Contract Labour Deployment in India: Future Insights Under the Code on Occupational Safety & Health

The business of human resource deployment by contractors for their clients has grown and evolved globally. In India, the contractor-sourced industrial workforce grew by about 293% between 2002-03 and 2021-22.[1] Recently, India has unfurled four labour codes that revamp its existing labour laws to meet the needs of the Indian workforce such as contract labour deployment.

The Contract Labour (Regulation and Abolition) Act, 1970 (“CLRA”) predominantly constitutes the applicable law on contract labour in India. It will be replaced by the Code on Occupational Safety, Health and Working Conditions, 2020 (“OSH-Code”) from a date, pending to be notified (“Effective Date”). This article seeks to evaluate the material reforms introduced by the OSH-Code regarding contract labour deployment:

a. Revised Applicability Threshold: The OSH-Code has increased the applicability threshold of contract labour related compliance to engagement of at least 50 contract labour personnel, as opposed to 20 under the CLRA, in the preceding 12 months. Thus, all contractors supplying, or establishments engaging, up to 49 contract labour personnel in the said tenure will be exempt from contract-labour specific compliance under Chapter XI of the OSH-Code.

b. Contract Labour: The OSH-Code has included the following in the scope of “contract labour”: (i) inter-state migrant workers, (ii) working journalists, (iii) sales promotion employees, and (iv) any person employed in an operational capacity. Further, any person regularly employed by the contractor for its establishment on mutual terms and drawing standard labour-like benefits will not qualify as “contract labour” (“Contractor Employees”). The said scope may change the status of certain personnel to contract labour from the Effective Date.  Accordingly, all contractors should revisit their existing and potential arrangements with their clients as well as personnel and vice versa (“Relevant Arrangements”), to ensure that the Relevant Arrangements are OSH-Code compliant from the Effective Date.

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