Submissions to the 42nd Session of the Indian Labour Conference (20-21 February 2009)

Item No. 1 (a)             Issues Connected with the Contractualisation of Labour


Retrenchment of workers and reducing the contractual obligation has been the major impact of globalisation, but we view it more as a part of, and a phase in, the re-composition of the workforce in the production at the global level. The main focus is the access to cheap labour for low cost production. As these are labour intensive operations there is a pressure for wage rise. To forestall such tendency and insure the production from such risks, the strategy is to install and sustain sub-standard employment relationships that create low capacity for organizing and collective bargaining.


The core process both in production and business is identified using value chain analysis, which identifies the main sources of profit in various steps to supply a product and services. In a globalising world, multiple processes of labour and production are linked on a global level to produce finished commodities. The large corporations use this tool to analyze such global commodity chain and focus their investment and control over processes that are most profitable. As a result, the power is unevenly distributed over this chain and profit is maximized by capital that dominates and controls the core business process.


So the reorganisation of global production takes place with low cost production on the basis of low wage expanding in the South. Under this division of labour, though labour shifts from agriculture to industry, the country does not enter a trajectory of autonomous growth. The industrial growth in the South, which is predominantly a result of expansion of sub-contracted production and contract labour system, does lead to increase in employment but not to significant increase in wages above poverty level. Even the surplus is not retained in national economy as it transferred through the commodity chain to the large multi-national corporations.


In the Indian context, the underlying political notion of universality of equality, engraved into the Constitution, has been progressively made into legal entitlements in employment relationships through various legislations. Within a same class of employment in an establishment viz. within a factory, equality of treatment and entitlement was accepted and became a basis of both, discourse and struggle. Even the Contract Labour Act is founded on progressive realisation of this universality. But, successive judgments of High Courts and the Supreme Court have in the past few years violated this underlying political notion and strengthened the need and demand of capital to keep labour unregulated.


The large majority of contract workers are from among disadvantaged sections of the society. Scheduled caste employees and women find themselves employed largely as contract labour. The Sixth Pay Commission recommendations for Central Government Employees singles out Class IV employment for outsourcing, effectively implying that the lowest class of employment in the government and public sector will get contractualised. Class IV employment has traditionally been the only avenue available to candidates from the scheduled castes for a decent tenured employment. Legal support to abolition of contract labour, as envisaged under the Contract Labour Act stands compromised with recent judgments of the Supreme Court and other courts. Today, when the economy is in a severe downturn, the first workers to lose employment are contract workers.


Contract workers have no security of employment. They have no real recourse to social security benefits, despite the Contract Labour Act clearly specifying social security coverage of contract workers. Wages to contract employment is generally limited to the statutory Minimum Wage. The workers get wages less than one fourth wages to tenured workers in similar employment.


The New Trade Union Initiative (NTUI) represents over 2 hundred thousand workers in contract work, from all sectors of employment, including the public sector, private manufacturing, service sector, government employment in municipal work, anganwadi work, etc. In view of the foregoing, the NTUI submits and demands:

1. Measures to contain and restrict Contract Labour Employment in the economy:

  • NTUI demands that the Contract Labour Act be strictly implemented, for the progressive abolition of contract employment, and absorption of contract workers in perennial employment as tenured workers. In the context, NTUI urges the Labour Ministry to immediately constitute a Commission to examine the current situation of contract workers.
  • NTUI demands a separate review of employment of contract workers, and implementation of the Contract Labour Act in the public sector. It refers to the ruling of the Supreme Court in 1999 on the Gujarat Electricity Board case recommending such a review in the public sector.
  • The system of automatic licensing of contractors should be immediately stopped. Clear guidelines should be specified for qualification of contractors. Contractors convicted for basic labour law violations, including non-payment of minimum wages, should be debarred from recognition under the Act. This bar should also cover any benami organisation of the contractors.
  • License to contractors for the same work process or contract should not be for more than a year. This will help in controlling sham contracts in situations of work of permanent nature.


  2. Measures to protect and regulate Contract Labour Employment

  • Wages to contract workers should be regulated strictly on the basis of equal wages for equal work. On the same principle, minimum wages for contract workers should be fixed as the lowest wages to tenured workers in the industry.
  • Labour Commissioners should be mandated under the powers of Clause 5 of the Act to declare minimum wages for contract labour in the industry. Industry Wage Boards for contract workers should be declared for this purpose.
  • Central Labour Commission should have a declared uniform minimum wage in Central Sphere for all unskilled category of workers.
  • In all cases of contract employment continuing for a year or more, the principle employer should be mandated to maintain a sub account for PF of contract workers.
  • Seniority of contract labour should be recognized for preference in employment as tenured workers in any company or public sector or government.
  • The policy of supportive outsourcing of regular housekeeping, horticulture, catering and maintenance work should through Contract labour license should be stopped and reorganized to retain this work within the Public Sector.
  • Labour cooperatives of contract workers should be given preference over other corporate entities or contractors for awarding contract. The labour cooperatives should be given a 15% price preference, as is the norm for business with other cooperatives. Even in a situation where a labour cooperative is not the lowest bidder, the cooperative should be given the first option of refusal for taking up the contract at the accepted bid.



Social Security


The Unorganised Workers’ Social Security Act, 2008 was finally passed by the Parliament on 17 December 2008 after it went through several drafts since 2004, each draft being more limited in its scope and applicability than the previous one. While we appreciate the fact that the UPA finally, in the run up to the elections, found it at least expedient to pass this enabling legislation, we would like to bring to your immediate notice gross and fundamental shortfalls in the legislation.


Social Security is a Citizenship Right of Working People


The legislation in its current form has completely eliminated the initial principle that was set out by the National Commission on Enterprises in the Unorganised Sector (NCEUS) in its Report – ‘Comprehensive Legislation for Protection of Unorganised Workers’ – of viewing social security as a.citizenship right of every working person. In eliminating the provision of a National Minimum Social Security Benefit and in implementing the Act through various schemes the legislation has not only diluted the original draft but also excluded a large section of the unorganised working people who technically are above the poverty line but are employed in the informal sector under extremely precarious conditions of work from the purview of this Act.


Social Security as a Justiciable Right and not just an Enabling Scheme


The Right to a National Minimum Social Security Benefit is a citizenship right as provision of this benefit is only a return for the contribution that every worker makes to the national product. The share of the informal sector in Gross Domestic Product is estimated to be around 63%. About 47% of the value added in the non-agricultural sector and 35% of the total value added in the urban economy come from the informal sector activities, which are much higher in agriculture and also in construction and trade. It is therefore the responsibility of the State to provide for these workers in times of unemployment, illness, disability, death and old age. It is the primary responsibility of the Government to develop appropriate systems for providing protection and assistance to its workforce and their families. The Act should make the government accountable through the process of justiciability of this legal claim.


Social security legislation that covers the poorest section of the workforce must be universal in its reach and coverage and must provide for such benefits that are caused by inability to access gainful employment. By implication, a universal social security benefit must be aimed at all workers as citizens. Core benefits as defined as the minimum provision of benefits must by their very nature be non-contributory. It is critical to provide National Minimum Social Security Benefit and define the basis of it in terms of, in relation to and in quantitative proportion with the statutory minimum wage. The National Minimum Social Security Benefit cannot be in any way linked to either the contribution of workers or be subject to the availability of funds. In the event of funds raised through employers’ contributions, taxes and levies falling short, a special tax to finance the National Minimum Social Security Benefit across the board starting from the lowest band of income tax payment which should be made mandatory and subject to no rebates, reliefs and concessions and not just an arbitrary monetary amount.


Disjunction between Right and Scheme


The legislation gives space for self declaration of workers as ‘unorganised workers’ that determines their eligibility under the Act thereby establishing the notion of Universality of applicability but in implementing the Act through targeted schemes, it takes away the right of many unorganised workers to the minimum benefits that these schemes provide. All the general schemes under the Act are targeted towards BPL families whereas BPL lists across the country have been a contentious issue that is yet to be resolved. It has also been an issue of contention between the governments at the Centre and the States.  Also, most workers employed in the informal sector in urban centres fall in the category of APL although they are almost invariably employed with no security of tenure, no access to benefits and neither are most of them paid the statutory minimum wage. Many of them are self-employed or home-based workers with not even an identifiable employer. The applicability of the legislation cannot be restricted to BPL workers.


Minimum Entitlement: Health and Old Age assistance


The benefits specified under the Act fail to holistically address the two most crucial needs of workers with insecure employment – one, of health and two, of old age sustenance. Therefore it is most essential to have a comprehensive health insurance that includes hospitalisation, injury, maternal care and all benefits should also include dependents and should not have an age limit. If we take the government scheme that has been initiated in the state of Tamil Nadu as the basis for this insurance, the premium for a standard family of 5 would be Rs. 450 annually. The working population in the informal sector is 401.9 million. Therefore the expense that would be incurred by the government for providing this health insurance to every worker in the informal sector with not more than 4 dependents would amount to Rs. 180 billion approximately.


The Indira Gandhi Old Age Pension Scheme covers only BPL individuals above the age of 65 years and provides Rs. 200 per month from the central government and an optional component of Rs. 200 from state governments. This is abysmally low and we believe that the computation of the pension must be clearly and unambiguously based on the principle [of 50% of last wages drawn] employed for Government employees’ pension. Therefore the pension must be linked to the statutory minimum wage. Standard pension calculation is at 50% of average emoluments drawn by a worker during the terminal year of employment. The formula is similar in the case of other employees in the formal sector. In fixing the pension for the informal sector as a lump sum to be arbitrarily decided upon by the Central and State governments, the legislation is in gross violation of the spirit of Article 14 of the Constitution. The difference can only be in the quantum of pension, and not in the principle for calculating the pension. We therefore demand that this legislation accepts the standard pension formula and applies it for all workers in the informal sector, with the proviso that the minimum pension payable to a worker in the informal sector in any state shall be as calculated based on the minimum agricultural wage in the state or the national floor level minimum wage or the wage as prescribed under the NREGA, whichever is higher. For the sake of calculation even if we are to take the national floor wage recommended by the Ministry of Labour of Rs.80 per day, the minimum monthly pension of a worker in the informal sector would therefore be Rs. 80 x 30 x 50% = Rs. 1200 per month. Now, persons above the age of 60 in India constitute about 7.2% of the entire population, i.e., 1.02 billion which is equal to 76.6 million. 86.6% of the total workforce is engaged in the informal sector. Hence, we can approximately claim that about 66.1 million persons above the age of 60 will be eligible for this universal pension. Hence the total expenditure that the government would incur for the payment of this pension annually is about Rs. 952 billion.


Thus in total if we calculate the budgetary provision required to provide this National Minimum Social Security Benefit, it amounts to Rs. 1132 billion which is 2.7% of the GDP.


In keeping with the principle of the National Minimum, workers should be completely exempt from contributing to this National Minimum Social Security Benefit. Further apart from contributions from Government and employers there must be provision for an additional special tax or levy that may be decided upon by legislature. Such a provision would be not just be in keeping with the notion of the National Minimum but, also in consonance with the egalitarian objectives of a progressive society.


The legislation should also be justiciable and violation of it by employers or any other agency responsible for its implementation made a criminal offence. It also provides no machinery for raising of disputes and dispute resolution. The burden of proof of violation should lie on the violator and not the beneficiary. Furthermore, the implementation should be time-bound and punitive action specified for non-delivery of benefits.


We view social security as a right of all citizens in a representative democracy. Workers therefore should be represented by their unions. The representation should be determined through the democratically verified strength of the membership of trade unions within the decision making bodies. Tripartite Boards should be formed at Local, District, State and Central levels. In extending the process of democratisation, the implementing agency for the delivery of benefits of the Act should be the local self government bodies in both rural and urban areas to ensure the participation of workers as citizens and adjudicated by the Labour Department and not the Revenue Department.


Social security is a necessary but insufficient provision for removing the insecurity of workers in the informal sector. In order to remove insecurities of workers in the informal sector concurrent and simultaneous legislation must be put in place to regulate employment and conditions of work in the informal sector, where in separate legislative protection be provided for agricultural workers and non-agricultural workers alongside legislation for universal social security.


In view of the foregoing NTUI submits that:

  1. A National Minimum Social Security Benefit be defined that is non-contributory and justiciable and is defined in terms of, in relation to and in quantitative proportion with the statutory minimum wage.
  2. Tripartite Boards at local, district, state and national levels for implementing the legislation be set up.
  3. A dispute resolution machinery be clearly set out
  4. A Legislation for regulation of employment and conditions of work in the informal sector, with separate laws for agricultural workers and non-agricultural workers be legislated immediately.


Item No. 1 (b)             Issues Related to Migrant workers


With respect to International Migration, NTUI submits that:


  1. A list of all registered Recruiting Agencies to be advertised on a monthly basis in every State;
  2. Maintenance and updating of such list in the website of the Respondent/Ministry;
  3. The Government of India should negotiate with the Government of USA to provide in law for mobility of worker from one employer to another, in case of breach of a minimum standards of a contract by an employer, for inclusion of a viable grievance procedure for workers from abroad.
  4. Counselling of migrant workers is an imperative protective mechanism for such workers.
  5. Multi-party dialogue is critical in developing solutions; the ILO can play a vital role in enabling such dialogue.
  6. Creation of a labour attaché in countries with 10% or more out migration from India and the authorized representative of the Indian Embassy to receive and mitigate complaints and if required provide for legal aid, and


Amend existing legislations or introduce rules for:


  1. Requiring every recruiter to complete due diligence formation to be formatted by the concerned ministry in respect of every potential foreign employer;
  2. Requirement of every licensed recruiting agencies to submit a declaration that the emigrating workman has received due counseling in respect of the potential employment and that the conditions of employment in the foreign country would not be any less beneficial than the conditions of employment applicable to India;
  3. Requiring the recruitment agency to acquire from the emigrating employee to submit by an annual statement that the conditions of employment are in accordance with the due diligence and the declaration;
  4. Requiring the recruitment agency to file annual submissions in respect of the employment/emigration details and the reporting of any negative submissions from an emigrating employee, their association or supporting organisations;
  5. Requiring a national data base of employers who have obtained the services of any authorized recruitment agency at any time;
  6. Incorporating sanctions in the Emigration Act applicable to the directors of such companies that acquire licenses under the Act, including delisting and withdrawal of license for gross and repetitive violations of law.
  7. To provide for a model contract in the Emigration Act that could serve as a benchmark against which contract offered for work abroad might be evaluated.




Item No. 3      Issues relating to Sales Promotion Employees in India


  • Enforcement of Industrial Disputes (Amendment) Act, 1982 in Section 2 (j) defining ‘Sales Promotion’ as an industry


The absence of any grievance redressal machinery to address the issue of disputes with respect to workman involved in sales promotion in an industry has left such workmen unprotected. Whereas in the course of economic development and globalisation, sales has become an important function of all business and the workmen in the sales process have expanded rapidly. As various studies have shown that the majority of the sales promotion workmen come from educated section of the society. In other words it is one of the first entry levels of educated employment. In absence of any legislative protection, these educated young workmen are exploited in terms of security of employment, wages, hours of work, promotion opportunities etc. Moreover, these young workmen are also deprived of a sense of identity and aspirational motivation that would enable them to be integrated and socialised in the nation-building process.


  • Extension of Sales Promotion Employees ( Conditions of Service) Act, 1976 to scheduled industries other than Pharmaceuticals


In today’s economy sales is an important business function and workmen engaged in this work acquire over years skill level and knowledge base which are core capabilities for any sales and marketing activity. Today there is a significant large workforce involved in sales which has acquired a stable character. Though these workmen move between jobs in different industries, they remain within the sales area thereby acquiring a stable professional identity. Their job mobility and career advancement is taking place within the sales activities. In view of both this stability of workforce in sales activity and mobility within various industries, it is imperative from the principle of equality and equity that the Schedule Industries cover all industries beyond the existing limitation of the pharmaceutical industry in the Act of 1976.


  • Statutory Working Rules for the Sales Promotion Employees under the SPE Act


The Rules framed by the Government are narrow in scope and require a comprehensive concept of protection. The existing provisions do not constitute an integrated concept of protection and is not at par with such conditions applicable to other workmen in similar industries in India and in other developing countries. Moreover, they are not in conformity with the best practices internationally codified by the ILO. Therefore, the protection requires to be expanded to include appointment, job specification, place of work, hours of works and holidays, payment of wages and overtimes, and retirement age.


  • To insert “Sales Promotion” in clause (s) of Section 2 of the Industrial Disputes Act,1947 in the manner of ID ( West Bengal Amendment) Act, 1981


The amendment to the ID Act being limited to only West Bengal and Nagaland has created a serious anomaly which is against the grain of developing a national market and mobility of workmen. As a result, it has become an impediment to the transfer of skills of the profession to backward areas of the country. Moreover, as a result of this discriminatory access to the ID Act, it has become a main instrument of the pharmaceutical companies to use this as a punitive mechanism against workmen in West Bengal resulting in widespread unfair labour practice and undermining of unions of sales employees.


In view of the above submission, we submit that the recommendations with respect to Sales Promotion employees in India, be immediately accepted and appropriate amendments to the ID Act be made and rules framed.