Contract Workers in Public Sector Undertakings

 

 

The recent struggle of the workers working at M/s ITI Ltd., Bengaluru once again brings to the forefront the question of contract workers and the conditions under which they are forced to work, especially in public sector undertakings and the Government. These workers like thousands of other workers in various public sector undertakings have been termed as contract workers and denied their most basic rights despite working for several decades.

The bane of contract labour system was recognized by the Supreme Court  as “an archaic system and a relic of the early phase of, capitalist production, which is now showing signs of revival in the more recent period”. The institutionalization of contract labour in both public and private establishments, received a great impetus in the early nineties which saw the advent of policies of liberalization, privatization and globalization (LPG) in the country. Over time, this system has steadily grown and become one of the biggest contributors to the continuance and growth of inequality in the country. This archaic system is today once again finding new methods of perpetuation.

According to the Public Enterprises Survey for 2019-2020, the number of contractual workers in CPSEs rose from 2,67,929 in March 2016 to 4,98,807 in March 2020. The data shows that the number of non-permanent workers and employees in CPSEs has rapidly increased since 2015-16, and account for 37% of the manpower of CPSE in 2019-20 compared to 19% in 2015-16. While, the share of daily-wage workers rose by 178% and that for contractual workers rose by 86% from 2015-16 to 2019-20 in Central Public Sector Enterprises, for the same period, the number of permanent employees reduced by 25% . Many of the PSUs that reported a large number of contractual workers and employees in 2019-20 didn’t have any or had very few contract workers in 2015-16 .

This trend of increased rise in the number of workers engaged as contract workers, and the fall in the number of permanent workers is not accidental, but very much part of the conscious policy pushed by the State. Workers are engaged as contract workers in all works including the core work of the organization, and work in such capacity for several decades without any security of tenure and stripped of their ability to bargain for their basic rights. It must be noted that a vast majority of the workers compelled to work as contract workers are those from historically oppressed communities, including Dalits and women.

Court Rulings against the contract system

The Supreme Court way back in 1960 in the case of Standard Vacuum Refinery Company Vs. their Workmen [AIR 1960 SC 948], was of the opinion that “industrial adjudication generally does not encourage the employment of contract labour in modern times…”. Similarly, in Catering Cleaners of Southern Railway and Ors. vs. Union of India and Ors. , the Supreme Court noted the 'primitive' and ‘baneful’ nature of the system of contract labour. It also expressed its surprise on the tendency of the organized sector including the public sector companies to get the work done through contractors rather than through their own departments, when, in fact, it is expected to function as a model employer.

In Sankar Mukherjee and Ors. vs. Union of India (UOI) and Ors , the Supreme Court noted that the contract labour system was nothing “but an improved version of bonded-labour”, and again expressed its surprise at the employment of workers through contract by public sector employees and held that “There is no security of service to the workmen and their wages are far below than that of the regular workmen of the company.”

In Gujarat Electricity Board v. Hind Mazdoor Sabha [(1995) 5 SCC 27] the Supreme Court again expressed its dismay over the continued use of contract labour by the public sector undertakings even where workmen could be employed by them directly and observed that “The only ostensible purpose in engaging the contract labour instead of the direct employees is the monetary advantage of reducing the expenditure. Apart from the fact that it is an unfair labour practice, it is also an economically short-sighted and unsound policy, both from the view of the undertaking concerned and the country as a whole”

Again, in 2011, the Supreme Court in Bhilwara Dugdh Utpadak Sahakari S. Ltd. Vs. Vinod Kumar Sharma Dead by L.Rs. and Ors. held that showing workers as employees of the contract is “a new technique of subterfuge” to “to deny the rights of the workmen under various labour statutes”  and categorically held that the “Court cannot countenance such practices any more. Globalization/liberalization in the name of growth cannot be at the human cost of exploitation of workers.”

On the question of employing contract workers by HAL, a Single Judge of the Karnataka High Court  articulated it most justly, in a judgment that was subsequently overturned by the Division Bench

“Hence, the moot question would be whether the respondent who is a public sector behemoth with a workforce of over 30,000 and a turnover of about 18,000 crores and engaged in developing technology to serve the defence of the country and also categorised as a navaratna company, could have resorted to employing labourers on contractual basis to execute services of a perennial nature? In the considered opinion of this court the only answer can be is a emphatic "NO", more so, keeping in view the enormous work and thousands of thousands of employees and thousands of crores of profits. More so in the light of the fact that the petitioners started working between the year 1974-1997 is not disputed. If that be so, even the latest entrant has put in two decades of services as on today and almost a decade of service even by the time the judgment in Umadevi's case came to be rendered.”    

However, this judgment was overturned and the position of contract workers continues to be precarious.

The Contract Labour Act and its watering down

The Contract Labour (Regulation and Abolition) Act 1970 which was brought in with the stated objective to abolish contract labour system in certain works as prescribed therein and to regulate the conditions of work, recognizes that the system of employment of contract labour lends itself to various abuses. Despite the passing of the law and the various judgments of the Supreme Court, the employment of contract workers not only continued, but in fact has increased, as seen above.

However, the law was substantially watered down by the Supreme Court, which in SAIL Vs National Union Water Front Workers and others [2001 LAB. I.C. 3656] overruled the judgment in AIR India Statutory Corporation Vs United Labour Union and Others [1997 LLR 305 (SC)]. While in Air India, the Supreme Court had ruled that by "necessary implication" the Principal Employer will be under statutory obligation to absorb the Contract Labour on abolition of the Contract Labour system, in SAIL, the Supreme Court ruled that in section 10 of the CLRA act there is no implicit requirement of automatic absorption of Contract Labour by the Principal Employer in the concerned establishment on issuance of notification by the appropriate Government under section 10(1) prohibiting he employment of Contract Labour in a given establishment. With this judgment, a catch-22 was brought in for workers who demanded the abolition of the contract labour, who by virtue of this demand, in fact faced the risk of losing their jobs.

Perpetuation of new forms of bonded labour by the Labour Codes

The perpetuation of the contract labour system also continues and in fact pushed by the coming in of the new Labour Codes. This has been dealt with in depth in a previous issue .

More particularly for this article, Section 57 of the OSH Code is important which prohibits the employment of contract labour in core activities of any establishment, excludes from the definition of core activity the following works namely:—

(i) sanitation works, including sweeping, cleaning, dusting and collection and disposal of all kinds of waste;

(ii) watch and ward services including security services;

(iii) canteen and catering services;

(iv) loading and unloading operations;

(v) running of hospitals, educational and training Institutions, guest houses, clubs and the like where they are in the nature of support services of an establishment;

(vi) courier services which are in nature of support services of an establishment;

(vii) civil and other constructional works, including maintenance;

(viii) gardening and maintenance of lawns and other like activities;

(ix) housekeeping and laundry services, and other like activities, where these are in nature of support services of an establishment;

(x) transport services including, ambulance services;

(xi) any activity of intermittent nature even if that constitutes a core activity of an establishment;”

The exclusion of the above activities thus condemns the workers in these activities to being “contract workers” in perpetuity.

With increased contractualization of the workforce and a concomitant reduction in the permanent workers, what is being developed is a workforce with no rights, which will be subject to easy victimization for any effort to organize and demand their basic rights. This will affect not only contract workers, but also the permanent employees in the establishment, whose power to bargain will also be significantly reduced. It is the need of the hour for all workers to come together to stand up and agitate against these new forms of bonded labour.