An analysis of draft Bill on the Contract Labour (Regulation & Abolition) Act, 2015

CHAPTER I

PRELIMINARY

Section 1Short Title, extent, commencement and application:

A) In Chapter I, Preliminary, Section 1. (4)(a) of the Draft Bill related to the application of the Act to establishments, has brought in every establishment which employs or had employed 10 or more contract labour. In the current Statute the headcount considered for the applicability of the Act is employment of 20 or more contract labour.

Further, Section 1(4)(b) of The Draft Bill, brings under its purview, every manpower contractor who supply/provide contract labour to any establishment. Whereas, in the current statute the headcount considered for the applicability of the Act to manpower contractor  is twenty or more workmen.

This means, for establishments the headcount for applicability of the Act is reduced from 20 to 10 AND the Draft Bill is totally not considering, for the purpose of applicability of the Act to manpower contractors, concept of ‘headcount’. This means, on a reading of Section 1(4)(b) of the Draft Bill, any manpower contractor who wishes to supply/provide contract labour to any establishment, such a contractor, first, has to register his establishment with the Enforcement Authority and then only he can supply/provide contract labour. Hitherto, manpower contractors who employs/or employed on any day of the preceding year 20 or more ‘workmen’, -the current Act becomes applicable. In other words, a contractor employing less than 20 workmen, the Act is inapplicable. This freedom/ concession of the manpower contractor, which, the current statute has provided, the contemplated new Act in its Draft Bill, is withdrawing. A person who wishes to get into ‘service industry’ as his/her profession/ trade, has a right only to contemplate, dream and his right to practice enshrined in the Constitution comes into life only after he obtains ‘license’  from the Enforcement Authority, and, then only his dream comes true. Elsewhere, the Draft Bill mandates minimum 100 contract labour on pay roll of the contractor for obtaining license. There is contradiction apparently visible between the sections on the matter of applicability of the Act.

Immediate question that arises is, how about a family of adults who work as domestic servants to earn their living- Do they also come under the umbrella of this bill? How about a person who starts a new business in supply of contract labour, who is a small timer, say supplying only one contract labour to an establishment?  Is not Section 1(4)(b), if  promulgated,  violative of Fundamental Rights, like, Right to live, Right to Trade, Business, Profession?

Upon observation, the  Draft Bill has re-phrased the sub clause (b) of Section 1(4), such that, it has taken away the word ‘workmen’ as existing in the current statute in vogue and instead has used ‘contract labour’. Here, the interrogative is to ask the ‘intention, purpose of this clause under consideration’- to be clarified. This, being a ‘TITLE’ Clause, read along with other sections that are not under consideration of the Draft Bill AND read with the sections which are under consideration of the Draft Bill for amendments- should not become discordant, incongruous.

Provisional Clause to Section 1(4) AND Sub Section 5 of the concerned Section 1 is not touched by the Draft Bill.

Section 2(1)(b) of the Draft Bill:

The Draft Bill has introduced newly a definition to cover ‘Blacklisted Contractor’. The intention is to bring under the purview of the Act such contractors who have not complied with the Act, who are habitual violators of the Act and its Rules( Section  24 of the Bill)

Section 2(1)(b) says, ‘Any contractor who has been blacklisted by any Government Department’ is a ‘Blacklisted Contractor’.

There are many instances establishments face, wherein, the hired manpower contractor is blacklisted by the establishments themselves on grounds of non-compliances of the applicable statutes. The Draft Bill should consider this and modify the definition under consideration to empower the establishments to inform the

Government about blacklisting done by the establishment and acting upon such information the Appropriate Government should blacklist the contractor.

Accordingly, the Definition should be reworded as,

Section 2(1)(b)-Draft Bill- “Blacklisted Contractor” means “Any contractor who has been blacklisted by any Government Department based on which the Appropriate Government records such a contractor as blacklisted AND upon information of the establishment which has hired the services of a manpower contractor, based on such information any contractor being blacklisted by the Appropriate Government”

Section 2(1)© of the Draft Bill:

Reads as, “A workman shall be deemed to be employed as “contract labour” in or in connection with the work of an establishment when he is hired in or in connection with such work through a manpower supply contractor”

In the existing Act Section 2(1)(b) reads as.

“A workman shall be deemed to be employed as “contract labour”,  in or in connection with the work of an establishment when he is hired in or in connection with such work by or through a contractor, with or without the knowledge of the principal employer”;

The Draft Bill while defining who is a “contract labour”-  after the clause ‘in or in connection with such work’, hiring a workman by a contractor with or without the knowledge of the principal employer has been deleted/taken out of the purview of the definition. The Draft Bill only considers a workman being hired through a manpower supply contractor and does not take into account whether he is hired with the knowledge or without the knowledge of the principal employer.

Usage of the word “by”:

(i) Grammatical meaning: ‘BY’ as a preposition means near, beside, in the region of, ‘BY’ as an adverb means near, aside, in reserve. ‘BY’ as a noun means –by and by: before long, eventually, by and large, by the by, by oneself –other examples of noun clause usages of  ‘BY’.

In the Act that is current ‘by’ is used as a noun clause, i.e., ‘by a contractor’. This means, the establishment has hired a workman with the aid of, by prompting, with  the company of a contractor( not alone, not unaided)

(ii) Cognate Expression: In the Act that is current establishment hiring a workman ‘by’ a contractor, the word ‘by’  used as a noun clause expresses that the establishment has hired a workman not without aid but with the company of a contractor. ‘company includes accompaniment of a contractor. Prompting to hire a workman, the establishment has taken the assistance, aid of a contractor in the act of hiring.

Usage of the word “through”:

(i) Grammatical meaning: As a preposition ‘through’ connotes because of, means. As an adverb it connotes ene to end, beginning to end, completely

(ii) Cognate Expression: In the Act that is current establishment hiring a workman ‘through’ a contractor, the word ‘through’  used as a preposition clause expresses that the establishment has hired a workman because of a contractor; means of a contractor. As an adverb clause it connotes that the establishment has hired a workman, for  end to end/ beginning to end  activities involved in hiring process, such acts being completely shouldered as responsibility of the contractor. In every part or respect of the process of hiring it is shouldered on the contractor to complete the process.

The Act that is current has used the word ‘or’ in between the words “by, through”  readable as by or through a contractor. The word ‘OR’ is a conjunction connoting, it introduces the second of two alternatives; introducing all but the first; or only the last of, any number of alternatives.

From the described grammatical meaning and cognate expression with the part of speech ‘or’ placed between the words by and through, the Act that is current allows hiring a workman by a contractor, with the knowledge of the principal employer OR hiring a workman through a contractor, with or without the knowledge of the principal employer.

The  ACT  that is current, has equipped, strengthened the establishment/ principal employer with legal rights to exercise either or both of the two options provided by the Section to hire workmen ‘by’ a contractor with the knowledge of the establishment/principal employer; OR, through a contractor with or without the knowledge of the principal employer.

The Draft Bill has hit at the ‘by or through’ alternatives provided by the current Act as a right of the principal employer to choose between the alternatives. The intention of the Draft Bill is that all such hirings are to be made/ made with the knowledge of the principal employer. This is not pragmatic as many activities carried out by or through a contractor may not be carried out under the direct supervision of the principal employer, like, gardening; the manpower contractor sub-contracting a portion of work, etc.

It also means the Draft Bill is envisaging to abolish totally the concept and scheme of  hiring contract labour.

Section 2(1) of the Draft Bill:

Definitions:

B) Section 2(1)(a): The definition of “Appropriate Government” is changed and re-phrased and means that if the manpower supply contractor supplies manpower in more than one State, the Appropriate Government is Central Government and (ii) in relation to any other manpower supply contractor, the Government of the State.

In the current existing Act that is in vogue, under Section 2(1)(a) ‘Appropriate Government’ means- (i) in relation to an establishment in respect of which the Appropriate Government under the I D Act,1947, is the Central Government, the Central Government; (ii) in relation to any other establishment, the Government of the State in which the other establishment is situate.

The Draft Bill has not touched the provisional clause found in the current Act in and for Section 2(a) (i) and (ii).

The Draft Bill has virtually changed the ‘lens’ through which the Act is viewed. In the Act that is current, the statute has considered ‘establishment’ to which I D Act, 1947 defines which should be the Appropriate Government, Centre or State. The Draft Bill has changed this lens and has brought in ‘manpower supply contractor’ in place of ‘establishment’ and also does not fall back on I D Act to define Appropriate Government.

What about a manpower supply contractor who sub contracts to other manpower supply contractors in other States? If a manpower supply contractor agrees to supply for a principal employer’s units/establishments found in , say, Karnataka and in other States, directly supplies manpower to the establishment in Karnataka; sub contracts to the manpower supply contractors found in other States to supply manpower to the Principal Employer- who will be the Appropriate Government?

There are many other issues that may crop up with this definition. A perusal of cases decided by the Honourable Apex Court and High Courts of each State on disputes related to which is the Appropriate Government which has jurisdiction to settle the matter needs to be assessed, unless already done.

Section Section 2 (1) (c )- Manpower Supply Contractor:

The Draft Bill defines ‘Manpower Supply Contractor as, “ a firm which supplies contract labour for any work of the establishment”.

Section 2 (1) ( c ) of the Act which is current, defines ‘Contractor’ as, “Contractor in relation to an establishment, means a person who undertakes to produce a given result for the establishment,  other than a mere supply of goods or articles of manufacture to such establishment, through contract labour or who supplies contract labour for any work of the establishment and includes a sub-contractor””.

What meaning is envisaged in the Draft Bill for the word ‘firm’ found in the definition?

Firm in the parlance of The Indian Partnership Act, 1932 means Persons who have entered into partnership with one another are called individually, "partners" and collectively "a firm", and the name under which their business is carried on is called the "firm-name".

Is the Draft Bill envisaging that all manpower supply contractors should register under the Indian Partnership Act? On the other hand, Section 8 of the Draft Bill on ‘eligibility for license’ speaks a different language. There is apparent incongruity between these two Sections, and in turn, may affect interpretations of other Sections.

What meaning the Draft Bill intends to give for the clause ‘for any work of the establishment’? Does it include supply of goods and articles also, to make such a supplier a ‘contractor’? The Act current, has excluded the latter.

Suppose a supplier of articles/raw materials unloads goods in the unit of an establishment, and, after unloading, the workmen of the supplier carries them and stacks them in the store of the establishment- the whole activity being a day’s job,- does the supplier become a manpower supply contractor? Are the workmen who unload and stack considered as contract labour? How does the Draft Bill view this activity performed by a supplier to an establishment on a daily basis?

The current Act is very candid in defining the purpose of supply of manpower. It says clearly that ‘a contractor is a person who undertakes to produce a given result for the establishment’. It means in no uncertain terms that the contractor is hired by the establishment to produce a certain result. Whereas, the Draft Bill uses the clause ‘for any work of the establishment’ in the definition. The purpose/intention behind the usage of the clause ‘undertakes to produce a given result’ in the current Act is, the legislation is aware that an establishment hires contract labour for general or specific activities which is for a fixed period or for a continuous period.

It also specifically excludes a person who merely supplies goods/articles from the ambit of definition of contractor. Whereas, it is apparent that the Draft Bill in using the clause ‘for any work of the establishment’, intends to include all the works performed by the contractor, which means, in other terms, a supplier of articles/goods, a supplier of contract labour who cleans the aseptic tank once in a while, any other work performed for a single day  in or in connection with the work of an establishment will be in the ambit of the definition. Once in the ambit, the contract labour have to be covered under applicable social legislations. This is not the intention of the Contract Labour ( R & A) Act, 1970.

Further the current Act articulates that

(i)  a person who undertakes to produce a given result for the establishment through contract labour is a ‘contractor’, which means, the Contractor himself supervises and gets the result

(ii)  a person who supplies contract labour for any work of the establishment to produce a given result is a ‘contractor’,  which means, the contractor merely supplies contract labour to the establishment and the establishment gets the result through them.

Now, on a reading of the definition of ‘manpower supply contractor’ as drafted in the Draft Bill, it seems, it provides the meaning as found in (ii) above. The interpretation made in (i) is vaguely captured, or, can be said to be non-existent.

Further the current Act includes a sub-contractor also in the ambit of the definition of contractor which is totally missing in the definition found in the Draft Bill. This may lead to lots of confusion in implementation of the draft Section-if gazzetted as it is.

There are many such activities a supplier performs. This needs to be thought over and explained as a proviso to the Section.

Section 2 (1) (e) “Establishment”:

The Draft Bill defines establishment as- “Establishment” means-

(i) any office or department of the Government or a local authority, or

(ii) any place where any industry, trade, business, manufacture or occupation is carried on;

The Draft Bills definition is a ‘mirror reflection’ of the definition found in the current Act.

Section 2 (1) (g) definition of wages:

The Draft Bill, to define ‘wages’ has just reproduced completely clause (vi) of Section 2 of The Payment of Wages Act, 1936, which, is an exhaustive definition with inclusive and exclusive clauses.

The current Act under Section 2 (1) (h) simply defines ‘wages’ as- “wages” shall have the meaning assigned to it in clause (vi) of Section 2 of The Payment of Wages Act, 1936.

The Draft Bill has brought in/ added  ‘house rent allowance’ in the inclusive clause of the definition of ‘wages’ by way of introducing clause (f). This is an additional burden that will be imposed on the establishment/ principal employer.

Since definition of ‘wages’ covers many items in the wage band as found in the inclusive clause, adding HRA as part of the wage is not required, since, over and above the burden imposed, it may lead to differences or disputes between contract labour  and principal employer and/or contractor, contract labourers comparing themselves with the salary of regular workmen.

CHAPTER II

THE ADVISORY BOARDS

Central Advisory Board:

The Draft Bill speaks about formation of Central Advisory Board describing about the representatives-members of the Board, number of persons to be appointed as members. It has added two more representative positions from the existing three.

The Draft Bill has reduced the maximum number of members from the present seventeen headcounts to eleven AND from the present minimum of eleven to three headcounts. The reason is to be ascertained.

The current Act, in its proviso clause to Section 3 states that the number of members nominated to represent the workmen shall not be less than the number of members nominated to represent the principal employers and the contractors.

The Draft Bill, in the proviso clause of Section 3 has taken out principal employers as nominees to represent on the Board, retaining workmen and contractors- which is BAD IN LAW. It violates the fundamental rights of the principal employers as it has not considered them to represent as members on the Board. It also violates the principles of Natural Justice- ‘AUDI ALTEREM PARTEM’, thereby making the Central Advisory Board a biased Board, which is against the principles of Natural Justice Nemo judex in causa sua - No one should be made a judge in his own cause or the rule against bias.  The result is decisions arrived by the Board can be viewed as ‘biased’. It is also against the Directive Principles of State Policy-Chapter-IV of the Constitution.

Section 4. STATE ADVISORY BOARD:

The Draft Bill speaks about formation of State Advisory Board describing about the representatives-members of the Board, number of persons to be appointed as members. It has added two more representative positions from the existing three. The current Act has allowed to the discretion of the State Government, providing freedom to it, in appointment of a Chairman. The Draft Bill has taken out this discretion and freedom of the State Government, and instead states in Section 4 (2) (a) that The State Advisory Board shall consist of Labour Minister ( in charge), Chairman, ex-officio. The State Governments, if required, can challenge this as it violates Part II-State List and Part III-Concurrent List of the Seventh Schedule of the Constitution.

The Draft Bill has retained the maximum number of members as found in the current Act in Section 4 as eleven headcounts   AND has reduced the minimum number of members from nine to three headcounts. The reason is to be ascertained.

The current Act, in its proviso clause to Section 4 states that the number of members nominated to represent the workmen shall not be less than the number of members nominated to represent the principal employers and the contractors.

The current Act in Section 4 (2) (c) takes into account for nominating members on the Board the Government, the industry, the contractors, the workmen, and any other interests. The Draft Bill has omitted the industry and has retained others which is BAD IN LAW

The Draft Bill, in the proviso clause of Section 4 has taken out principal employers as nominees to represent on the Board, retaining workmen and contractors- which is BAD IN LAW. It violates the fundamental rights of the principal employers as it has not considered them to represent as members on the Board. It also violates the principles of Natural Justice- ‘AUDI ALTEREM PARTEM’, thereby making the State Advisory Board a biased Board, which is against the principles of Natural Justice-Nemo judex in causa sua - No one should be made a judge in his own cause or the rule against bias.  The result is, decisions arrived by the Board can be viewed as ‘biased’. It is also against the Directive Principles of State Policy- Chapter IV of the Constitution.

Section 5- Power to Constitute Committees: There is no change made.

CHAPTER III

LICENSING OF CONTRACTORS

Chapter IV of the current Act deals with licensing of contractors.

Firstly, the title of Chapter III as existing in the current Act- ‘REGISTRATION OF ESTABLISHMENTS EMPLOYING CONTRACT LABOUR’ is deleted fully by the Draft Bill, and instead, the Draft Bill titles Chapter III as ‘LICENSING OF CONTRACTORS’.

This leads to complications in different ways and forms in implementing, enforcing the overall purpose of the Act itself. The title is not conducive to field reality. Enforcement Authorities

This Chapter III, can be viewed as only applicable to contractors and not to establishments, which can also mean that establishments are out of the purview of this Chapter.

Section 6 of the Draft Bill: Title: Appointment of Licensing Officers:

The title of this Section as found in the current Act ‘Appointment of Registering Officers’ is deleted by the  Draft Bill,  and instead, the Draft Bill titles the Section as ‘Appointment of Licensing Officers’. The purpose of this title change is to be made clear, since, registering authorities connotes more powers than licensing authorities in the eyes of persons to whom this statute applies and also in the eyes of law.

The current Act envisages for registration by licensing. The Draft Bill’s intention, appears as though, it intends to provide license and whether this amounts to registration is questionable.

In the current Act, Section 6 (b)  and Section 11 states, the Appropriate Government may by an order notified in the official gazette, define the limits, within which a registering officer shall exercise the powers conferred on him by or under this Act. On the one hand, the Draft Bill while changing the nomenclature from  registering officers to licensing officers, on the other hand, the Draft Bill has deleted Section 6 (b)  and 11(b) of the current Act.

Appropriate Government’s right, freedom and empowerment to define the limits of the powers of registering/licensing officers’ cannot be taken away, since, it is the Appropriate Government, by its powers enshrined in the Constitution, in turn, empowers by way of delegation, the registering/licensing officers. When Appropriate Government has the empowerment to delegate power, the power to define the boundaries and limits within which the delegatee has to function, is a sub-sect of the whole, is integrated and is part of the overall powers of the Appropriate Government, which cannot be stricken out by way of amendments.

Section 7 of the Draft Bill: Title: Licensing of Contractors:

It says, No contractor, shall supply or engage contract labour in any establishment except under and in accordance with a license issued in that behalf.

Section 7 of the current Act is applicable for Principal Employers to obtain a certificate of registration from the registering officer. The Draft Bill has deleted this and has made the section to apply only to contractors. Does this mean, principal employers need not register their establishments? Further, Section 12 of the current Act deals with licensing of contractors under Chapter IV. This Section is explicit and clear in its wordings and imposes conditions to be complied by the contractor in the license itself, as part of the license. This is not found in draft Section 7 of the Bill.

Section 8 of the Draft Bill: Title: Eligibility for License:

The Draft Bill lists out nine conditions, under this section, for licensing of contractors. This is a welcome move and compels the contractors for compliances.

The first condition insists for the applicant to be a company incorporated or registered in India under the Indian Companies Act, 2013. Since condition 2 of the Section states, applicants must have minimum 100 workers on its payroll, it means, this chapter becomes applicable only to such contractors who have 100 workmen on their pay roll (reading of Section along with Section 4 of the Draft Bill). Others who have less than 100 workmen on their pay roll, as the Act, need not obtain license. This Section is incongruous to Section 4(b) in the Draft Bill.

Further, there is scope for contractors who have 100 and above workers can hoodwink the Government by supplying contract labour to establishments by floating more than one associations, firms,etc.

Condition 8 says that for eligibility to obtain license the net worth of the applicant must not be less than 5 crore. This takes out majority of the contractors from the ambit of the Act itself. It also makes the section incongruous to Section 4(b) of the Draft Bill.

Section 8 of the current Act speaks on ‘revocation of registration in certain cases. The Draft Bill speaks about revocation in Section 12.

Section 9 of the Draft Bill: Title : Application for License:

The Section says that application has to be made in a prescribed form and the licensing officer is empowered to investigate before issuing license. Section 13 of the current Act dealing with Grant of License also empowers the licensing officer almost in similar lines.

Section 10 of the Draft Bill : Title: Grant of License:

It says that if the applicant satisfies the requirements of Sections 8 & 9, the licensing officer shall grant license within 30 days of receipt of the application.

Section 13 of the current Act, dealing with Grant of License, is more elaborate in capturing the details of the establishment to which the contractor supplies manpower, investigation powers of the licensing officer and on validity of the license issued.

Section 11 of the Draft Bill: Title: No fees/commission or any cost to workers:

A new condition is imposed by way of this Section that the contractor shall not charge any fees/commission or costs to the workers. This is a welcome gesture.

Section 12 of the Draft Bill: Title: Revocation, suspension and amendment of license:

This Section has more elaborately described the circumstances during which revocation, suspension of the license can be made. In Section 14 of the current Act, the section only confines to misrepresentation, suppression of material facts, violation of conditions subject to which the license was granted- for revocation, suspension of license.

The Section in the Draft Bill has introduced failure to comply with other applicable labour laws or failure to comply with the CL(R & A) Act also will lead to suspension , revocation of license.

It is suggested that the Section captures forfeiture of deposit also as found in the current Act.

Section 13 of the Draft Bill: Title: Appeal:

This Section and Section 15 of the current Act is almost the same. However Section 13 of the Draft Bill is a step ahead in introducing a fixed period of 30 days to dispose of the appeal- ‘which is welcome’.

Section 14 of the Draft Bill:

Contract labour will become a directly employed worker:

By introducing this Section, such establishments which have not taken contract labour from the licensed contractor, then the contract labour shall be deemed to be directly employed worker of such establishments.

Since license is issued only for contractors who come under Section 8 of the Draft Bill, this section becomes inapplicable to other contractors who are not covered by Section 8 of the Draft Bill.

CHAPTER V

SOCIAL SECURITY OF CONTRACT LABOUR

Section 15 of the Draft Bill:

Under this Section, the Draft Bill has made the establishment responsible, as its duty, to (i) pay the dues to the contract labour AND (ii) to deposit the dues towards the contract labour to various statutory bodies on behalf of contractor AND (iii) to comply with the following legislations wherever applicable: there are 9 enactments listed.

With this, the Section has made the principal employer to comply with the enlisted legislations, making the principal employer directly responsible. Maternity benefits, equal remuneration, gratuity, and BONUS are to be paid by the principal employer and file compliances before the concerned authorities on behalf of the contractor.

This move will directly impact on the principal employers increasing the overhead costs, product costs, more administrative work, ect. In turn, this will have a cascading effect on the consumer. Many of the compliances hitherto were the responsibility of the contractor. Now, the duty is on the shoulders of the principal employers- including depositing the dues to various statutory bodies, like, PF, ESIC, etc.

It is not correct to impose this duty on the principal employers. Further, contract labour cannot be brought in parity with the regular workmen to pay in parity with the latter on grounds of educational, experience baggages, and, on the skill sets of the regular workmen being different. Legally also this Section is BAD IN LAW. This Section is just a step below in making the contract labour as direct workmen of the establishments/principal employers.

Section 20 and Section 21 of the current Act, under Chapter V respectively stipulates that any amenities and benefits prescribed under applicable sections is not provided by the contractor AND payment of wages not fully made within the stipulated time by the contractor- such amenities and benefits  AND payment of wages shall be provided and/or paid by the principal employer and shall be recovered from the contractor, deducted from the dues payable to the contractor.

Section 21 of the current Act mandates the principal employer to nominate a representative to supervise the payment of wages made by the contractor and for certifying the amounts paid as wages.

Therefore, it is better to re-examine these Sections of the Draft Bill which would have direct affect on the principal employers.

CHAPTER V

OTHER BENEFITS

Section 16 of the Draft Bill: Title: Annual Increment:

The Section insists for an annual increment of minimum three percent of wages.

Since The Payment of Wages Act, 1936 is a social security of contract labour as found in Chapter IV of the Draft Bill, the increment becomes compulsory to be made by the establishment- another burden on the principal employer.

This is not a fair Section and to be re-looked into.

Section 17 of the Draft Bill: Title: Priority to Regular Employment: (newly introduced)

It states that, the contract labour who has worked not less than three years in an establishment shall be given preference by the establishment while recruiting regular workers.

This can be applicable to such contract labour who work on perennial nature of jobs, who work in or in relation to the main process, operation, or other work / job incidental to or ancillary for the industry, trade, business, manufacture or operation. It cannot be applicable to other types of jobs wherein the contract labour is employed.

This Section also need a re-examination.

Section 18 of the Draft Bill: Title: Skill Certification: (newly introduced)

It states that the establishment shall issue a skill certificate to the contract labour at the time of termination/leaving employment.

Section 19 of the Draft Bill: Title: Experience Certificate (newly introduced)

It stipulates that, contractor shall issue experience certificate to the contract labour annually giving details of the work performed by the contract labour in the prescribed format.

This will lead to different kinds of mischief both by the contractor and by the contract labour. This section and Section 18 both will become the root causes of industrial disputes. The principal employer will have to spend more time in courts of law than in his/her industry.

Sections 18 and 19 have to be taken out of the purview of the Draft Bill.

CHAPTER VI

PROHIBITION

Section 20 of the Draft Bill: Title: Prohibition of employment of contract labour:

This Section and Section 10 of the current Act are mirror reflections of each other.

Section 21 of the Draft Bill: (newly introduced):

It stipulates that if any establishment has engaged contract labour  in violation of Section 20 of the Draft Bill, such contract labour shall be  deemed to be directly employed worker of the establishment.

The Notification envisaged under Section 20 based on the grounds stipulated can be challenged in law, if they are not properly gauged.

CHAPTER VI

Section 22 of the Draft Bill: Title: Records, Returns and Notices: (newly introduced):

The Section mandates that every employer of an establishment shall,

1. maintain records, muster rolls, wages, and other details as prescribed by the Appropriate Government.

2. Display on the notice board abstract of the Act, category-wise wage rates of the employees etc

3. Shall issue wage slips

4. Send an annual return

Section 29 of the current Act is already in place for the purpose contemplated in Section 22 of the Draft Bill.

In our view, either this Section has to be taken out of the purview of the Draft Bill or make the section applicable to the contractor to be executed at his/her premises and not at employer’s premises.                                  

CHAPTER-VII

FACILITATORS

Section 28 of the current Act is already in place for the purpose contemplated. In our view this is a redundant measure to appoint facilitators when registering authorities/licensing authorities are already there working for the cause. It may only generate further employment.

The powers vested in Section 23 on facilitators will only facilitate in increasing unrests in industries. This Section will have the propensity to be a causes-belli for industrial disputes.

Therefore, this Section should be annulled/deleted.

CHAPTER VIII

PENALTIES AND PROCEDURES

Section 24 of the Draft Bill: Title: Contraventions of provisions regarding employment of contract labour:

The Section 23 of the current Act is reproduced as Section 24 in Draft Bill with the following changes:

1. Imprisonment is reduced from three months to one month, or

2. Fine up to fifty thousand rupees from the current one thousand rupees, or

3. with both 1 and 2 above

4. For continuing contravention with an additional fine which may extend to one thousand rupees from the present hundred rupees for every day….

Section 25 of the Draft Bill: Title: Cognizance of offences:

Section 25 is a reproduction of Section 26 of the current Act with the following changes:

1. inspector is replaced by facilitator-(which is not required in our view)

2. for trial of offences, judicial magistrate of the first class has replaced presidency magistrate or a magistrate of the first class

Section 26 of the Draft Bill: Limitation of prosecutions:

Section 26 is a reproduction of Section 27 of the current Act with the following changes:

1. has brought in facilitator in place of inspector-(in our view not required)

2. Limitation period extended up to one year instead of the current three months.

Section 27 of the Draft Bill: Title: compounding of offences:( newly introduced):

Firstly, the Section starts with ‘notwithstanding anything contained in the Act of CrPC, 1973’….. Which means, this Section overtakes the Cr.PC- in our view is questionable under law

In our view the Section is not correctly framed.

Compounding of offences, in our view, is not required and mere reproduction of Sections 24 and 25 of the current Act suffices. Therefore this Section has to be taken out of the purview of the Act.

The Section is harsh on employers. Nowhere in the Section compounding of offences committed by contractors is penned- which, according to us, is one sided enactment, since, contractors may also violate the enactment under review.

CHAPTER IX

MISCELLANEOUS

Section 28 of the Draft Bill: Title: Power to exempt in special cases:

Section 28 and Section 31 of the current Act are mirror reflections of each other.

Section 29 of the Draft Bill: Title: Protection of action taken under this Act:

No comments

Section 30 of the Draft Bill: Title: Power to give directions:

Section 30 and Section 33 of the current Act are mirror reflections of each other.

Section 31 of the Draft Bill: Title: Power to remove difficulties:

Section 31 and Section 34 of the current Act are mirror reflections of each other.

Section 33 of the Draft Bill: Title: Power to make rules:

In our view Section 35 of the current Act is more clear and elaborate in comparison with this Section 33 of the Draft Bill. Hence, it is advisable to adopt the former in verbatim.

Section 34 of the Draft Bill: Title: Repeal and savings:

Repealing the present Act without considering views and objections here by found in this submission and of submissions made by others will only complicate the matter in applying the new Act and its Rules.

There are many contradictions in different clauses of the Draft Bill. Many words and expressions found in the Bill are not defined for exclusive applicable to the Act. Social Security measures should be made applicable only to contractors who employ 500 and above workmen, restricted to large industries. If the Bill is passed as a statute, in toto, this will adversely affect the MSMEs across India. In our view,  establishments, contractors employing below 100 workmen should not be burdened with social security measures. Eligibility for license is harsh and should be deferred. Penalties and compounding of offences are very harshly schemed and should be soft, subdued. Definition in Section 2 needs reframing. Chapter VII of the Bill should be deleted.

In our view the entire Draft Bill needs a re-examination, and, if implemented without considering views and objections raised from various fronts, will adversely affect MSMEs- emphasis added.

The author can also be reached at drgubbilegal@gmail.com