Contract labour is an expression which is often used to denote different ways of employing workers otherwise than under a usual employment contract. In common parlance, ‘contract labour’ refers to labour which is employed to perform some work, but has no direct employer-employee relationship with the principal employer i.e. the party for whom the work is being carried out. The relationship between the employee and the principal employer is mediated by one or more other parties who actually employ the workers, pay them and have an employer-employee relationship with them.

These intermediaries between the ‘principal employer’ and the workers are the ‘contractors’, whose relation with the principal employer is governed by a contract between them. Often, the mediation between the principal employer and the workers is not by one contractor alone, but a chain of sub-contractors and sub-sub-contractors. This system of work done for a principal employer through contractor or a chain of contractors is referred to as ‘contract labour system’.

Contract Labour (Regulation and Abolition) Act, 1970 defines contract labour as under:

“A workman shall be deemed to be employed as contract labour in or in connection with the work of an establishment when he is hired on or in connection with such work by or through a contractor, with or without the knowledge of the principal employer.”

Based on the above definitions, the ingredients of contract labour may be inferred as follows:

  • that the person concerned must be a workman;
  • that he must be employed in or in connection with the work of an establishment;
  • that the employment may be by or through a contractor; and
  • that the employment as such may be with or without the knowledge of the principal employer.

The contract labour arrangements provide an opportunity to the employer to secure the required number of workers for the time, he needs them. Contractors get benefits in the form of premium or commission for the contract labour they supply to the principal employer. They also receive charges and overcharges for various services they provide to these workers such as transport, accommodation and loans. The situations like surplus availability of labour and limited job opportunities compel the unemployed to accept contract employment. With limited alternatives, the workers have to accept high cost in order to have access to a job and the links which the labour contractors provide them, even though the cost involved may be very high, especially in cases of workers migrating from one place to another. The important issue, however, is whether these perceived advantages are real benefits and whether contract labour is a viable long term option or a short term crisis measure. If yes, then what are the minimum social security measures and conditions of work which need to be observed in order to meet the requirements of basic human rights, ‘just and humane conditions of work’ and to ensure decent and dignified human life to the persons engaged as contract labour.



The genesis of government concern in India towards the plight of contract labour can be traced back to the decade beginning with 1860 when a modest legislative action was initiated with reference to the contract labour employed in plantations. From then onwards up to the setting up of the Royal Commission of Labour in 1929, where Commission of Labour recommended the abolition of the jobber’s role in recruitment all over the country. The plight of contract labour and the need for action was highlighted by all Inquiry Committees set up during the fifteen years that followed the Royal Commission Report.

It was the Labour Investigation Committee (1946), which in its report examined in detail the nature of workforce needs of the industry. Pointing out that the system of contract labour was very much in vogue, the Committee recommended the abolition of contract labour system, wherever possible, and regulation of the system in all other cases.

Subsequently, the Indian Labour Conference at its 19th and 20th Sessions (1961-62) considered the reports of the Labour Bureau and recommended legislative action for abolition of contract labour system in certain types of work as mentioned by the Supreme Court in Standard Vacuum Oil Refinery Company v. Their Workmen.

This was followed by the setting up of a Tripartite Committee, which was assigned with the task of drafting the outline of legislation. Based on the Tripartite Committee’s recommendations, the Ministry of Labour drafted the Contract Labour Bill, which was considered and discusses at the 23rd Session of the Indian Labour Conference, wherein no consensus could be arrived at. The Government of India, didn’t wait, and drafted its own Bill. The Bill was amended based on the recommendations of the National Commission on Labour, The Bill was passed by both the Houses of Parliament and subsequently received Presidential Assent on 5th September, 1970. It came into effect 10th February, 1971.



The prime objective of the Contract Labour (Regulation and Abolition) Act is to prevent the exploitation of contract workers and to abolish the system of contract labour in cases where:

  • The work is perennial in nature.
  • The work is incidental or is necessary for the functioning of the establishment.
  • The work is of such a nature that it can employ a considerable number of workmen fulltime.
  • The work need not be done by contract workers and can be done by regular workmen.


The Act is silent with regard to the absorption of contract labour by the principal employer after the issuance of the prohibition notification issued under Section 10 of the Act. The Act needs to be amended so long as to contain specific provision in this regard. As for the Act in its present form, the same is applicable only to establishments and contractors employing 20 or more than 20 contract labourers.

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