Registration Certificate To Employ Contract Labour

Dear all,

What will be the impact if an organization employs contract labor without the proper registration certificate as per the Contract Labour (Regulation and Abolition) Act? I have come across a situation where an organization has employed contract labor without the proper registration certificate. The contract worker is now claiming permanency from the principal employer since the organization terminated the services of the contractor through whom the contract worker was engaged.

I would appreciate receiving valuable input from senior members.

Regards,
Ranga

Non-registration will not give the contract labour any benefit of automatic absorption into the principal employer's rolls unless the contract was a sham. Certainly, if the arrangement with the contractor was just for namesake or a sham one, then the workers can claim regularization. If you have been engaging the workers in works of perennial nature or in the core activities of the business which could have been carried out by employing regular employees, then their claim for regularization will be maintainable in law. Similarly, being the principal employer, if you have been exercising substantial control over these workers by way of deciding their wages, sanctioning their leaves, taking disciplinary action against them, etc., then it will be deemed that the contract is just for namesake or a windscreen.

Please follow similar discussions on the same issues in the following links:

- [CiteHR link](https://www.citehr.com/100187-non-registration-contractor-contract-labour-act.html)
- [Madhu.T.K: Contract Labour blog post](http://www.madhu-t-k.blogspot.in/2010/11/contract-labour.html)

Madhu.T.K

While the absence of the license or registration is not a direct ground for workers to obtain permanent status, these are often taken into account by the courts in deciding whether the contract is a sham. The courts look at it as, "Why have you not registered? You must have things to hide," which implies that you do not want your contract scrutinized. It seems like the workers are correct. You should speak to a good lawyer to defend yourself in court as a lot depends on how competent your lawyer is.

These kinds of instances are seen very often in our industries, both in the private sector and in the public sector as well. This has been an ongoing problem which, I would say, is going to remain so. The claim of permanency is always present right from day one, and the tug-of-war continues despite court rulings.

Recently, we have seen instances like "Neyveli Lignite Co.," a CPSU major that employs over 12,000 contract workers in regular operations. They are fighting for absorption armed with a Supreme Court ruling on this issue, but the fight/negotiation is ongoing endlessly despite a strike lasting over 45 days. Though they have reached some interim arrangement, the issue has not been completely resolved despite the Supreme Court judgment on their claim. I have no information on any firm being penalized for not complying with court orders for absorption. The question of permanency remains a vexed problem with no concrete solution.

Similarly, unregistered contract employment has not stopped yet, even though there are penal provisions in the statute. Having heard our Prime Minister's comment on "Inspector Raj," this menace is expected to continue indefinitely. If inspectors are reduced or abolished, who will inspect and hold firms accountable for violations? These are going to be tough days for the labor class.

Dear Kumar,

I have commented on this just today but the relevance is here, so I will repeat.

What has 60 years of inspector raj achieved?

How many companies were punished or made to stop using contract labor for main production work due to inspector's visits?

The reality is that all the inspector raj achieved was to enrich government employees and perpetuate the problem. To that extent, at least Modi government's move is in the right direction. Remove what is only used for harassment.

However, you need to understand what the government actually said. They didn't say inspections and location visits are now banned or completely illegal/invalid. What they said instead is that the individual inspector is no longer at liberty to visit any factory he wants when he wants. The chief inspector (or chief commissioner) will decide which factory is to be inspected, when, and by whom. The report must be submitted (monitored through the portal/server) within a specified deadline, and the report available to the concerned stakeholders.

So, it will be like income tax. It's not that income tax raids can't happen or don't happen. But it's not a call each individual income tax officer takes. It's decided by a very senior officer when and where the raid will take place.

These kinds of instances we see very often in our industries, both in the private sector and in the public as well. This has been an immortal problem which I would say is going to remain so. The claim of permanency is always there right from day one, and the tug-of-war continues despite court rulings. Recent instances we have seen include "Neyveli Lignite Co.," a CPSU major that employs over 12000 contract workers in regular operations. They are fighting for absorption armed with an SC ruling over this issue, but the fight/negotiation is going on endlessly despite a 'strike' for over 45 days. Though they have reached some interim arrangement, the issue has not been sorted out totally despite the SC judgment on their claim. I have no information on any firm that has been penalized for not complying with the court's orders for absorption. So the permanency question is a vexed problem with no concrete solution. Similarly, unregistered contract employment has also not stopped yet, though there are penal provisions in the statute. Having heard our PM's comment on "Inspector Raj," this menace is expected to continue forever. If Inspectors are reduced or abolished, who will inspect and frame them for violations or erring firms? Going to be tough days for the labor class.