Ivory Mica & Minerals Ltd. (IMM) is a mid-sized, publicly traded mining company that mostly works in the country's underdeveloped, mineral-rich eastern area. The company specializes in the extraction and processing o

CS Professional · Labour Laws and Practice · PYQS · June 2026
Ivory Mica & Minerals Ltd. (IMM) is a mid-sized, publicly traded mining company that mostly works in the country's underdeveloped, mineral-rich eastern area. The company specializes in the extraction and processing of low-grade coal and mica, which are highly sought after by the worldwide electronics, energy, and cosmetics industries. IMM has a superb reputation in the stock market. Five years ago, IMM's management implemented an aggressive outsourcing strategy to reduce overhead expenses and increase operational efficiency. IMM reorganized its operations rather than hiring manpower directly. It delegated the actual extraction job to a network of outside labour contractors while keeping a small core staff of engineers and management. The unlicensed primary contractor, "Surya Extractor Contractor Ltd.", oversees the day-to-day mining operations and is compensated at a set fee for each ton of extracted mineral. Surya Extractor further subcontracts the work to unregistered local "gang leaders" (middlemen) in order to preserve their profit margin. These intermediaries hire labourers from underprivileged rural and tribal areas severely impacted by seasonal drought. The middlemen encourage entire families to labour in the mines since they are paid piecemeal (depending on the weight of the harvested minerals). The working environment is appalling. Instead of being official contract labourers, the adult miners are categorized as "daily wage helpers". Mica mining frequently entails "rat-hole" mining, which entails excavating small, dangerous tunnels. The intermediaries highly value children's ability to crawl into these tight shafts because of their diminutive stature. Children under the age of 14 years make up about 30% of the informal workforce. They perform 10-hour shifts in dangerous, dusty surroundings, often even at night. During an unplanned site visit to one of the far-off mines, Stelva, the Manager of IMM, discovers children shifting mica and carrying big loads. He also disclosed the intricate network of subcontracts designed to shield IMM from labour law requirements. Through his interaction with the local workers, Stelva learns that they are trapped in a cycle of debt servitude to the intermediaries. The manager, Stelva, claims that there isn't a single youngster or underpaid employee at the IMM. Our payroll compliance is 100%. In our agreement with the independent business company Surya Extractors, child labour is categorically forbidden. If their contractor and subcontractor violate the law, it is their responsibility of law enforcement. Based on the above scenario, answer following questions (a and b): What is the legal validity where an unlicensed contractor recruits labour and sub-contracts work to third parties, and what are the requirements for license acquisition by contractors and sub-contractors. Mention the penal provisions that attach to such violations under The Occupational Safety, Health & Working Conditions Code, 2020?

Answer & Explanation:

Section 2(1)(n) of the Occupational Safety, Health and Working Conditions Code, 2020 defines the term Contractor which, in relation to an establishment, means a person, who- undertakes to produce a given result for the establishment, other than a mere supply of goods or articles of manufacture to such establishment, through contract labour; or supplies contract labour for any work of the establishment as mere human resource, and includes a sub-contractor. Licensing of Contractors (Section 47 of the Occupational Safety, Health and Working Conditions Code, 2020) The section is a core compliance provision that regulates the licensing of contractors engaging contract labour. It ensures that contractors cannot operate without formal authorisation, and it introduces both general licences and work-specific licences. General Rule: Except under and in accordance with a licence issued by the designated authority under Section 119(1), no contractor shall: Supply or engage contract labour in any establishment; or Undertake or execute work through contract labour, Licence shall be issued after verifying that the contractor meets qualifications or criteria prescribed by the Central Government. Such licence shall specify: Number of contract labour permitted. Amount of security to be deposited. Work-Specific Licence: If contractor does not meet prescribed qualifications or criteria, the authority may issue a work-specific licence. Such licence: is electronically renewable within prescribed period. applies only to the concerned work order. is subject to specified conditions. Conditions of Licence: Subject to the provisions of this Part- Licence may include conditions relating to: Hours of work. Fixation of wages. Essential amenities for contract labour. Licence shall be obtained from: Central Government authority (if establishment falls under Central jurisdiction). State Government authority (if establishment falls under State jurisdiction). It may be noted that contractors seeking licences for multiple States or whole of India must obtain licence from the authority referred to in sub-section (1) of section 119 designated by the Central Government for such purpose. It is further provided that before issuing such licence the authority so designated shall consult the concerned State or States authorities designated under sub-section (1) of section 119, electronically before issuing licence for the establishments for which the Appropriate Government is the State Government. Under Section 47 of the Occupational Safety, Health and Working Conditions Code, 2020, no contractor can undertake or execute work through contract labour without obtaining the prescribed licence. Therefore, where an unlicensed contractor recruits labour and further sub-contracts the work to another unlicensed sub-contractor, such engagement is unlawful and in violation of the Code. Where any principal employer of an establishment is employing contract labour through a contractor who is required to obtain a licence, but he has not obtained such licence, then, such employment shall be deemed to be in contravention of the provision of the Occupational Safety, Health and Working Conditions Code, 2020. Therefore, they are liable to regulatory action and attracts the penal provisions contained in Chapter XII of the Code.

Topics: Occupational Safety, Health and Working Conditions Code, 2020

Open in Interactive Practice Hub · Full Practice Hub · Chapter Weightage · More in this subject

Related Questions in this Topic