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Unit 4: Contract Labour (Regulation and Abolition) Act, 1986

Several factors may be accounted for the continuance and growth of contract labour system. Notes
First, contract labour was unorganised and unable to look after its own interest. Second, persons
who could spare time in their own houses but could not move out for employment got jobs and
were able to supplement their income from different sources. They were in a position to work
as and when leisure was available and unlike factory workers, there was no rigour of attending
the factory or the establishment at stated time and for stated period. Third, the advantages to the
employer in employing contract labour are:
1. Production at lower cost;

2. Engaging labour without giving them fringe benefits such as leave wages, benefi ts under
the Employees’ State Insurance Act or provident fund contribution and among others
bonus;
3. General reduction of the overhead cost and the administrative burden of maintaining an
establishment; and
4. The sheer economics of farming out contracts for manufacture of certain components rather
than investing capital and installing plants for their manufacture.

Things have undergone a change since some time. During the post-Independence period, several
statutory and non-statutory measures have been adopted to regulate and improve the conditions

of contract labour. The problem of contract labour has often figured as a matter of dispute before
tribunals and courts, which have taken pragmatic consideration into account in matters like
regulation of contract labour. In certain cases, contract labour has been abolished. The Contract
Labour (Regulation and Abolition) Act, has not only endorsed the judicial thinking but has taken
effective measures to regulate the employment of contract labour.

4.1 Contract Labour

4.1.1 Constitutional Prohibition

Article 21 of the Constitution lays down that no person shall be deprived of his life and personal
liberty, except according to the procedure established by law.
In People’s Union for Democratic Right vs. Union of India, ((1982) 2 LL.J 454), the Supreme Court had
to decide, inter alia, whether the violation of the provisions of the Contract Labour (Regulation
and Abolition) Act, 1970 are also violation of Article 21 of the Constitution. The Supreme Court

answered the question in the affirmative and observed:

Now the rights and benefits conferred on the workman employed by a contractor under the
provisions of the Contract Labour (Regulation and Abolition) Act, 1970 and the Inter-State
Migrant Workman (Regulation of Employment and Conditions of Service) Act, 1979 are clearly
intended to ensure basic human dignity to the workman who are deprived of any of these rights

and benefits to which they are entitled under the provisions of these two pieces of social welfare
legislation, that would clearly be a violation of Article 21 (of the Constitution) by the Union of India,
the Delhi Administration and the Delhi Development Authority which, as principal employers,
are made statutorily responsible for securing such rights and benefits to the workman.

In Bandhua Mukti Morcha vs. Union of India, AIR 1984 SC 802, the Supreme Court once again
deprecated callousness of the Central Government as well as the State Government of Haryana
to enforce the provisions of this Act. The Court accordingly issued necessary directions for
immediate relief of the poor and unfortunate workmen.

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