Labour Laws

Key Highlights of the CLRA Act

calendar08 Jul, 2022
timeReading Time: 4 Minutes

The Contract Labour (Regulation & Abolition) Act, 1970′ also known as the “CLRA Act”, was established to control the employment of contract workers in certain establishments. The primary purpose of this Act is to prevent the exploitation of the contract workers rights and introduce better working conditions for them. A worker is deemed employed as a Contract worker when hired through the contractor. In addition, the contract workers are indirect workers, they differ from direct workers in terms of the employment relationship with the establishment, a contract worker is a daily wager, and the contract workers are accumulated & provide at the end of the month. The contractor’s role is to hire, supervise & remunerate the contract workers. We will focus in this article only on the Key Highlights of the CLRA Act.  

The Purpose of the CLRA Act

Following are the primary purpose of the CLRA Act are:

  • To stop the exploitation of contract workers rights.
  • To provide excellent and proper working conditions to the contract workers.
  • To control the functioning of the Advisory boards.
  • To state the essential requirements and the process of licensing contracts.
  • The Act set up the rules and regulations regarding the registration procedure for employing contract workers.

Applicability of the CLRA Act, 1970

Section 1(4) defines the establishments where this Act will be applicable:

  • If twenty or more workers are employed in any establishment or were associated as contract workers on day during the preceding 12 months.
  • Any contractor employs /employed twenty or more workers as contract workers on any day of the preceding twelve months.
  • The Act applies to all establishments if workers are employed as contract workers. Section 2(b) of this Act states that a worker is deemed to be employed as a contract worker when they are hired in or in connection with such work by a contractor without or with the knowledge of the principal employer.
  •  This Act does not apply to any establishment or organisation where any work of casual or intermittent nature is performed.
  • This Act does not apply to a person appointed in a managerial and advisory capacity.

Composition of the Advisory Boards under the CLRA Act

The establishment and composition of the Central & State Advisory Boards mention under Chapter 2 of the Contract Labour (Regulation & Abolition) Act, 1970[1]. The main functions of the boards are to advise the Central & State governments on the issues regarding the administration of the CRLA Act and to carry out all the essential functions assigned under the CLRA Act.

Central Advisory Board

The Central Board shall consist of:

  • The Central Government appoint the Chairman of the Board;
  • The Chief Labour Commissioner (Central), and
  • The Central Government shall nominate 11 to 17 members to represent the government, coal industry, railways, mining industry, contractors, workers and members from other areas that, in the opinion of the Central Government, ought to represent on the Central Advisory Board.

State Advisory Board

The State Board shall consist of:

  • The State Government appointed a chairman of the board;
  • The Labour Commissioner of that State, and if he is absent, any other officer will be nominated by State Government.
  • In addition, the State Government may nominate 9 to 11 members to represent that government, contractors, workers, industry, and members from other areas, which in the opinion of the State Government, should be represented on the State Advisory Board.

Licensing of Contractors under CLRA Act

In Chapter 4 of the CLRA Act, 1970 mention the vital requirements & the procedure of licensing contractors. In chapter 4, we will study the required steps for grant, revocation, suspension and amendment of License.

  • Appointment of licensing officers: By an order in the Official Gazette, the appropriate government may appoint Gazetted Officer of the government as licensing officer & state their functions & powers under Section 11 of the CLRA act.
  • Grant of the Licences
  1. All the applications for the grant of a license under Section 12(1) shall be made in the prescribed form. They shall contain the particulars regarding the map location of the establishment, the nature of the operation, process, or work for which the contract worker is to be employed & such other details as may be prescribed.
  2.  The licensing officer may take the investigation in respect of the application received, and in bringing such investigation, the licensing officer shall follow the procedure as prescribed.
  3.  A license grant under this chapter shall be valid for the time specified therein and may renew from time to time.
  • Grant, Revocation, Suspension and Amendment of Licenses: However, if it comes to the knowledge of the licensing officer that a license has been getting by misrepresentation and suppression of any material fact or the license holder has failed to fill the conditions subject to granting of the License or contravened any provision of this Act then the licensing may revoke, suspend or amend the License.

Welfare and Health of Contract Worker under CLRA Act

As per chapter 5 of the Act, the principal employer has to ensure that the contractor provides facilities adhering to the appropriate government’s rules.

  • If the contractor employs 100 or more workers by contract worker, then one canteen shall be available on the worker premises and maintained by the contractor for the use of such contract worker.
  • The contractor must provide and maintain a restroom or other facilities that can be sufficiently clean, lighted, ventilated and comfortable in the case of an establishment where contract workers must halt at night.
  • The contractor is also responsible for providing other facilities like drinking water, bathroom (separate for men & women), first aid, etc.

Recommendations under CLRA Act

This Act is an essential legislature to protect the rights of workers appointed as contract workers by a contractor.

  • The Act fails to state a difference between peripheral and core activities that have led to non-implementation.
  •  The Act applies to every establishment employing 20 or more than 20 contract workers. Thus it enables the contractor to avoid their liabilities regarding the welfare of the workers by employing less than 20 workers.
  • The penal provisions of the Act are not deterrent enough, so it enables the principal employer to rather face prosecution instead of following the requirements of the Act.
  • Under the CLRA Act, the education scheme for contract workers should be extended because most workers are illiterate, unskilled and ignorant of their rights.
  • There is no independent or direct provision under this Act for filing claims or short or non-payments; illegal deduction in payment, etc.; these claims are filed under the Minimum Wages Act,1948 or the Payment of Wages Act, 1936 that create issues regarding the applicability of these Acts. Hence, it should include these provisions for the better functioning of the Act.


The CLRA Act, 1970 was enacted to prevent the exploitation of contract workers as no existing legislation deals with contract workers. In addition, the Authority must consider certain shortcomings of the Act, and essential changes should be made & implemented.

Read our Article:Contract Labour Act: A Synopsis of Key Provisions

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