Page 92 - DMGT516_LABOUR_LEGISLATIONS

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

and the like came out with suggestions for reforming labour laws but of no avail. The Notes
Standing Conference for Public Enterprises (SCOPE) had even come with proposals to
liberalise using contract labour in non-core activities of an establishment. This too did not
see the light of the day.

There is a growing realisation that the interpretation of the Central Act has gone too far and time
has come to bring some changes in the Act to make it more realistic. For a very long time, the
words “in connection with the work of the establishment” contained in Section 2(b) of the Act has
been stretched to such an extent that canteens, hospitals, dispensaries, sweeping premises and
even garden maintenance has been considered as regular work. Any amount of pleading by the
employers that running a canteen was not their core activity, did not meet the nod of the courts.

In the competitive economy, flexibility is required in manning the establishment.
In the State of Andhra Pradesh, the government received many proposals from FDIs to set up
industries in the State, but the parties were reluctant to do so because of the rigid labour laws.
Chandrababu Naidu government had taken the initiative to cut this gordian knot by bringing an
amendment to the Central Act. He brought the concept of Core Activity. The amendments to
th
the Act received President’s assent on 19 June 2003 and the Amendment came into force from
st
1 August 2003 through a gazette notifi cation. The salient features of the Amended Act (State
Act) are as follows:
(a) Section 10 (Prohibition of employment organisation contract labour) of the Central Act is
replaced by a new Section which enunciates that employment of Contract labour in Core
Activities of any establishment is provided the principal employer may engage contract
labour if the normal function of the establishments is ordinarily done through contractors;
or if the activities do not require full time workers for the major portion of the working
hours in a day or for longer periods; or if any sudden increase of volume of work in the core
activity which needs to be accomplished in a specifi ed time.

(b) A sub-section (dd) has been inserted into Section 2 of the Central Act to define Core Activity.
It defines Core Activity as any activity for which the establishment is set up but does not

include: sanitation works such as sweeping, cleaning, dusting, collection and disposal
of wastes; watch and ward, security services; canteen and catering services; loading and
unloading operations; support services like hospitals, educational and training institutes,
guest houses, clubs, courier services; gardening and maintenance of lawns; transport and
ambulance services; any activity incidental to core activity.
(c) Chapter II (Advisory Boards) of the Central Act has been omitted. Instead, a new subsection
(2) has been added to Section 10 which will deal with the question whether a particular
activity is a Core Activity. For this purpose, the government appoints an Advisor who will
look into the matter after taking all factors into consideration and submit his report within
a prescribed time to the government whether the issue question is Core Activity or not.
(d) Section 31 (power to exempt in special cases) in the Central Act has been replaced by a
new Section which empowers to exempt for a specified period any establishment from the

provisions of the Act. The new Act incorporates a sub-section (2) to Sec. 312 of the Central
Act, which empowers the government to revoke such exemption.
Since the subject of Labour is on the concurrent list contained in seventh schedule of the
Constitution of India, each State Government has the inherent right to amend any Central
legislation of the above subject, taking into consideration the peculiarities of the situation and

the overall good for the State. When Orissa State first took steps to dismantle State Electricity
Board and replaced it by Genco, Transco and Disco, every one raised eyebrows. Later, every
State followed suit of Orissa government. Perhaps other States will follow the path shown by AP

Government to find a modus vevindi on the subject of engagement of contract labour.
Contract Labour (R&A) Bill 2003-04 is pending with parliament

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