolition) Act, 1970

  • This act has been enacted to regulate the employment of contract labour in certain establishments, and to provide for its abolition in certain circumstances, and for matters connected therewith.
  • It aims to prevent the exploitation of contract labour and also introduce better conditions of work.
  • It extends to the whole of India.
  • Applicability:
    • To any establishment in which twenty or more workmen are employed on any day of the of the accounting year as contract labour.
    • To any contractor who employs or who employs twenty or more workers on any day of the accounting year.
    • Also, it does not apply to the establishments if any work is performed in the intermittent nature.
    • It does not apply to establishments situated in the special economic zone (SEZ).
  • Salient Features of the Act:
    • Every establishment which proposes to employ contract workers for its work is required to obtain a certificate of registration from the appropriate Government.
    • Every contractor who has employed twenty or more workers on any day of the month has to obtain a license for engaging contract labour working for any establishment.
    • The granted licence will be valid for the specified period and may be renewed from time to time.
    • Payment of Wages:
  • It is the responsibility of the contractor to pay the required wages to each worker employed under contract labour before the expiry of the stipulated period.
  • If the contractor fails to make the payment within the stipulated period, then the principal employer shall be liable to make the payment of wages in full or the unpaid balance due.
  • The wages are to be fixed by the Commissioner of Labour.
    • For contravention of the provisions of the Act or any rules made thereunder, the punishment is imprisonment for a maximum term upto 3 months and a
      fine upto a maximum of Rs.1000/-.
    • The Act provides for the constitution of Central and State Advisory Boards to advise the concerned governments on matters arising out of the administration of the Act. 
    • The Central or state government after consultation with the appropriate advisory boards may prohibit the employment of contract labour in any process, operation or other work in any establishment. 

Q1) What is the Special Economic Zone?

SEZ refers to the Special Economic Zone, which is a special demarcated area or a geographical region that is considered as a duty-free enclave and has different economic laws than the rest of the country.

Source: Workers Employed To Perform Perennial/Permanent Nature Of Work Can't Be Treated As Contractual Workers : Supreme Court Allows Regularisation