Mr. Bharat wants to set up an industrial establishment for collecting and manufacturing quarry products. He has been told that there is no significant difference between contract labour and employees. Is there any differ

According to the Contract Labour (Regulation and Abolition) Act, 1970 a 'contract labour' is hired in or in connection with such work by or through a contractor and such hiring is with or without the knowledge of the principal employer. 'Contract labour' can be distinguished from employees in terms of employment relationship with the principal establishment and the method of wage payment. A workman is deemed to be a contract labour when he/she is hired in connection with the work or contract for service of an establishment by or through a contractor. They are indirect employees. Contract labour is neither borne on pay roll or muster roll or wages paid directly by the employer. The landmark judgement in Standard Vacuum Refining Company v. Its Workmen, [1960] 3 SCR 466 in which the Supreme Court said that contract labour should not be employed where the work is perennial and goes on from day to day; the work is necessary for the factory; the work is sufficient to employ a considerable number of whole-time workmen; and the work is being done in most concerns through regular workmen. It has been well settled by the various judgements of Apex Court & High Courts that the contractor's employees will not automatically become the employees of the principal employer, even if the principal employer does not get registration and the contractor does not hold licence, though employing contract labour without obtaining registration or without obtaining licence is an offence under the Act.