Contract Labour in India

The Regulation of Contract Labour in India

The most distinct visible change in the time of globalization and privatization is the increased tendency for outsourcing, offloading or subcontracting. The rationale is that the establishment could focus on more productivity in the core or predominant activity so as to remain competitive while outsourcing the incidental or ancillary activities.

The Contract Labour (Prohibition and Regulation) Act 1970 provides a mechanism for regulating engaging of contractor and contract labour. The Act provides for registration of contractors (if more than twenty workers are engaged) and for the appointment of a Tripartite Advisory Board that investigates particular forms of contract labour, which if found to be engaged in areas requiring perennial work connected with the production process, then the Board could recommend its abolition under Section 10 of the Act. A tricky legal question has arisen as to whether the contract workers should be automatically absorbed or not, after the contract labour system is abolished. Recently a Constitutional Bench of the Supreme Court has held that there need not be such automatic absorption.

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