The Contract Labor Act 1970

The Contract Labour (Regulation and Abolition) Act 1970 was enacted as a Central law aimed at regulating the conditions under which contract labourers work and also provide for the gradual abolition of the contract labour system as and when possible.

The Act was made applicable to all establishments operating all over the country and both the Central and state governments were authorised to enforce it in their respective jurisdictions. The Act envisages the minimization of the exploitation of the labour class and improving the working conditions enjoyed by labourers employed on a contract basis.

The present day and age of extensive globalisation has resulted in people and corporates increasing their pace of production in order to maximise their profits. This has resulted in careful cost cutting by companies thus promoting contract labour.

Contract workers form a large part of the total workforce in India. Most of these workers are engaged in seasonal or occasional employment as and when they are called for. The primary sectors that mainly function through contract labour are loading and unloading of goods and materials; catering including canteen services; security services; civil and construction works; electrical/ air conditioning/ painting/ whitewashing; house-keeping services; computer maintenance, etc.

Contract labourers are usually recruited through contractors who work as a link between the actual employers and the workers. However, over time such contractors are indulging in large scale misuse and abuse of power. Workers are especially abused by being paid lesser wages than agreed upon, being forced into employment that is harmful to physical or mental health etc.

Ensuring the welfare of the labour sector in the nation is the prime responsibility of the Central Government. For this reason, the Central Government has enacted several legislations aimed at securing the welfare of the labour class. However, the rights conferred to contract workers by way of the Constitution and various other labour laws are generally poorly enforced. Although there are trade unions to secure the rights and welfare of the workers, they primarily cater to the vested interests of the trade union leaders. In SMEs, the situation is even worse; there is total anarchy and the workers are left all to themselves.

Therefore in order to secure the rights and address the welfare of contract labourers, the Government deemed it fit to pass the Contract Labour (Regulation and Abolition) Act 1970.


The prime objective of the Contract Labour (Regulation and Abolition) Act is to prevent the exploitation of contract workers and to abolish the system of contract labour in cases where:

  • The work is perennial in nature.
  • The work is incidental or is necessary for the functioning of the establishment.
  • The work is of such a nature that it can employ a considerable number of workmen full time.
  • The work need not be done by contract workers and can be done by regular workmen.


The Act is applicable to every establishment wherein twenty or more workmen are employed or were employed on any day of the preceding twelve months as contract labor. The Act is also applicable to all those contractors who employ twenty or more contract laborers in any establishment belonging to a primary employer.

Accordingly, any organization that comes under the ambit of the Act should register itself as the principal employer by making an application to the registration officer who is appointed by the appropriate government. Further, it should be known that any establishment that does not register itself under the Act is barred from employing contract labor. Also, all contractors who are engaged in recruiting and providing contract labor are supposed to obtain a license for the same. Such license has certain conditions such as hours of work, fixation of wages and provision of certain essential amenities etc. subject to which the contractor can recruit contract laborers.

One thought on “The Contract Labor Act 1970

Leave a Reply

error: Content is protected !!
%d bloggers like this: