The Indian government has passed a new law called the Contract Labour (Regulation and Abolition) Code, 2020, which will change the way contract workers and employers work together in India. This law will have some benefits and challenges for the contract staffing industry, which provides workers for various sectors.
Some of the main changes are:
- Smaller establishments with less than 50 contract workers will not have to follow the rules regarding registration, licensing, welfare facilities, etc. This will make it easier and cheaper for them to hire contract workers. But it will also mean that many contract workers will not get the benefits and protections that the law provides.
- Workers who migrate from one state to another or who work through online platforms such as Uber, Ola, Swiggy, etc. will also be considered as contract workers and get benefits such as minimum wages, social security, etc. This will bring more workers under the formal sector and ensure their dignity and welfare. But it will also mean that the contract staffing industry will have to follow more rules and obligations for these workers.
- The principal employer (the company that hires the contract workers) will be responsible for providing welfare facilities such as canteens, rest rooms, drinking water, first aid, etc. to the contract workers. The contractor (the company that provides the contract workers) will have to pay for these facilities and may recover it from the principal employer. This will ensure that the contract workers get access to basic amenities and facilities at their workplace. But it will also mean that the principal employer will have to spend more money and space for these facilities.
- The contractor will be identified as an “employer” having independent responsibilities for complying with the law such as payment of wages, contribution to social security fund, health and safety measures, etc. The principal employer will only be liable in case of default by the contractor. This will shift most of the accountability and liability from the principal employer to the contractor. But it will also mean that the contractor will have to shoulder more responsibility and risk for ensuring compliance with the law.
- The contract workers will have the right to form trade unions and participate in collective bargaining with the contractor or the principal employer. They will also have access to grievance redressal mechanisms and dispute resolution forums. This will empower the contract workers and give them a voice and representation in their workplace. But it will also mean that the contract staffing industry will have to deal with more demands and expectations from the contract workers and their unions.
The new Contract Labour Act is a landmark legislation that will have a significant impact on the contract staffing industry in India. It will bring more clarity and uniformity in the legal framework governing the contract labour system in the country. It will also create more opportunities and challenges for the contract staffing business in India.
I welcome the new law and appreciate its intent and objectives. I believe that it will benefit both the contract workers and the employers in the long run. However, I also acknowledge that it will require some adjustments and adaptations from both the parties in the short term.
Together, we can make the contract labour system in India more efficient, effective, and equitable.
