How corrupt are India’s contract labour laws?

On paper, contract workers can’t be denied so­ci­al security benefits. But these remain paper promises.

The aftermath of the pandemic is expected to lead to a drama­tic shift in the composition of ’s 470 million-strong wo­rkforce with companies relying more on contract workers to lower fixed costs.

But let’s face it: the law governing contract workers is the rotten apple in labour legislation and everyone became witness to it during the nationwide lockdown.


The migrant workers’ crisis is also the tra­gedy of contract workers, who have been growing in numbers over the years.

The share of contract workers in total organi­sed manufacturing sector employment jumped from 15.5 per cent in 2000-01 to 27.9 per cent in 2015-16, according to an Indian Council for Research and In­ter­national Economic Relations’ paper published in January 2019.

Hiring a contract worker involves a triangular relationship: principal em­ployer, contractor (or manpower supply agency) and worker.

Legally, if migrant workers are to get the benefits of the la­bour laws, including displacement and journey allowance, they need to be hired through the contractors.

After the government imposed a lockdown at four ho­urs’ notice, the first person to abandon the workers was the contractor.

Agencies hiring at least 20 contract workers are covered under the Contract Labour (Abolition and Regulation) Act, 1970.

States such as Rajasthan and Ma­dhya Pradesh have increased the threshold to 50 so that fewer companies or agencies are governed by the law.

Firms face the incentive of staying small to stay under the ra­dar of complex labour laws.

This has led to the mushrooming of thousands of fly-by-night contractors who hire workers at the minimum wage, and abandon them when business takes a hit.

This is the reality despite legal safeguards.

For instance, temporary and permanent workers doing the same job must have wage parity; the government can abolish contract workers if the job is found to be perennial and the employer has to step in if contractors fail to pro­vide basic facilities and wages.

On paper, contract workers can’t be denied so­ci­al security benefits. But these remain paper promises.

rulings have mostly favoured the employers.

As a result, em­ployers are free to decide if the work performed by the two categories of workers is similar or not and even when the government abolishes contract workers in certain areas, the em­ployer…

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