Contract Labour Act

Meaning & Definition

The Contract Labour Act is an abbreviation for the Contract Labour (Regulation and Abolition) Act of 1970 that governs the employment of contract workers by regulating the conditions of their employment, as well as providing for their welfare and health. It covers businesses that employ their workers through a contractor, rather than directly employing them themselves.

Importance of the Contract Labour Act

• Ensures the protection of contract workers’ rights and their welfare.
• Identifies what a principal employer and contractor will be responsible for.
• Avoids penalties and violations of labour law by organisations.
• Ensures that children in a supplier’s workforce are treated fairly.
• Provides accountability and transparency in engaging contract workers.

Legal Compliance / Policy / Regulation

Companies that hire at least 20 workers through the Contract Labour (Regulation and Abolition) Act,1970 must comply with the Act requirements, obtain registration as a principal employer, and make sure contractors provide valid labour licences. 

Employers also have the obligation to pay workers on time, provide food, provide restroom facilities, maintain safety equipment, and ensure compliance with all labour laws. 

As a final note, it should be noted that even if an employer outsources its workforce, it has been determined that the employer remains ultimately responsible for compliance of its contractors with all aspects of the Labour Law.

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