2. Contract Labour in India: In Law and Public Policy

As largely seen in practice in China, refer Chap. 5.

Also, defined as primary and secondary control, by the Supreme Court in IAAI versus IACWU (2009) (13 SSC 374, pp. 387–388).

For details on legal provisions under the constitution and judicial interpretation see, Gopalakrishnan and Mirer (2014).

The Constitution of India in the 7th schedule delineates legislative power into central, state and concurrent list. The concurrent list constitutes the powers which can be both considered by the central and the 29 state governments of India.

The provision for equal pay and benefits for equal work is provided in the rules (and not the act) and that too only as a condition of issue of licence to the contractor.

The original act covered mostly factories and had delegated the power to the appropriate government to extend the provisions of this act to any other establishment or class of establishments, industrial, commercial, agricultural or otherwise [Section 1(5)]. Thus with the passage of time, more and more establishments have been covered.

See Section 95(2)(ef) of ESI Act.

The number of weeks was raised to 26 from 12 by the Maternity Benefit (Amendment) Act, 2017, making India provider of third longest paid maternity leave in the world after Canada (50) and Norway (44). See, http://​www.​bbc.​com/​news/​world-asia-india-39227964 (accessed on 28 January 2018).

Added by the Factories (amendment) Act, 1976.

ibid.

Section 25-B of the IDA, terms engagement without break of 240 days (195 days for mines) including period on paid leave, disability leave, as equivalent to one year of continuous engagement.

Inserted by the Trade Union (amendment) Act, 2001.

The right provides certain exceptions, for details see, the Constitution of India (part.III).

For details on the structural analysis of labour laws see; Kumar (2013).

Part of the analysis was published by the author with the title ‘A structural analysis of Indian contract labour laws’, This work took on board the writings of Wesley Newcomb Hohfeld (1879–1918) who was an American jurist whose two essays on jurisprudence published in Yale Law Journal in the years 1913 and 1917, found acceptability in legal circles for analysis of law.

For details see the Contract Labour (R&A) Act, 1970 & Rules, 1971, available at, Ministry of labour and employment website at URL http://​labour.​gov.​in/​content/​innerpage/​labour-welfare.​php.

Shastree (2013, p. 6) the author has cited that paltry fines like Rs. 200/- or even less make a mockery of labour law entitlements.

ibid, p. 6.

See, Kumar (2012): Contract Labour—Regulation and abolition act and rules, p. 288.

Even before the promulgation of the Contract labour (R&A) Act, in the case of Standard Vacuum Refinery Company—versus—their workmen (1960 AIR 948; 1960 SCR (3) 466) the Supreme Court observed that contract labour should not be employed where the work is perennial, or of core nature, or when the work is sufficient to employ considerable number of whole time workers or where work mostly concerns regular workmen.

Some of these discrepancies were raised by Ramapriya Gopalakrishnan in her address at the one-day conference on ‘Contract labour in India: Issues in law and public policy’, held at JNU, New Delhi (21 April 2014).

See the MOLE Annual report (2009–10).

For details, see http://​www.​indialabourstat.​com/​labourandworkfor​ce/​380987/​labourcourts/​151/​stats.​aspx (accessed on 21 December 2014).

See Section 2(2).

The Worker’s Compensation Act has been renamed as the Employee’s Compensation Act.

The original Act covered mostly factories and had delegated the power to the appropriate government to extend the provisions of this Act to any other establishment or class of establishments, industrial, commercial, agricultural or otherwise [Section 1(5)]. Thus with the passage of time, more and more establishments have been covered.

There is no fixed period for revision of such limit in the laws. The limit for ESIC was Rs. 15,000 ($224) up to 31 December 2016, Rs. 10,000 ($150) up to 30 April 2010, Rs. 7,500 ($112) up to 30 September 2006 and Rs. 6,500 ($97) p.m. up to 31 March 2003 ($1 = Rs. 66.8).

At some Sections like 40, 44, 73A (Chapter V-A), the term principal employer has been used.

See Section 95(2)(ef) of ESIC act.

The penalty under Maternity act for breach has been weakly formulated. The act provides for punishment with imprisonment which may extend to three months or with fine which may extend to five hundred rupees or both (Section 21).

The penalty as per EPF act is imprisonment up to three years or a fine of up to Rs. 10,000 ($150) (Section 14).

With effect from 01 September 2014, the wage ceiling for EPF deduction is Rs. 15,000/- ($224) per month. The same is expected to be revised at par with the ESI wage ceiling of Rs. 21,000/- ($314) per month. For details, see http://​www.​financialexpress​.​com/​money/​good-news-epf-cover-wage-limit-to-be-raised-from-rs-15000-to-rs-21000/​957142/​ (accessed on 28 January 2018).

Added by the Factories (amendment) Act, 1976.

ibid.

The act has been elaborated in detail in Chap. 4 on collective bargaining.

See Sections 2 (kkk), 25C, 25D and 25M.

See Sections 25B, 25C, 25F, 25FF.

Inserted by amendment of 1976, prohibits lay-off without prior permission of the Government.

The act has been also dealt in the Chap. 4 on collective bargaining.

The Planning Commission of India has recognized that the Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 197, in the present form has been not implementable and needs revision. For details, see MOLE Working Group Report on ‘Labour Laws & Other Regulations’ (2012).

The Act does not recognize a worker from another state as ‘migrant’ who reaches the job site by self.

The reference point of 2001 has been taken on account of the Supreme Court judgment in the case of Steel Authority of India—versus—National Union Waterfront Workers (7 SCC 1, 42-63, 2001), where the court diluted workers’ claim for absorption on abolition of contract labour.

See, Singh (2000): Judicial Intervention in the Contract of Employment—Some Reflections on Labour Adjudication in India.

For identifying whether a contract is a ‘sham contract’, the court has later laid that this can be found by looking at the employer–employee relationship and the actual nature of contract by examining facts like who exercises the primary control on the employees through wage payment and supervision.

In contrast as elaborated in the Chinese case study in Chap. 5, the 2008 Chinese Labour Contract law provides for unlimited contract after second extension besides providing avenues for job progress and skill development.

For details, see Jann and Wegrich (2007): Theories of the policy cycle. In, Fischer, Miller and Sidney (Eds.) (2007): Handbook of Public Policy Analysis: Theory, Politics, and Methods.

The Indian National Congress since its formation was very active in taking up the cause of labour. The passage of the Workmen’s compensation Act, 1923 and Trade union Act, 1926 by the British-India government was due to its relentless efforts. At the Karachi session, 1931, the Indian National Congress (INC) passed a resolution seeking safeguarding the interests of workers by legislation and other means.

The first session of the Indian Labour Conference was held in January 1940. The 47th meeting of the ILC is slated to be held in 2018.

The 1991 policy states that except for some strategic and military considerations, the government intends to end the monopoly of any sector or an individual enterprise. For details, see Statement of industrial policy, Department of Industry, Government of India, 24 July 1991 at http://​dipp.​nic.​in/​English/​Policies/​Industrial_​policy_​statement.​pdf (accessed on 12 April 2015).

Please see https://​economictimes.​indiatimes.​com/​news/​economy/​policy/​india-may-have-a-new-industrial-policy-in-two-months/​articleshow/​62964359.​cms (accessed on 22 February 2018).

See Report on the working conditions of Contract Labour, Labour Bureau (2000–01), Chap. 1.1; also see report of 1st National commission on Labour (1969), Section 29.6, pp. 418–419.

The policy on labour market in the pre-liberalization period kept on wavering as can be seen in the policy of recruitment of class IV workers and policy on casual workers in government departments. Since independence, recruitment in class IV were several times banned and restored (See, Ministry of Home Affairs OM dated the 24 September, 1958, August 1977, 21 March 1979 and 07 June 1988, Also see, Ministry of Finance OM No. F. 10 (15)-E.Coord./67 dated the 23rd September, 1967, etc.) (see, Ministry of Home Affairs/ Finance circulars on casual labour, also available at  http://​contractworkersf​ordignity.​blogspot.​in/​, accessed on 27 September 14).

Unlike Contract labour system, casual workers enjoyed weekly paid holidays, somewhat fixed tenure, direct payment and permanency claims on two years of regular engagement. Casual employment which was formalized by the Ministry of Finance order No. F. 8 (2)–Est (Spl)/60 dated 24 January 1961, sought for minimum wages and preferential appointment at the time of open recruitment for regular workers. The term for preferential appointment was fixed as two years by subsequent orders of the Ministry of Home Affairs in 1966, and was later reduced to 240 days (206 days for establishments having 5 days a week) of engagement including broken period in-between. The casual worker scheme continued up till about 1993, i.e. till the launch of Casual labourers (grant of temporary status and regularization) scheme by the Ministry of Personnel, Public Grievances and Pensions (Dept. of Personnel and Training), thus lakhs of casual workers were gradually regularized through the casual route (See, ibid.).

The policy was targeted for a yearly cut of 1/3 of vacant posts in all ministries, departments and autonomous bodies. For details, refer Ministry of Personnel, Public Grievances & Pension, MHA, Office Memorandum No. No.2/8/2001—PIC dated 16 May 2001, 30 August 2006 and 09 April 2009.

The Sixth Pay Commission for the first time laid wider emphasis on contractual engagement in government at every level. For details, see http://​finmin.​nic.​in/​6cpc/​6cpcreport.​pdf (accessed on 27 September 2014).

For details on GFR, see http://​finmin.​nic.​in/​the_​ministry/​dept_​expenditure/​gfrs/​GFR2005.​pdf (accessed on 27 September 2014).

See http://​mnregaweb4.​nic.​in/​netnrega/​all_​lvl_​details_​dashboard_​new.​aspx (accessed on 27 February 2018). For other details on the scheme, see http://​Nrega.​nic.​in.

The Economic survey, 2018, reports that among the beneficiaries of MAGNREGA 54% were women. See http://​mofapp.​nic.​in:​8080/​economicsurvey/​ (accessed on 27 February 2018).

Skill India mission aims to develop the institutional capacity for skilling 300 million people in different schemes by 2022. See National skill development mission: A framework for implementation, p. 3, http://​www.​skilldevelopment​.​gov.​in/​assets/​images/​Mission%20​booklet.​pdf.

Make in India is a major policy initiative designed to make India a global designing and manufacturing hub by improving ‘ease of doing business’ environment in the country. Since the launch of the scheme, India has gained 42 ranks from 142 in 2014 to 100 in 2018. See http://​www.​makeinindia.​com/​eodb (accessed on 27 February 2018).

For details, see http://​pmkvyofficial.​org (accessed on 27 February 2018).

For details, see https://​pmrpy.​gov.​in/​ (accessed on 28 February 2018).

For the draft Social security code, 2018, please see, https://​labour.​gov.​in/​sites/​default/​files/​SS%20​Code%20​2018-02-28%20​FOR%20​UPLOADING.​pdf.

Also see, https://​economictimes.​indiatimes.​com/​news/​economy/​policy/​government-readies-social-security-scheme-for-50-crore-workers/​articleshow/​63130835.​cms (accessed on 04 March 2018).

Simplification, rationalization and amalgamation of central labour laws into broad codes were part of the recommendations of 2nd National Labour Commission (2002).

Please see https://​economictimes.​indiatimes.​com/​news/​economy/​policy/​india-may-have-a-new-industrial-policy-in-two-months/​articleshow/​62964359.​cms (accessed on 22 February 2018).

For details, see Report of the Comptroller and Auditor General of India containing the results of performance audit of Implementation of Industrial Disputes Act, 1947 and Contract Labour (Regulation and Abolition) Act, 1970, Report No. 15 of 2007, p.v, Ministry of Labour and Employment, Government of India. http://​www.​prsindia.​org/​uploads/​media/​1237548159/​CAG%20​report.​pdf.

The provision for fixed-term employment contract was introduced in apparel manufacturing industries under the industrial employment (Standing Order) Act vide notification dated 07 October 2016. For details on the amendment proposal, see https://​labour.​gov.​in/​sites/​default/​files/​FixdTerm%20​Employment%20​for%20​all%20​sectors.​pdf (accessed on 10 February 2018).

Ibid., footnote 65.

Deakin and Haldar (2014) in their paper mainly study ‘dismissal protection’ as available under the Indian laws and the Gujarat Industrial Disputes Amendment Act, 2004, which replaces Section V-B of the Industrial Disputes Act making a provision of compensation in case of retrenchment or closure.

Some demographists have estimated that India has already crossed China in 2017; see https://​www.​nytimes.​com/​2017/​05/​24/​world/​asia/​china-india-population.​html. Further, whereas the working age (15–64) population in China is shrinking, the same is rising in India. In fact, China was compelled to scrap the one-child policy due to its ageing population after 35 years. For details, see https://​timesofindia.​indiatimes.​com/​world/​china/​china-working-age-population-shrinks-presenting-pitfall-for-pension-plans/​articleshow/​63111005.​cms&​https://​www.​theguardian.​com/​world/​2015/​oct/​29/​china-abandons-one-child-policy (all accessed on 06 March 2018).

The arable land area of India is 161 million ha versus China’s 130 million hectares; whereas the irrigated land area is 55.8 million ha to China’s 54.5 million ha. See, http://​www.​thehindu.​com/​todays-paper/​tp-opinion/​Agriculture-where-India-and-China-stand/​article14827791.​ece (accessed on 06 March 2018).

For details, see http://​businesstoday.​intoday.​in/​story/​what-took-china-ahead-of-india-and-what-keeps-it-ahead/​1/​201565.​html (accessed on 07 March 2015).

Also as seen during the field study (elaborated in Chap. 5), most Chinese workers were able to read and write.

For details, see Hanson (1997): What sort of capitalism is developing in Russia?

Refer Chap. 5 on fieldwork in Guangzhou, China.

As termed in India.

The ‘iron rice bowl’ was the term given for regular employment in military, civil services and state-run enterprises in communist China in which security from ‘cradle to grave’ was guaranteed by the state. The job security with steady income and benefits was part of the socialist ideology of communist China. (For details, see Kuruvilla et al. (2011).

The hukou system is controlled by the state which classifies people from their place of residence. The Chinese labour market is thus differentiated between urban and rural workers. For details, see Afridi et al. (2012).

For detailed statistics comparing India and china, see Srinivasan (2003): China and India: Growth and Poverty, 1980–2000. The rate of growth of India however remained slightly lower than China during the period 1950–1980. This dismal growth rate averaging 3.5% in India during the planned period (1950–1980) was also called the Hindu rate of growth.

Ibid, in fact India was slightly better placed in per capita GDP.

Kohli (2012) argues that the talk of socialism was only rhetoric and the Indian state was even pro-business in pre-liberalization period.

The slow movement in liberalization by the Indian state has been often criticized by the liberal protagonists as detrimental to India’s all-round progress; however, at the same time the same sometimes has been lauded for absorbing the shocks of economic depressions. See Bhatt (2011): Recent global recession and the Indian economy: an analysis.

For full story on the liberalization of the Indian economy, see Kohli (2006): Politics of economic growth in India, 1980–2005, part-I and II.

For statistical and other details on decline of the SOEs and rise of private sector in China, refer Lee (2005): Livelihood struggles and market reform: (Un)making Chinese labour after state socialism.

Feng Xu (2014): Temporary work in China (p. 146). In, Fudge and Strauss (2014): Temporary work, agencies and unfree labour- Insecurity in the new world of work.

It is estimated that the cost of engaging Chinese rural migrant workers is only about 40–55% to the cost of engaging Chinese urban workers due to the prevalence of the hukou system which prevents the migrant workers from claiming equal status to that of the local urban hukou. For details, see Leong and Pratap (2011): China’s Capitalist Development and its Implications for Labour with Special Reference to the Shenzhen SEZ.

In 1980, the flow of FDI into China totalled less than $200 million (US dollars) which exceeded $44.9 billion, i.e. more than 225 times in 1997. Coughlin and Segev (1999).

For details, see full text of the ‘Report of the work of government’ presented by Premier Wen Jiabao (05 March 2011) at http://​english.​cpc.​people.​com.​cn/​66102/​7320564.​html.

The net reduction in poverty figures is estimated to be 800 million persons since initiation of reforms in China. For details, see www.​worldbank.​org/​en/​country/​china/​overview (accessed on 06 March 2018).

See http://​www.​in.​undp.​org/​content/​india/​en/​home/​post-2015/​mdgoverview.​html (accessed on 06 March 2018).

See https://​unu.​edu/​publications/​articles/​redefining-poverty-in-china-and-india.​html (accessed on 06 March 2018).

Full text of the law may be seen at https://​www.​ilo.​org/​dyn/​natlex/​docs/​ELECTRONIC/​37357/​108026/​F1930029246/​CHN37357%20​Eng.​pdf (accessed on 09 March 2018).

In China, the third-party workers are often called ‘agency labour’ or ‘outsourced labour’, whereas the term ‘contract labour’ is used for workers on fixed-term contract.

For the Labour Promotion Law, 2008, please see https://​www.​ilo.​org/​dyn/​natlex/​docs/​MONOGRAPH/​76984/​81380/​F1735089926/​76984.​pdf (accessed on 11 March 2018).

Though largely devoted for creating employment opportunities, the Chinese Labour Promotion Law, 2008 especially Chapter III on fair employment remind of the Directive Principles of state policy Chapter III (Articles 16, 19, 21, 23 and 24) and Chapter IV (Articles 39, 39-A, 41, 42, 43, 46, 47 and 54), related to labour matters enshrined in the Constitution of India.

Karindi (2008, p. 13) cites several sources to indicate that many foreign-owned enterprise especially those of Hong Kong, Taiwan and South Korea have either fled China by night or are planning to close their business since the passage of the 2008 labour laws.

Lan et al. (2015) narrate employers’ strategies including lay-off, re-engagement on short/fixed terms, abridging contracts, adopted by firms to deal with the 2008 laws. The authors point out cases in 2008 just before the promulgation of the Labour contract law, where many firms terminated fixed-term contracts of long-term workers and engaged the same workers through dispatch firms.

The total number of cases settled by Labour Dispute Arbitration Committees (LDACs) more than doubled from 340,030 in 2007 to 711,044 in 2014, the number of cases resolved by LDACs through mediation nearly trebled in the same period, increasing from 119,436 in 2007 to 321,598 in 2014. See China Labour Bulletin, http://​www.​clb.​org.​hk/​content/​china%E2%80%99s-labour-dispute-resolution-system (accessed on 11 March 2018).