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Monday, 7 December 2015

Principal Employer should include Sub-contractor in their RC under CLRA

I feel extreme pleasure to share with you a note on – requirement of mentioning sub-contractors name other details  in Form II &  issue of Form V by Principal Employer also clarifying  applicability of Contract Labour (Regulation & Abolition) Act, 1970 to Sub Contractors & sub-sub contractors. 

Applicability of Contract Labour (Regulation & Abolition) Act, 1970 to Sub Contractors 

Under  Section 2 clause (c) of the Contract Labour Act(Regulation & Abolition) Act, 1970 defines "contractor" in relation to an establishment, to mean "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 included a "sub-contractor." 

Section 12 sub-section (1) then proceeds to enact that with effect from such date as the appropriate Government may, by notification in the official Gazette, appoint, no contractor to whom this Act applies, shall undertake or execute any work through contract labour except under and in accordance with a ‘licence issued in that behalf by the licensing officer. It is therefore clear that not only a contractor but also a sub-contractor who comes within the definition of the term 'contractor' in section 2 clause (c) is bound to obtain a licence under section 12 sub-section (1) before contractor or sub-contractor can undertake or execute any work through contract labour.

Thus incase where sub- contractors, have-not cared to obtain such licence and yet they have undertaken and are executing any  portions of the of work entrusted to them by the contractors, through work men employed by them either directly through contractor (or sub contractor) . This is clearly in violation of the prohibition enacted in section 12 subsection (1). 

In fact, if sub- contractors undertake or execute any work through contract labour without obtaining a licence under section 12 sub- section (1), they would be guilty of a criminal offence punishable under section 23 deals with the provisions of contravention regarding employment of contract labour and Sections 24 and 25 are the penal provisions with regard to the offences contemplated under the Act.

The Principal Employer needs to mention in Form II names of all subcontractors with the number of people deployed or not.

As per the above detail where I had explained you that sub contractor is also a contractor (read section 2(c ). This part of the definition is lucid. However, the words “and include a sub-contractor” throws us into an infinite loop.
The term contractor therefore includes the term sub-contractor. Therefore, every sub-contractor is a contractor. Neither the Contract Labour Act nor the rules made pursuant thereto describe or define the sub-contractor.
Section 12 that deals with licensing of contractors prohibits any contractor from employing contract labour without a license to do so.
As per the Rule 18 provides for Form II of the certificate of registration to be granted under Section 7 [2] of the Act. The certificate of registration has to contain
[i] the name and address of the establishment,
[ii] the maximum number of workmen to be employed as contract labour in the establishment,
[iii] the type of business, trade, industry, manufacture or occupation which is carried on in the establishment, 
[iv] the names and addresses of contractors, 
[v] nature of work in which contract labour is employed or is to be employed and
[vi] other particulars relevant to the employment of contract labour
Also read with Rules 21 (2), every application for the grant of a license shall be accompanied by a certificate by the principal employer in Form V to the effect that the contractor has been employed by him as such in relation to his establishment.

The principal employer further undertakes to be bound by all the provisions of the Act and the rules made thereunder in so far as the provisions are applicable to him in respect of the employment of contract labour by the contractor.

In this regard, I’m supported by the virtue of The Supreme Court verdict  in Gammon India Ltd. and Ors. v Union of India (UOI) and Ors., AIR 1974 SC 960: (1974)I LLJ 489 SC. The Hon\'ble Supreme Court has put the contractor and sub-contractor on the same pedestal qua the establishment, in terms of the CLRA Act. They are both doing the work of the establishment, and therefore Form-V has to be issued by the Principal Employer. The concept of principal employer is inextricably linked with the establishment

I trust that this will secure your appeal regarding Principal Employer liability to provide Form V to sub contractor.

Adding to this, I would also like to inform you that in absence of valid contract labour license 
As per Section 12 - Licensing of contractors: No Contractor shall undertake or execute any work through contract labour except license issued by licensing officer.
So, I would like inform you that in the absence of a valid license, a contract workman would be deemed to be the workman engaged directly by the principal employer.
In this regard I am supported by the verdict on case of  P&H HC: Chet Ram Vs. PO Labour Court Faridabad 2011