New Delhi: The labour ministry proposes to change laws to protect wages and welfare benefits of contract workers, even as trade unions call for a ban on contract?hiring for regular jobs.
The ministry plans to amend the Contract Labour (Regulation and Abolition) Act, 1970, which will allow labour commissioners and other appropriate authorities to fix minimum wages for workers employed as seasonal hires, a ministry official said. He declined to be identified because the proposed amendment will have to seek a cabinet approval before it’s introduced in Parliament.
Contract workers are those hired en masse by a contractor, who is paid a fee by an employer. The contractor has the responsibility of paying the workers their wages and other benefits.
No accurate data exists on how many such workers are employed by Indian industry and government departments, but the ministry estimates that they make up nearly 28% of India’s 459 million workforce.
The official said while there is a rule that contract workers be paid equal wages as regular employees for equal work, it is routinely violated. “The proposal to bring this rule into the Act will curb violation and ensure that contract workers get the same wages and benefits as a regular employee,” he said.
However, trade unions are opposed to organizations hiring contract labour. “Companies are increasingly hiring contract workers and violating guidelines on wage payments and other work conditions,” said R.V. Subba Rao, vice-president of Bharatiya Mazdoor Sangh. “A ban will put an end to this exploitative system.”
The labour ministry also proposes a change in India’s contract law that will require all companies to mention wages paid to workers in the formal contract signed between companies and contractors who supply them the workers.
The government last year established a tripartite committee of bureaucrats and employers’ and workers’ representative to resolve the contentious issue. The group failed to arrive at a consensus in the six rounds of discussions held since July.
The amendment has been proposed after talks failed on several grounds, including whether companies or their contractors should take charge of payment of social security, such as provident fund and health insurance.
Employers’ representatives have held that labour contractors should bear the responsibility to disburse welfare payments. Trade unions have said companies must make the payments as specified in the provident fund and the employees’ state insurance laws. Current legislation does not specify who should pay social security benefits.
The biggest opposition to reforming the contract law has come from employers. According to proceedings of the tripartite group talks available with Mint, Michael Dias, who represents employers, maintained that the existing law provided for all “contingencies” for hiring contract workers and was “bereft of any exploitation as alleged by trade unions”.
Employers have also opposed the ministry’s proposal to appoint a third party to decide wages of contract worker.
Dias stressed that firms do not employ contract workers for the same activity as regular workers in assembly production. The bigger problem, he said, was the government’s failure to implement the existing law.