THE
CHALLENGES
IN
CONTRACT WORKFORCE
LAW PERSPECTIVE
ENGAGING
– LABOUR
LIVE CASES

Air India & Best & Crompton – IR exposure

Group 4 Securities – Financial exposure

Company X: for procedural and safety – Prosecution exposure
NEED FOR CONTRACT WORKFORCE

Uncertainty in businesses

Flexible arrangement within the legal framework

Employer can concentrate on ‘core’ activities

Entrusting to a professional agency
TYPES OF CONTRACTS

Job contract

Manpower supply contract (without supervision by the
Principal Employer)

Both are recognised under the Act
WHAT NEEDS TO BE ENSURED ?

The work is not prohibited

Core and perennial nature of work to be avoided

Ration of regular Vs contract workers

There must be written agreement

Contractor does have EPF and ESI codes
UNDERSTANDING CERTAIN TERMS

Contractor

Contract Labour / Workman

Establishment

Wages

Ultimate liability
PRIMARY COMPLIANCE ACTIVITIES

Registration Certificate by Principal employer

Form V has to be issued to the contractor

Contractor license by the Contractor

Payment of minimum wage (national floor MW or notified MW)

ESI and EPF Coverage from day one

License by the contractor including sub contractors (or sub
contractors)
OTHER COMPLIANCE ACTIVITIES

Maintenance of registers

Submission of returns

Display of abstract / notices

Providing amenities to contract labour ( drinking water, toilets,
canteen, etc. )

Safety measures
ABOLITION OF CONTRACT LABOUR

Only Sec 10 speaks about this

The legal position in case of ‘abolition’


Various judgements
Impact of:

240 days under ID Act

Can raise ID challenging the status

480 days under Conf Perm Status Act
OTHER RELEVANT POINTS

EPF and ESI coverage from the first day

All categories of workforce “engaged for work” have to be covered

Bifurcation of minimum wages to minimize EPF outflow is not
legally correct

Nature of each wage component determines statutory
contributions – not nomenclature

PE’s liability on:

Gratuity – Two views prevail

Bonus – As on date, not liable
CERTAIN CHECK POINTS

It has to be job contract

PE not to supervise and control CLs

PE not to allocate work

PE not to enforce reward or reprimand

PE not to make payment

PE not to sanction leave
Our Contact:
Aparajitha Corporate Services Limited
www.aparajitha.com
Nagaraj Krishnan – 98946 64000
Varadan K - 99524 11510