Are Indian Workers Disposable?

Contract Labour Exploitation in India: A Legal and Ethical Crisis

In India’s ever-evolving employment landscape, a troubling trend has taken root—the exploitation of contract labour. Employers, keen on minimising costs and responsibilities, increasingly turn to contract workers in place of hiring permanent employees. While contract labour is legally permitted and sometimes necessary for temporary or non-core tasks, its misuse to sidestep statutory obligations has become alarmingly common.

The Nature of Exploitation

Contract workers often perform the same duties as permanent employees, yet they remain deprived of comparable wages, benefits, and job security. Denied access to healthcare, paid leave, social security, and protection against arbitrary termination, these workers are vulnerable to exploitation and occupational hazards.

According to the Periodic Labour Force Survey (2022–23), more than 25% of workers in the organised sector are employed through third-party contracts. Yet, many of them work year after year in the same roles, without permanency, pay parity, or benefits.

Legal Framework: The Contract Labour (Regulation and Abolition) Act, 1970

The Contract Labour (Regulation and Abolition) Act was introduced to regulate the employment of contract labour and ensure their welfare. However, its implementation has been patchy. The law empowers the appropriate government to prohibit contract labour in certain conditions, especially when the work is perennial and integral to the establishment.

But the Act falls short in one critical area—it does not automatically absorb contract workers into the principal employer’s workforce, even when their engagement is found to be a sham. The burden of proof lies heavily on the worker, who must approach the court for relief.

Judicial Intervention and the Challenge of Sham Contracts

The judiciary has played a pivotal role in addressing this exploitation. However, each case requires detailed factual inquiry, making the process time-consuming and uncertain.

Key Case Law Examples:

1. Air India Statutory Corporation v. United Labour Union (1997): The Supreme Court held that if the contract is a sham or camouflage, the workers should be treated as employees of the principal employer. This was seen as a progressive move towards labour protection.
2. Steel Authority of India Ltd. v. National Union Water Front Workers (2001): This judgment diluted the effect of Air India, ruling that even if contract labour is abolished under Section 10 of the Act, the workers cannot be automatically absorbed. They must prove that the contract was not genuine—a major setback for contract workers.
3. Hindustan Steelworks Construction Ltd. v. Commissioner of Labour (1996): The Court emphasized that long-term engagement of contract workers on core activities indicates a sham arrangement and is an attempt to evade statutory responsibilities.

While these judgments have helped outline principles, they offer no blanket remedy, and litigation takes years to conclude. In practice, this legal uncertainty benefits employers and leaves contract workers in a vulnerable position.

Ground Realities and Statistics

• In 2021, the Indian Railways faced protests when over 4,000 contract workers across various zones demanded regularisation after years of continuous service.
• In the automobile sector, contract workers constitute up to 70% of the workforce in certain companies, performing the same duties as permanent employees but earning half or even less.
• A 2023 survey by the Centre for Labour Research found that 62% of contract workers in the manufacturing sector had been working in the same role for over three years with no benefits or permanent status.

The Way Forward

There is an urgent need for legislative reform to protect contract labourers more effectively. Key recommendations include:

• Statutory clarity: Define parameters under which contract labour is presumed to be a sham, shifting the burden of proof to the employer in such cases.
• Time-bound adjudication: Establish labour tribunals with fixed timelines for determining the legitimacy of contract labour arrangements.
• Equal pay for equal work: Enforce this constitutional principle strictly across all sectors where contract workers perform similar duties as permanent staff.
• Stronger enforcement: Empower labour inspectors and worker unions to report and act against exploitative arrangements.

Conclusion

The use of contract labour, when misused, becomes a form of modern-day bonded labour, devoid of dignity and fairness. While judicial intervention has offered sporadic relief, relying on litigation alone is neither sustainable nor just. India needs a proactive, rights-based approach to labour reform—one that balances flexibility for employers with dignity, equity, and protection for workers.

Until then, the line between employment and exploitation will continue to blur, one contract at a time.

ALT INDIA LEGAL