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
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