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The challenges in engaging contract workforce – labour law perspective

The challenges in engaging contract workforce – labour law perspective. Live cases. Air India & Best & Crompton – IR exposure Group 4 Securities – Financial exposure Company X: for procedural and safety – Prosecution exposure . Need for contract workforce . Uncertainty in businesses

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The challenges in engaging contract workforce – labour law perspective

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  1. The challenges in engaging contract workforce – labour law perspective

  2. Live cases • Air India & Best & Crompton – IR exposure • Group 4 Securities – Financial exposure • Company X: for procedural and safety – Prosecution exposure

  3. Need for contract workforce • Uncertainty in businesses • Flexible arrangement within the legal framework • Employer can concentrate on ‘core’ activities • Entrusting to a professional agency

  4. Types of contracts • Job contract • Manpower supply contract (without supervision by the Principal Employer) • Both are recognised under the Act

  5. What needs to be ensured ? • The work is not prohibited • Core and perennial nature of work to be avoided • Ration of regular Vs contract workers • There must be written agreement • Contractor does have EPF and ESI codes

  6. Understanding certain terms • Contractor • Contract Labour / Workman • Establishment • Wages • Ultimate liability

  7. Primary compliance activities • Registration Certificate by Principal employer • Form V has to be issued to the contractor • Contractor license by the Contractor • Payment of minimum wage (national floor MW or notified MW) • ESI and EPF Coverage from day one • License by the contractor including sub contractors (or sub contractors)

  8. Other compliance activities • Maintenance of registers • Submission of returns • Display of abstract / notices • Providing amenities to contract labour ( drinking water, toilets, canteen, etc. ) • Safety measures

  9. Abolition of contract labour • Only Sec 10 speaks about this • The legal position in case of ‘abolition’ • Various judgements • Impact of: • 240 days under ID Act • Can raise ID challenging the status • 480 days under Conf Perm Status Act

  10. Other relevant points • EPF and ESI coverage from the first day • All categories of workforce “engaged for work” have to be covered • Bifurcation of minimum wages to minimize EPF outflow is not legally correct • Nature of each wage component determines statutory contributions – not nomenclature • PE’s liability on: • Gratuity – Two views prevail • Bonus – As on date, not liable

  11. Certain check points • It has to be job contract • PE not to supervise and control CLs • PE not to allocate work • PE not to enforce reward or reprimand • PE not to make payment • PE not to sanction leave

  12. Our Contact: Aparajitha Corporate Services Limited www.aparajitha.com Nagaraj Krishnan – 98946 64000 Varadan K - 99524 11510

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