The Telegraph
Since 1st March, 1999
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Better deal in contract job legislation

New Delhi, Aug. 6: In a controversial move, the government is planning to bring in a new contract labour legislation that will allow employers to hire skilled personnel on contract at wages seven times higher than currently allowed.

The new law will also permit central government establishments, including essential services, to hire contract labour.

The draft legislation, which will amend existing regulations, has been agreed upon by a high-powered group of ministers on labour, which includes Planning Commission deputy chairman K. C. Pant and labour minister Saheb Singh Verma.

The law proposes to raise the upper wage limit for contract labourers from Rs 500 a month to Rs 6,500 in order to allow employers to hire skilled workers on contract.

The revised upper limit will be subject to review every five years. Contract workers can be used in a wide range of activities, which include security, transport services such as aviation, roads and rails, courier services and maintenance of plants and machinery, besides the traditional areas like construction, gardening and cleaning.

Interestingly, a official noting on the issue says this has been done to “improve the willingness of principal employers to utilise the services of contractors”. The act will see to it that principal employers are not unnecessarily harassed by establishing a linkage between the workers hired by a contractor and the principal. This will restrict the responsibility of a principal to a contract labour “only through registered contractors.”

While industry lobbies will be pleased by this, trade unionists and rights groups are unlikely to take to this kindly. “This means that if a contract worker dies in an industrial tragedy, the principal employer can go scot-free without paying any compensation. It will boil down to the contractor who, too, can disappear. He is unlikely to have assets that could be seized for compensation payments,” said CPM MP Nilotpal Basu.

Employers may be jailed for up to six months for violating the Contract Labour Act but only if they continue to do so for more than a year.

The government, under the proposed law, will also have to appoint a senior officer who alone can register and enquire into complaints on contract labour. The government says this has been done to stop harassment by junior officials and inspectors.

However, the new law will give contract workers some welcome benefits: they will now be eligible to claim overtime at twice the normal pay rate and a minimal retrenchment compensation at the rate of 15 days’ pay for every year served. GoM sources said that there is disagreement on this issue with some ministers insisting that compensation should be equivalent to 45 days’ wages. However, contract labourers now do not even have the right to a 15-day compensation unless it is written into their contracts.

The new legislation will also make compulsory registration of contractors to partially check some of the frauds that can take place.

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