Applicability of Contract Labour (Regulation & Abolition) Act, 1970 (CLRA Act)

The Contract Labour (Regulation & Abolition) Act, 1970 (CLRA Act) regulates employment of contract labour and provides for abolition of contract labour in certain cases. The question of applicability of the CLRA Act to an establishment frequently becomes a matter of concern for employers. Following points may serve as a guidance note for employers in such cases:

  1. CLRA Act is applicable to every establishment in which 20 or more workmen are employed as contract labour or were so employed anytime during last 12 months. Hence, the Act would be become applicable once 20 or more workmen are employed as contract labour on any day in an establishment during the preceding 12 months.
  1. The Act is applicable to every establishment if the workmen are employed in the establishment as ‘contract labour’. Section 2(b) of the CLRA Act provides that a workman shall be deemed to be employed as ‘contract labour’ when he is hired in or in connection with the work of an establishment, by or through a contractor. Such engagement of contract labour may be with or without the knowledge of the Principal Employer. Whether the workman is employed to do any skilled, semi-skilled, un-skilled manual, supervisory, technical or clerical work for hire or reward is immaterial for deciding upon the applicability of the CLRA Act.
  1. The Act does not apply to establishments in which work only of an intermittent or casual nature is performed. Explanation to Section 1(5) of the CLRA Act further provides that work performed would be deemed to be of an intermittent nature if it was performed for less than 120 days in the preceding twelve months or it is of a non-seasonal character and is performed for less than 60 days in a year.
  1. Where question arises as to the applicability of the CLRA Act to a contractor, the same would depend on the following aspects:
    • Whether there exists a genuine contract between the Principal Employer and such contractor.
    • Whether the periodicity and nature of services provided by such contractor to the establishment of the Principal Employer are intermittent.
  1. At the workman level, the Act does not apply to a person who is mainly engaged in a managerial or advisory capacity. In an important case decided by the High Court of Calcutta[1]Mcleod and Co. v. Sixth Industrial Tribunal, West Bengal and others, AIR 1958 Cal 273, while interpreting the expression 'managerial', 'administrative' and 'supervisory,' the Hon’ble Court noted that primary work of a person who is mainly engaged in a managerial or advisory capacity would include supervision, but it would not mean that supervision would be the only function of a manager or an administrator. Therefore, another test that could be considered to determine whether any supervisory work was performed while discharging managerial or administrative work, is to ascertain if the person was entrusted with the duty or responsibility of distribution of work and power to sanction or refer leave, increment, shift schedule, power to permit late comer, power to allow a person to leave early, etc.

Exclusion from the applicability of the CLRA Act is contingent upon the nature of work in the establishment and capacity in which person is employed in or in connection with the work of any establishment. The same needs to be examined by the employer on a case by case basis.

For more detailed information on this topic, do reach out to us at “insights at bcpassociates.com”.

Share on

References   [ + ]

1. Mcleod and Co. v. Sixth Industrial Tribunal, West Bengal and others, AIR 1958 Cal 273

1 thought on “Applicability of Contract Labour (Regulation & Abolition) Act, 1970 (CLRA Act)”

  1. Fully agree.
    1. But the employers want hiring n firing to be easier, without any mess, which they cannot do it in case of regular employees.
    2. All managements are very very cost consciousness, as it’s survival of the fittest. Hence, as a means of cost saving,they prefer contract labour.
    3. Unions come in the way of hiring n firing, equal pay, multitasking etc. in case regular employees.
    4. Registration under CLRA, equal pay, statutory payments like getting covered contract labour also under PF, ESI etc make the employers lose patience over HR man. He is neither identified with the managements nor with the labour.
    Hence, he is caught between the devil and deep see. He can never endear himself to any managements unlike a Finance Manager.

Leave a Comment