PAPER-I GENERAL – TOPIC-20

CONTRACTUAL LABOUR MANAGEMENT

LEARNING OBJECTIVE
The Labour Acts aim at regulating employment of contract labour. These acts
empowers the Govt. to prohibit employment of contract labour in any process, operation or
other work in any establishment if the working conditions and benefits provided to them are
discriminatory.

1 CONTRACT LABOUR (REGULATION & ABOLITION) ACT, 1970 (AMENDED IN

2017)
1.1 SCOPE & COVERAGE:
The Act extends to the whole of India. It applied to: -
a) Every establishment in which 20 or more workmen are employed or were employed on
any day of the preceding 12 months as contract labour, and
b) Every contractor who employs or who employed on any day of the preceding 12
months, 20 or more workmen.
c) The Act, however, does not apply to any establishment working casually or
intermittently. Work performed in an establishment shall not be deemed to be of an
intermittent nature: -
(i) If it was performed for more than 120 days in the preceding 12 months, or
(ii) If it is of seasonal character and is performed for more than 60 days in a year.
State amendments – Some states e.g. Maharashtra, Andhra Pradesh, UP & Rajasthan
have amended the act and replaced the words ‘twenty or more’ by ‘fifty or more’ and
in case of UT of J&K and Ladakh by ‘Forty or more’.
1.1.1 DEFINITIONS:-
Workman: -
A workman is said to be employed as Contract Labour in or in connection with the
works of an establishment when he is hired for the work by or through a contractor with or
without the knowledge of principal employer.
Contractor: -
Contractor (including sub-contractor) means a person who undertakes to produce a
given result for an establishment through contract labour or who supplies contract labour for
any work in an establishment. Persons who merely supply goods or articles of manufacture for
an establishment are not contractor.
The contractor is employed to produce the given result for the benefit of the Principal
Employer in the fulfilment of the undertaking given to him by the contractor. [M/S Gammon
India Ltd. Etc. Vs. U.O.I. & Othrs. (1974)1 SCC 596]. Workman hired through a contractor
without a valid license and being paid by the management through that contractor, are
workmen employed by the establishment and not contract labour. Workman engaged through
a contractor in excess of the maximum number permitted under the license are not contract
labour [Workman vs. Best & Crompton Engg. Ltd. (1985)2 LLN 169 {Mad) (D.B.): (1985) 1 LLJ
492].
Establishment: -
Establishment, for this purpose, means any place where any industry, business trade,
manufacturing or occupation is carried on or any office of the Govt. or a local authority.

1.2 EMPLOYEES ENTITLED:

The Act covers every workman employed in or in connection with any of the
establishment, by or through a contractor, with or without the knowledge of the principal
employer but excludes:
(i) persons employed in managerial or administrative capacity,
(ii) persons employed as supervisors and receiving wages as notified by the appropriate
Govt. in the official Gazette (exceeding Rs 500/- per month).
(iii) “Out – workers” to whom materials are given for manufacturing or processing at his
own premises.

1.3 ADMINISTRATIVE AUTHORITY:

The act is administered by the Central and the State Governments in their respective
jurisdiction. The central/ state Govts have set up advisory Boards constituted by
representatives of industry, contractor, workers and government nominees
The Govt. also appoints registration offices, Licensing officer and inspectors for carrying
out the provisions of the Act. The Central and the State Govts shall make their rules for
enforcement of the Act.

1.4 PROHIBITION ON EMPLOYMENT OF CONTRACT LABOUR:

The appropriate Govt. can prohibit employment of contract labour in any process,
operation or other work in any establishment after considering the conditions of work and
benefits provided for the contract labour in that establishment and other relevant factors.
1.5 OBLIGATIONS OF PRINCIPAL EMPLOYERS / CONTRACTORS
The obligations of the Principal Employer of an establishment and /or the contractor are
as under: -
Registration of Establishment (Principal Employer):
● The principal employer should apply for registration of his establishment with the
registering officer, in the prescribed form along with the prescribed fee. On being satisfied
with the application the registering officer shall issue a registration certificate. The
 certificate is liable to be cancelled if it has been obtained by misrepresentation of facts or if
it has become useless.
● An establishment cannot employ contract labour if it does not hold a certificate of
registration or if its certificate has been revoked.
● Failure to obtain registration by the principal employer entails penal action but does not
give a right to the workers engaged by the contractor to claim employment from the
principal employer. [Dena Nath &Ors. Vs. National Fertilisers Ltd. &Ors. (1992)1 LLJ 289
(S.C.)].
Licensing of Contractors:
● A contractor should apply for license for employing contract labour, to the licensing officer,
in the prescribed from containing particulars such as location of the establishment,
operation of work, nature of process, particulars of contract labour, etc. On being satisfied
with the application and after making necessary investigation the licensing officer grant the
license on payment of the prescribed fee and security deposit. A copy of the license has to
be displayed prominently at the premises where the contract work is being carried out.
● A contractor cannot undertake or execute any work through contract labour if it does not
hold a valid license or its license has been revoked. Failure to obtain a license by a
contractor, entails penal provisions, but in no case shall the contract labour be deemed as
workman of the Principal Employer [Dena Nath 7 Vs. National fertilizers Ltd. &Ors. (1992) 1
LLJ 289 (S.C.)].
● No contractor can engage contract labour without obtaining a license or whose license has
been revoked or in contradiction with the terms and conditions specified in the license. No
license can be revoked unless the licensing authority gives a fair hearing.
Welfare & Health Amenities for Contract Labour:
The following amenities are required to be provided by the contractor for contract labour;
i One or more canteens where the number of contract labour ordinarily employed are 100
or more.
ii Sufficiently lighted, well ventilated, clean and comfortable rest rooms, where contract
labours are required to halt at night in connection with their work.
iii Supply of wholesome drinking water at convenient places, provisions for latrines, urinals
and working facilities and
iv Fully equipped First-Aid Boxes readily accessible during all working hours.
Payment of Wages:
● The contractor is liable to make regular and timely payment of wages to the contract
labour through Electronic mode / crediting in bank account and if not so practicable, then
in cash, in presence of an authorized representative of the principal employer.
● If however, the contractor fails to make the payment in time or makes short payment, the
Principal Employer should make payment of wages in full or the unpaid balance due to the
contract labour, and recover the same from the contactor.
● However, gratuity and bonus will not be payable by the Principal Employer since these do
not come within the definition of wages. [Cominco Niani Zinc. Ltd. Vs. Pappachan 1989 LLR
12,3; (1989) 1 LLJ 452 (Ker. HC)].
Registers, Returns & Notice
● The principal employer and the contractor should maintain such registers and records
containing particulars of contract labour, nature of work performed rates of wages paid
and other prescribed particulars.
● The employer and contractor should also send the prescribed returns to the registering
officer or licensing officer.
● The employer and the contractor should exhibit in the premises of the establishment,
notices containing hours of work, wage period, nature, of duty and other prescribed
particulars.

1.6 COVERAGE OF CONTRACTOR`S EMPLOYEES UNDER EPF ACT & ESI ACT:
Contractor’s employees are eligible for Provident Fund benefits. If the establishment is
covered under ESI, the employees engaged by a contractor have to be enrolled as members of
ESI.
1.7 DIRECT ABSORPTION OF CONTRACT LABOUR:
Persons who get displaced, on the expiry of the contract/license period, do not get any
statutory right for absorption in regular service under the employer [P. Karunakaran Vs. Chief
Commercial Superintendent, southern Railway and Ors. 1989 1, LIN 898; LLJ 8 (Ker H.C.)].
1.8 RIGHTS OF EMPLOYERS/CONTRACTOR:
The principal employers and the contractors have the following rights:
(i) Right to appeal against an order of the registering officer or the Licensing officer
refusing or revoking registration or license. The appeal should be filed to the appellate
officer on the prescribed manner, within 30 days from the date on which the order is
communicated to him.
(ii) Right to be represented on the Central and State advisory Boards.
1.9 RIGHTS OF CONTRACT LABOUR
The obligations of the contractor and the principal employer are, practically, the rights
of the contract labour. Besides, the contract workmen have also the right to be represented on
the Central and State Advisory Boards.
1.10 OFFENCE & PENALTIES
Table 1. Offences and Penalties
OFFENCE PENALTIES

Obstructing
( an inspector while making Imprisonment up to 3 months, or fine
inspection, inquiry or investigation, or up to Rs. 500/- or Both.
failure to produce registers or documents
before an inspector for inspection.

Employing
( contract labour in Imprisonment up to 3 months or fine
contravention of the provisions of the Act up to Rs. 1000/- or Both. In case of a
or violating any condition of the continuing offence, additional fine up to
registration certificate or license. Rs. 100/- per day [Padam pd. Jain Vs.
State of Bihar (1978) [Link] 147)].

If the person committing an offence under this Act is a company, the company as well as
every person in charge of, and responsible to, the company for the conduct of its business at
the time of the commission of the offence shall be deemed to be guilty of the offence and shall
be liable to be proceeded against and punished accordingly unless such person proves that the
offence was committed without his knowledge or that he exercised all due diligence to prevent
the commission of such offence.

2 THE EMPLOYEE’S COMPENSATION ACT (Earlier known as WORKMEN’S

COMPENSATION ACT)
2.1 OBJECTIVE:
The Act aims to impose an obligation upon employers to pay compensation to workers
and/or their dependents for accidents arising out of and in the course of employment, resulting
in death or total or partial disablement for a period exceeding 3 days. Compensation is also
payable for some occupational diseases contracted by workmen during the course of their
occupation.
2.22 SCOPE & COVERAGE:
The Act extends to the whole of India. It applies to Railways and other transport
establishments, factories, establishments engaged in making, altering, repairing, adapting,
transport or sale of any article, mines, docks, establishment engaged in constructions, fire
brigade, plantations, oil fields and other establishment listed in schedules II & III the Act. It does
not apply to casual workers, those employed in armed forces and workers covered by the
Employees State Insurance Act. 1948.
2.3 EMPLOYEES ENTITLED:
Every employee (including contract labour), who is engaged for the purpose of
employer’s business meets with an accident; he is entitled to compensation for injury suffered
in any such accident. There are three tests to determine whether an accident arises out of and
in course of employment viz. it has to be established that:
(i) At the time of the accident the employees were in fact employed on the duties of their
employment;
(ii) That accident occurred at the place where he was performing his duties; and
(iii) That the immediate act which led to the accident is so remote from the sphere of his
duties that it is to be regarded as nothing but something foreign.
Now, to find out as to whether a workman is covered under the Act or not we have to see the
following points:
Whether his employment was of a casual nature;
(i) Whether his employment was otherwise for the purpose of employee’s trade or
business and does not come under the purview. Nevertheless, where compensation has
been claimed by a person, the relation between employer and the person who is
claiming compensation has to be seen which can be determined on the basis of
following principles:
(a) Whether the workman is having contract of service;
(b) Whether the master can only order or he can require workman what is to be done or he
can also order as to how it is to be done;
(c) Whether it is obligatory on the part of the workman to obey his order;
(d) Whether workman is having any agreement to serve the employer only or employed for
his trade or business.
2.4 ADMINISTRATIVE AUTHORITY:
It is administered by the state Govt. through commissioners for workmen’s
compensation appointed by them. Govts may also make rules for proper compliance of the Act.
2.5 DEPENDENT:
The following relations of a deceased workman shall be his dependents:
(i) A widow, a minor legitimate or adopted son, an unmarried legitimate or adopted
daughter, a widowed mother, whether or not dependent on the workman;
(ii) A son or daughter, who is aged 18 years or more, is infirm and wholly dependent on the
workman; and
(iii) Any of the following persons partially or wholly dependent on the workman –
A widower, a parent other than a widowed mother, a minor illegitimate son, an
unmarried illegitimate daughter or a daughter legitimate or illegitimate if married and a
minor, or if widowed and a minor, a minor brother or unmarried sister or a widowed
sister if minor, a widowed daughter in-law, a minor child of a pre-deceased daughter
where no parent of the child is alive, or a paternal grand-parent if no parent of the
workman is live.
 2.6 DISABLEMENT:
Injury caused by an accident ordinarily results into less of the earning capacity of the
workman is called disablement. Disablement can be either total or partial which can be further
subdivided as temporary or permanent. Disablement, whether permanent or temporary is said
to be total when it incapacitates a worker for all work, he was capable of doing at time of the
accident resulting in such disablement. Permanent Total disablement is specified in part I of
schedule I and Permanent partial disablement in part II of schedule I.
2.7 MAIN PROVISIONS:
The employer covered under this Act is liable to pay compensation to workman for
accidents arising out of and in course of employment, resulting in death or total or partial
disablement for a period exceeding 3 days or who has contracted occupational disease during
the course of their occupation.
2.8 ACCIDENT ARISING OUT OF & IN COURSE OF EMPLOYMENT:
If an occurrence is unexpected and without design on the part of the workman, it is
accident [Devshi Bhanji Khona Vs. Smt. Mary Burno, (1985) 1 LLN 362 (Ker)]. An accident arising
out of employment implies a casual connection between the injury and the accident and the
work done in cause of employment. Employment should be the distinctive and the proximate
cause of the injury. The tests for determining whether an accident arose out of employment
are:
(i) Injury must have resulted from some risk incidental to the duties of the service, or inherent
in the nature of condition of employment, and
(ii) At the time of injury workman must have been engaged in the business of the employer
and must not be doing something for his personal benefit.
2.9 IN COURSE OF EMPLOYMENT:
In course of employment connotes not only the actual work but also any other
engagement natural and necessary there to, reasonably extended both as regards work-hours
and work-place. Thus, an employer will be liable to pay compensation if a workman meets with
an accident while proceeding to his workplace on a bicycle [Indian Rare Earth Ltd. B. Subaida
Beevi & Ors 1981 (43) FLR 293]. Heart injury when brought about by a strain due to the work in
the employment (and not by natural wear and tear of employment) is compensable though
pre-existing and this is irrespective of the percentage of the part played by either of them viz.,
the work and the condition. [Zubida Bano & Ors. Maharashtra state Road Transport corp. &
Ors. (1992) 1 LLJ 66 (Bom)].
2.10 THE EVIDENCE ACT
The Evidence Act as such does not apply to the proceedings under the employee’s
compensation Act. The phrase “in course of employment” is understood to mean that the
injury has resulted during the course of employment from some risk incidental to the duties of
the service, which unless engaged in the duty owing to the master, it is reasonable to believe
the workman would not otherwise have suffered. In other words, there must be causal
relationship between accident and the employment [Director (T&M) DNK Projects Vs. Smt. D.
Buchitali (1989) 1 LLJ 259 (Ori)].
A factory worker suffering from a heart disease, while coming out of the factory, died
inside the factory premises. The stress and strain of work were the accelerating factor to death
and therefore the employer was liable to pay compensation. [Director (T & M) DNK Projects
Vs. Smt. D. Buchitali (1989) 1 LLJ 259 (Ori)].
The workman on duty went to canteen for bringing tea and he died. Held, the
accidental injury arose in course of the employment and the period of recess did not disrupt
the continuity of employment [Reg. Dir. ESIC Vs. Batulbibi, 1988 (58) FLR (Guj. HC) – 1990 LLR
(SC), 30 Journal Sec].
2.11 PAYMENT OF COMPENSATION TO CONTRACT LABOUR:
The principal employer is liable to pay compensation to contract labour in the same
manner as his departmental labour. He is entitled to be indemnified by the contractor [Sec. 12]
[Mg. Dir., Orissa State Ware Housing Corporation Vs. Smt. Geetarani Seal & Ors. (1992)]. The
principal employer shall not however be liable to pay any interest and penalty leviable under
the Act. [Sarjerao Unkar Jadhav Vs. Gurinder Singh & Ors. (1992)].
2.12 OCCUPATIONAL DISEASES:
A worker contracting an occupational disease is deemed to have suffered an accident
out of and in course of employment and the employer is liable to pay compensation for the
same.
2.13 COMPENSATION WHEN NOT PAYABLE:
(i) When disablement is for a period less than 3 days,
(ii) When accident (not resulting in death) is due to the fault of the workman or his wilful
disobedience of an order (to be proved by the employer),
(iii) The workman has contracted a disease which is not directly attributable to a specific
injury caused by the accident or to that occupation, or,
(iv) When the employee has filed a suit for damages against the employer or any other
person, in a civil court.

2.14 STATEMENT OF FATAL ACCIDENTS:

Where a commissioner receives information from any source that a workman has died
as a result of an accident arising out of and in course of his employment, he may require the
employer, by serving upon him a registered notice, to submit within 30 days of its service, a
statement in the prescribed from:
(a) Giving the circumstances attending the death of the workman, &
(b) Indicating whether he is or is not liable to pay compensation. If the employer feels that he
is liable to pay compensation, then he shall make the deposit to the commissioner within
30 days of the notice. If he disclaims the liability, then he should indicate the grounds for
the same. [Sec. 10 (A)].
 2.15 ACCIDENT REPORT:
Employer must communicate to commissioner within 7 days of the accident leading to
death or serious bodily injury to any workman.
2.16 AMOUNT OF COMPENSATION:
The Calculation for the amount of compensation shall be as follows: -
a) In case of death: 50% of the monthly wages X Relevant factor or Rs. 1,20,000/-
whichever is more
b) In case of total permanent disablement: 60% of the monthly wages X Relevant factor
or Rs. 1,40,000/- whichever is more
Note: - Relevant Factor means a Factor specified in schedule IV depending upon the age
of the workman on his last birthday before accident. e.g., R.F. is 216.91 at 25 years age and
184.17 at 40 years age.

c) In case of permanent partial Such % of the compensation payable in

disablement loss in case of an case of (b) above, as is proportionate to
injury specified under part II of the loss of earning capacity as being the
schedule [I] percentage of the loss of earning
capacity caused by that injury.

In case of partial Permanent Such % of the compensation payable in

d) disablement in case of an injury case of (b) above, as is proportionate to
not specified under part II of the loss of earning capacity (as assessed
schedule [I] by a qualified medical practitioner)
caused by that injury.

In case of temporary A half-monthly payment of the sum

e) Disablement (whether Total or equivalent to 25% of the monthly wages,
partial) during the period of disablement or 5
year whichever is shorter.

Note: Wages for this act includes any benefit or perquisite expressible in terms of
money but excludes travelling allowance/ concession, employer’s contribution to pension or
P.F. or a sum paid to cover any special expenses incidental to his employment. It includes
bonus, night out allowance, D.A., gratuity, free quarter, food allowance etc. also.
The employee shall be reimbursed the actual medical expenditure incurred by him for
treatment of injuries caused during the course of employment. If the injury of the employee
results in his death, the employer shall, in addition to the compensation above, deposit with
the Commissioner a sum of two thousand and five hundred rupees for payment of the same
towards the expenditure of the funeral of such employee.
2.17 TIME & MODE OF PAYMENT:
Liability of paying compensation starts as soon as the injury was caused [Pratap Narain
singh Vs. Srinivas Sabata & Ors. (1976) AIR 222(SC)]. If payment is not made within one month
from the date it fell due, a simple interest @ 12% may be levied by the commissioner. A further
sum not exceeding 50% of the compensation may be levied by the commissioner over and
above 12% by way of penalty if there is no justification for delay. Half monthly instalments may
be converted into a lump sum payment, by an agreement between the employer and the
workman or by applying to the commissioner. This half monthly payment may be reviewed by
the commissioner on an application.
2.18 COMPENSATION TO BE DEPOSITED WITH THE COMMISSIONER [Sec 8]:
The amount of compensation is not payable to the workman directly but to the
commissioner who will then pay to the workman/their dependents.
The receipt of the deposit with the commissioner shall be sufficient proof of discharge
of employer’s liability.
2.19 DISTRIBUTION OF COMPENSATION BY COMMISSIONER.
The commissioner shall distribute the compensation among the dependents in such
proportion as he deems fit. The employer can obtain the details of all disbursements made by
the commissioner by an application to that effect.
2.20 NOTICE OF ACCIDENT
Notice of accident should be sent to the commissioner and establishment by the
workmen with such particular as the names & address of person injured, the date and cause of
accident etc. this notice may be served either personally or by registered post or by means of
an entry in the notice-book maintained by the employer.
2.21 FILING OF CLAIMS:
No claim for compensation shall be entertained unless the notice of accident in the
prescribed manner has been given by the workmen except in the following cases:
(a) In case of the death of the workman.
(b) In case the employer had knowledge of the accident from any other source, at or about
the time of its occurrence;
(c) In case the failure to give notice or prefer the claim was due to sufficient cause.
The case must be preferred within 2 years from the occurrence of the accident or from
the date of death. It must be preceded by (i) a notice of accident and (ii) the claimant employee
must present himself for medical examination so required by the employer. Failure of employer
to have the workman medically examined does not debar him from challenging the medical
certificate produced by the workman. [Burhsal Sugar Mills Ltd. Vs. Ramjan (1982) Lab IC 84
(All)].
2.22 ATTACHMENT AND ASSIGNMENT OF COMPENSATION:
Compensation payable under this act cannot be attached, charged or passed on to any
person other than the workman by operation of law, nor can it be set-off against any other
claim.
 2.23 RETURNS AS TO COMPENSATION.
The employer is required to submit a return specifying
(a) The no. of injuries in respect of which compensation has been paid during the previous
year;
(b) The amount of such compensation; and
(c) Such other particulars as to the compensation as may be prescribed.
2.24 OBLIGATION OF EMPLOYER:
(ii) To pay compensation for an accident to the workman under the Act,
(iii) To submit a statement to the commissioner, within 30 days of receiving the notice, in
the prescribed form giving the circumstances attending the death of workman as result
of an accident and indicating whether he is liable to deposit any compensation.
(iv) To submit accident report to the commissioner in the prescribed form within 7 days of
the accident which result in death of a workman or serious bodily injury.
(v) To submit an annual return of accidents specifying the number of injuries for which
compensation has been paid during the year, the amount of such compensation and
other prescribed particulars.
2.25 OBLIGATION OF EMPLOYEES:
(i) To send a notice of the accident in the prescribed from, to the commissioner and the
employer, within such time as soon as it practicable for him. This notice is a
precondition for the admission of the claim for compensation.
(ii) To present himself for medical exam, if required by the employer.
2.26 RIGHTS OF EMPLOYERS AND EMPLOYEES:
Certain important rights of the employees and the employers are: -
(i) To apply to the commissioner for reviewing the half monthly payment (in case of
temporary disablement) on the ground of change in condition of the employee, the
application should be accompanied by a certificate of a medical practitioner.
(ii) To refer any dispute as to liability to pay compensation, amount or duration of the
compensation, or as to nature or extent of disablement, etc. to the commissioner for
settlement.
(iii) To appeal against an order of the commissioner to the High court, within 60 days of
the order. The employer is required to deposit the compensation before filing the
appeal [Provision to Sec. 30; see Narayanan Nair Vs U.O.I. (1990) 11 LLJ 520 (KER).].
 2.27.0 OFFENCES AND PENALTIES:

SL
OFFENCES PENALTIES
No

1. Unjustified delay in
1 payment (1)up to 50% of the amount of
of compensation Beyond one month compensation besides interest @
12% PA in addition to amount of
(i)
arrears .
(ii) 2
2.
a) Failure to maintain a notice Fine shall be not less than Rs.
book 50,000/- and may extend to Rs
1,00,000/-

b) Failure to submit a statement - As above-

of fatal accident
c) Failure to submit an accident - As above-
report
d) Failure to file annual return of
- As above-
compensation.
e) fails to inform the employee of
his rights to compensation as - As above-
required under section

3 THE MINIMUM WAGES ACT, 1948

3.1. SHORT TITLE AND EXTENT.—
This act is called THE MINIMUM WAGES ACT, 1948 and it extends to the whole of India. This act
was enacted to provide for fixing minimum rates of wages in certain employments.
3.2. DEFINITIONS—
(a) “adolescent” means a person who has completed his fourteenth year of age but has not
completed his eighteenth year;
(b) “adult” means a person who has completed his eighteenth year of age;
(c) “child” means a person who has not completed his fourteenth year of age;
(d) “cost of living index number”, in relation to employees in any scheduled employment in
respect of which minimum rates of wages have been fixed, means the index number
ascertained and declared by the competent authority by notification in the Official Gazette to
be the cost of living index number applicable to employees in such employment;
(e) “employer” means any person who employs, whether directly or through another person, or
whether on behalf of himself or any other person, one or more employees in any scheduled
employment in respect of which minimum rates of wages have been fixed under this Act, and
includes, except in sub-section (3) of section 26,—
(i) in a factory where there is carried on any scheduled employment in respect of which
minimum rates of wages have been fixed under this Act, any person named under Factories Act
1948, as manager of the factory;
(ii) in any scheduled employment under the control of any Government in India in respect of
which minimum rates of wages have been fixed under this Act, the person or authority
appointed by such Government for the supervision and control of employees or where no
person or authority is so appointed, the head of the department;
(iii) in any scheduled employment under any local authority in respect of which minimum rates
of wages have been fixed under this Act, the person appointed by such authority for the
supervision and control of employees or where no person is so appointed, the chief executive
officer of the local authority;
(iv) in any other case where there is carried on any scheduled employment in respect of which
minimum rates of wages have been fixed under this Act, any person responsible to the owner
for the supervision and control of the employees or for the payment of wages;
(f) “wages” means all remuneration, capable of being expressed in terms of money, which
would, if the terms of the contract of employment, express or implied, were fulfilled, be
payable to a person employed in respect of his employment or of work done in such
employment, and includes house rent allowance, but does not include—
(i) the value of—
(a) any house-accommodation, supply of light, water, medical attendance, or
(b) any other amenity or any service excluded by general or special order of the
appropriate Government;
(ii) any contribution paid by the employer to any Pension Fund or Provident Fund or under
any scheme of social insurance;
(iii) any travelling allowance or the value of any travelling concession;
(iv) any sum paid to the person employed to defray special expenses entailed on him by
the nature of his employment; or
(v) any gratuity payable on discharge;
(g)“employee” means any person who is employed for hire or reward to do any work, skilled or
unskilled, manual or clerical, in a scheduled employment in respect of which minimum rates of
wages have been fixed; and includes an out-worker to whom any articles or materials are given
out by another person to be made up, cleaned, washed, altered, ornamented, finished,
repaired, adapted or otherwise processed for sale for the purposes of the trade or business of
that other person where the process is to be carried out either in the home of the out-worker
or in some other premises not being premises under the control and management of that other
person; and also includes an employee declared to be an employee by the appropriate
Government; but does not include any member of the Armed Forces of the Union.
3.3. FIXING OF MINIMUM RATES OF WAGES.—
(1) The appropriate Government shall —
(a) fix the minimum rates of wages payable to employees employed in an employment
specified in Part I or Part II of the Schedule and in an employment added to either Part by
notification under section 27:
(b) review at such intervals as it may think fit, such intervals not exceeding five years, the
minimum rates of wages so fixed and revise the minimum rates, if necessary.
(2) The appropriate Government may fix,—
(a) a minimum rate of wages for time work (referred to as “a minimum time rate”);
(b) a minimum rate of wages for piece work (referred to as “a minimum piece rate”);
(c) a minimum rate of remuneration to apply in the case of employees employed on piece work
for the purpose of securing to such employees a minimum rate of wages on a time work basis
(also referred to as “a guaranteed time rate”);
(d) a minimum rate (whether a time rate or a piece rate) to apply in substitution for the
minimum rate which would otherwise be applicable, in respect of overtime work done by
employees (also referred to as “overtime rate”).
(3) In fixing or revising minimum rates of wages under this section,—
(a) different minimum rates of wages may be fixed for—
(i) different scheduled employments;
(ii) different classes of work in the same scheduled employment;
(iii) adults, adolescents, children and apprentices;
(iv) different localities;
(b) minimum rates of wages may be fixed by any one or more of the following wage-periods,
namely:—
(i) by the hour,
(ii) by the day,
(iii) by the month, or
(iv) by such other larger wage-period as may be prescribed;
and where such rates are fixed by the day or by the month, the manner of calculating wages for
a month or for a day may be indicated:
Provided that where any wage-periods have been fixed under section 4 of the Payment of
Wages Act, minimum wages shall be fixed accordingly.
3.4. MINIMUM RATE OF WAGES.—
(1) Any minimum rate of wages fixed or revised by the Government in respect of scheduled
employments under section 3 may consist of—
(i) A basic rate of wages and a special allowance at a rate to be adjusted with the variation in
the cost of living index number applicable to such workers (also referred to as the “cost of living
allowance”); or
(ii) A basic rate of wages with or without the cost of living allowance, and the cash value of the
concessions in respect of supplies of essential commodities at concession rates, where so
authorised; or
(iii) An all-inclusive rate allowing for the basic rate, the cost of living allowance and the cash
value of the concessions, if any.
(2) The cost of living allowance and the cash value of the concessions in respect of supplies of
essential commodities at concession rates shall be computed by the competent authority.
3.5. PAYMENT OF MINIMUM RATES OF WAGES.—
(1) Where in respect of any scheduled employment a notification under section is in force, the
employer shall pay to every employee engaged in a scheduled employment under him wages at
a rate not less than the minimum rate of wages fixed by such notification for that class of
employees in that employment without any deductions except as prescribed.
3.6. FIXING HOURS FOR A NORMAL WORKING DAY, ETC.—
1. In regard to any scheduled employment, the appropriate Government may—
(a) fix the number of hours of work which shall constitute a normal working day, inclusive of
one or more specified intervals;
(b) provide for a day of rest in every period of seven days which shall be allowed to all
employees or to any specified class of employees and for the payment of remuneration in
respect of such days of rest;
(c) provide for payment for work on a day of rest at a rate not less than the overtime rate.
(2) The provisions of sub-section (1) shall, in relation to the following classes of employees,
apply only to such extent and subject to such conditions as may be prescribed:—
(a) employees engaged on urgent work, or in any emergency which could not have been
foreseen or prevented;
(b) employees engaged in work in the nature of preparatory or complementary work which
must necessarily be carried on outside the limits laid down for the general working in the
employment concerned;
(c) employees whose employment is essentially intermittent;
(d) employees engaged in any work which for technical reasons has to be completed before the
duty is over;
(e) employees engaged in a work which could not be carried on except at times dependent on
the irregular action of natural forces.
(3) For the purposes of clause (c) of sub-section (2), employment of an employee is essentially
intermittent when it is declared to be so by the appropriate Government on the ground that
the daily hours of duty of the employee, or if there be no daily hours of duty as such for the
employee, the hours of duty, normally include periods of inaction during which the employee
may be on duty but is not called upon to display either physical activity or sustained attention.
3.7 OVERTIME.—
(1) Where an employee, whose minimum wages is fixed by the hour, by the day or by such a
longer wage-period as may be prescribed, works on any day in excess of the number of hours
constituting a normal working day, the employer shall pay him for every hour or for part of an
hour so worked in excess at the overtime rate fixed under this Act or under any law of the
appropriate Government for the time being in force, whichever is higher.
3.8 WAGES OF WORKER WHO WORKS FOR LESS THAN NORMAL WORKING DAY.—
If an employee whose minimum rate of wages has been fixed under this Act by the day works
on any day on which he was employed for a period less than the requisite number of hours
constituting a normal working day, he shall be entitled to receive wages in respect of work done
by him on that day as if he had worked for a full normal working day. Except that he shall not be
entitled to receive wages for a full normal working day in case his failure to work is caused by
his unwillingness to work and not by the omission of the employer to provide him with work.
3.9 WAGES FOR TWO OR MORE CLASSES OF WORK.—
Where an employee does two or more classes of work to each of which a different minimum
rate of wages is applicable, the employer shall pay to such employee in respect of the time
respectively occupied in each such class of work, wages at not less than the minimum rate in
force in respect of each such class.
3.10 MINIMUM TIME RATE WAGES FOR PIECE WORK.—
Where an employee is employed on piece work for which minimum time rate and not a
minimum piece rate has been fixed under this Act, the employer shall pay to such employee
wages at not less than the minimum time rate.
3.11 MAINTENANCE OF REGISTERS AND RECORDS.—
(1) Every employer shall maintain registers and records giving particulars of employees
employed by him, the work performed by them, the wages paid to them, the receipts given by
them and such other particulars in the form as prescribed.
(2) Every employer shall keep exhibited, in the factory, workshop or place where the employees
in the scheduled employment may be employed, or in the case of out-workers, in such factory,
workshop or place as may be used for giving out-work to them, notices in the prescribed form
containing prescribed particulars.
(3) The Government may, by rules made under this Act, provide for the issue of wage books or
wage slips to employees employed and prescribe the manner in which entries shall be made
and authenticated in such wage books or wage slips by the employer or his agent.
3.12 PENALTIES FOR CERTAIN OFFENCES.—
Any employer who—
(a) pays to any employee less than the minimum rates of wages fixed for that employee's
class of work, or less than the amount due to him under the provisions of this Act, or
(b) contravenes any rule or order made under section 13,
shall be punishable with imprisonment for a term which may extend to six months, or with fine
which may extend to five hundred rupees, or with both:
3.12A. GENERAL PROVISION FOR PUNISHMENT OF OTHER OFFENCES.—
(1) Whoever contravenes the provisions of this Act or the rules made there under shall be
punishable with fine which may extend to two lakh rupees and in the case of a continuing
contravention, with an additional fine which may extend to two thousand rupees for every day
during which such contravention continues:
Provided that the total amount of fine shall not exceed two thousand rupees per worker
employed.
(2) If any person who has been convicted of any offence punishable under sub-section (1) is
again guilty of an offence involving a contravention or failure of compliance of the same
provision, he shall be punishable on a subsequent conviction with fine which shall not be less
than one lakh rupees but which may extend to five lakh rupees.
(3) Notwithstanding anything contained in the Code of Criminal Procedure, it shall be lawful for
the Magistrate to impose a fine for an amount exceeding ten thousand rupees.”.
3.13 EXEMPTION OF EMPLOYER FROM LIABILITY IN CERTAIN CASES.—
Where an employer is charged with an offence against this Act, he shall be entitled, upon
complaint duly made by him, to have any other person whom he charges as the actual
offender, brought before the Court at the time appointed for hearing the charge; and if, after
the commission of the offence has been proved, the employer proves to the satisfaction of the
Court—
(a) that he has used due diligence to enforce the execution of this Act, and
(b) that the said other person committed the offence in question without his knowledge,
consent or connivance,
that other person shall be convicted of the offence and shall be liable to the like punishment as
if he were the employer and the employer shall be discharged:
(3) Nothing in this Act shall apply to the wages payable by an employer to a member of his
family who is living with him and is dependent on him. Explanation.—In this sub-section a
member of the employer's family shall be deemed to include his or her spouse or child or
parent or brother or sister.
3.14. CONTRACTING OUT.—
Any contract or agreement, whether made before or after the commencement of this Act,
whereby an employee either relinquishes or reduces his right to a minimum rate of wages or
any privilege or concession accruing to him under this Act shall be null and void in so far as it
purports to reduce the minimum rate of wages fixed under this Act.

CONCLUSION
The Contract Labour (Regulation and Abolition) Act 1970 was enacted with a view to
“regulate the employment of contract labour in certain establishment and to provide its
abolition in certain circumstances and for matters connected therewith.” In terms of facilities
provided, there was a huge disparity in the availability of the facilities for the regular
permanent workers and the contract workers of industrial establishments. The contract labour
act was enacted with the specific purpose of protecting the contract labour from any
exploitation by the contractors and companies. Employees Compensation Act provides for the
payment by certain classes of employers to their employees of compensation for injury by
accident. The minimum wages act prevents exploitation of labour and guarantees them a
minimum payment for their subsistence.