New Delhi: Atask force set up by the government is reviewing a law regulating contract employment and will suggest ways to prevent exploitation of contract workers who, trade unions say, are often denied adequate wages, regular work hours and welfare benefits.

The six-member group, which will meet on 10 August, has representatives of employers, trade unions and the government. The meeting marks a step forward from the last such talk on the subject held at the Indian Labour Conference in February.

Contract workers are those hired en masse by a contractor, who is paid a fee by the 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 the Indian industry and government departments, but the labour ministry estimates that they make up nearly 28% of India’s 459 million-strong workforce.

Contract employment has often led to friction at workplaces, where employees often demand its prohibition, which managements resist. Graphics by Sandeep Bhatnagar / Mint

While firms view contract workers as a mainstay of a rapidly changing economy, trade unions have for long been insisting that these employees must enjoy the same benefits as regular ones and must have the right to job security.

At the Indian Labour Conference, employers pointed out that in order to remain competitive, firms must be allowed greater flexibility to outsource workers while states must implement the often-flouted minimum wage regulations for contract workers.

Employers favoured an amendment to the Contract Labour (Regulation and Abolition) Act, 1970, which prohibits employment of contract workers in certain core activities of an enterprise. The Union government has issued nearly 76 notifications banning employment of contract labour.

Employers also said that in a changing business environment, a separation of core and non-core activities is not possible and pointed to China’s contract law, which does not make such a distinction.

“There are two critical issues here: whether contract employment should be banned, which is not an option. So the (second) issue is whether a contract worker should be given all benefits, except security of tenure," said a labour ministry official, who declined to be identified.

Contract employment has often led to friction at workplaces, where employees often demand its prohibition, which managements resist.

This has led to two landmark court judgements: In 1996, the Supreme Court ruled in an Air India case that contract workers employed in jobs, which they are not supposed to hold, would automatically become regular employees. However, a 2001 court decision reversed the ruling in a separate case involving Steel Authority of India Ltd and the National Union of Waterfront Workers.

But as employment in the formal sector declines and companies increasingly prefer contract workers, concerns are growing about the welfare of such workers, who are mostly poor migrants with few privileges and bargaining rights, and even lesser choices when the number of unemployed, according to the government, stands at 10.8 million.

Vinod Kumar Sharma, a member of the contract law task force and working president of the Indian National Trade Union Congress in Chhattisgarh, said employers often violated the contract law and offered few facilities to contract workers. He cited the example of Bharat Aluminium Co. Ltd, or Balco, which is 51% owned by UK-based Vedanta Resources Plc.

Sharma said the number of contract workers in the firm had grown 10-fold, from 1,500 to 15,000, since it was disinvested by the Union government in 2001; at the same time, regular employment has fallen from 7,000 to 5,400.

Wages to contract workers range between Rs3,000 and Rs5,000 a month compared with Rs12,000-19,000 a month paid to a regular employee, said Sharma, general secretary of Bharat Aluminium Mazdoor Sangh, a union of Balco workers. Contract workers are also often deprived of benefits such as medical facilities.

Sharma said their canteen allowance was raised from Rs5 to Rs10 a day only three years ago, after workers protested. “Workers do not get equal pay for the same jobs. This violation is found in all kinds of public and private power and steel companies, as well as coal mines."

Ranjit Lal, Balco’s vice-president for human resources, refused to comment when reached on the phone. He did not reply to an email questionn aire sent by Mint.

G. Ramanand, who is also a member of the contract law task force and national secretary of Mumbai-based All Indian Manufacturing Organization, which has 10,000 employers as members, also said contract workers are unfairly treated. “Workers are exploited and they must get their statutory dues (wages, dearness allowance and gratuity)."