Outcome of the Study on Proposed and Required Amendments in CLRA

In order to facilitate ease of doing business, some of the states are reviewing various labour laws. One such law is the Contract Labour (Regulation & Abolition) Act, 1971. Various states like Rajasthan and Haryana have increased the threshold limit for obtaining registration by the principal employer under CLRA. At the same time the labour ministry is also proposing various amendments in the Act. One of the proposed amendments is the proposed monthly minimum wage of Rs.10,000 for contract employees.

TeamLease has always been a thought leader in the space of labour law reforms and policy changes. Our endeavour has always been to help build a cohesive labour law and compliance ecosystem. In this regards we work closely with both Corporate India and Public policy makers by highlighting the key areas which require reform and changes. In this regard, we reached out to Corporate India to understand their views on the proposed and required changes in CLRA. Below are the key findings:

  • With regards to the threshold limit of 20 contract employees per establishment for Principal Employer to obtain a registration under CLRA which is still applicable for majority of states, 87.1% of the respondents feel it is unrealistic. Nearly 63.6% of the respondents were of the view that this should be increased to 100 employees across multiple establishments anywhere in the country and only a single registration should be required. Another 23.5% were of the number this number should be increased to 300 employees.
  • On the Labour Ministry’s proposal to have a separate minimum monthly wage of Rs.10,000 for contract workers, the opinion is largely divided. 52.3% of the respondents think it is not required and employees should be paid based on nature of work irrespective of contract or permanent employees. However 42.4% of the respondents do feel it is required to ensure that contract employees earn a minimum decent minimum wage and their interest are protected.
  • Large majority of the respondents have a strong concern on the implications of these proposed minimum wages. 82.6% agreed that the proposed guidelines are likely to encourage informal employment and adversely affect the small and medium enterprises as they may not be able to hire people at the prescribed minimum wages.
  • 75.8% also were of the view that the proposed guidelines can adversely affect employment in smaller states. It could take away jobs to larger cities where the minimum wages are at par with Rs.10,000 per month.
  • 86.4% of those polled believe that there should be a governance mechanism /licensing authority to facilitate grant of license to contractor post comprehensive due diligence. No contractor should be allowed to shall supply or engage contract labour unless they have a received a licence for the same from the said licensing authority.
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