Ensuring contract labour compliance
Regulatory insights and best Practices

Labour laws are a crucial set of regulations

that dictate how employers must treat their workforce. They are designed to protect the rights of employees and safeguard them from exploitation. These laws cover various aspects such as working conditions, wages, benefits, and safety standards in the workplace.

Compliance with labour laws is mandatory for all organizations, and failure to adhere to these regulations can result in serious consequences. These may include fines, penalties, legal action, damage to reputation, breach of contracts, and in severe cases, closure of the business.
Labour law compliance involves more than just filing returns; it requires maintaining accurate records that serve as evidence of adherence to these laws. These records must be readily available for inspection by authorities to demonstrate compliance and address any discrepancies promptly.
Different labour laws apply to specific industries or types of employment, while others are universally applicable across all organizations. It is essential for employers to stay updated with these laws and ensure strict adherence to avoid legal liabilities and maintain a harmonious workplace environment.
Compliance for employees is a critical aspect of maintaining a lawful, ethical, and safe workplace. It refers to the adherence to laws, regulations, and company policies that govern employee behaviour and company operations.
Compliance for employees involves understanding and following the legal and organizational rules that apply to their job roles. This includes areas such as workplace safety, data protection, ethical conduct, and equal employment opportunities. Every employee, regardless of their position, is expected to comply with these standards.

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What is Contract labour compliance?

Contract labour compliance refers to ensuring that all contractual arrangements and engagements with temporary or contingent workers comply with relevant laws, regulations, and agreements. This typically involves adhering to labour laws, employment regulations, tax obligations, and contractual terms specific to temporary or outsourced labour. Compliance ensures that both the employer and the contracted workers are protected legally and ethically throughout the engagement.

Engagement of contract labor

The contract labour (regulation & abolition) act, 1970 (act) permits companies and establishments in the manufacturing and services sectors to engage contract labour through contractors. Such an engagement can be only for work that do not form part of the core operations, which is guided by the memorandum of association of the company.

Contract labour management checklist

Key points to consider while selecting the contractor:

Compliance with CLRA
Ensure strict adherence to the provisions outlined in the contract labor (regulation and abolition) act, 1971, including registration requirements and compliance with statutory obligations.
Vendor selection Conduct thorough due diligence when selecting contractors, considering factors such as reputation, compliance history, financial stability, and track record of ethical conduct.
Compliance training Provide regular training and awareness programs to contractors and their employees on relevant labour laws, regulations, and compliance requirements to ensure understanding and adherence.
Regular audits and monitoring Conduct regular audits and monitoring of contract labour engagement to ensure compliance with contractual agreements, labour laws, and organizational policies, and take corrective actions as necessary.

Engaging contracted labour under the purview of the contract labor (regulation and abolition) act, 1971 (CLRA) provides organizations with flexible resources and helps mitigate fixed costs for principal employers. While the benefits of contracted labour are numerous, it also entails significant responsibilities. Organizations employing contracted labour must prioritize implementing a robust contract labour management system to effectively manage these responsibilities and mitigate principal employer liabilities.

Contract labour (regulation and abolition act), 1970: The highlights

Applies to all firms registered in India
Applicable to every establishment in which twenty or more workmen, art employed or were employed on any day of the preceding twelve months as contract labour.
This is also applicable to every contractor who employs or who employed on any day of the preceding twelve months twenty or more workmen
The Act does not apply if an establishment carries out casual or intermittent work, not exceeding 120 days in the preceding 12 months.
The establishment cannot be considered intermittent if work is (seasonal) and performed for more than sixty days in a year.

Services help you with contract labour laws compliances

Ensuring procurement of a registered certificate that comes under the contract labour act

Ensuring registration under the PF and ESI acts

On-time payment of salaries, wages, bonus, perks, leave wages, gratuity etc. to employees/labour employed on contract basis

Efficient maintenance of records & registers according to the minimum wages acts

Hassle free environment in engaging contract workforce

Expert consultation for decision making

Help in registrations of Fresh / Renewals / Amendments under the Act.

Handling Licenses – Fresh / Renewals / Amendments.

Remittances of ESI, EPF & LWF contributions for contract workers.

Accident-related compliance for contract workers.

Assistance at the time of inspections.

Regular reviews and feedback sessions between TalentPro and your organization are crucial for fine-tuning the RPO process and ensuring it aligns with your goals.

When a client engages with us, we conduct a comprehensive initial audit to assess the status of statutory compliance across all the state acts within the organization. Subsequently, we prepare a detailed audit report that is submitted to the client. This audit reveals both strengths and weaknesses in compliance and outlines a clear plan for moving forward with statutory and HR compliance initiatives. Based on these findings and consultations with the employer, TalentPro then proceeds with further activities to ensure compliance with all statutory and labour laws, tailored to meet the needs of organizations of all sizes – small, medium, or large.