Contract Labour and Outsourcing: Regulation, Principal Employer and Contractor Responsibilities (Overview) Questions

Question 1

Define contract labour. (concept)

Accepted Answer

**Contract labour** refers to workers engaged through a **contractor** to work for a **principal employer** (concept).

Question 2

Who is the principal employer? (concept)

Accepted Answer

**Principal employer** is the establishment/organisation where contract workers are deployed and for whom the work is performed (concept).

Question 3

Contract labour is regulated to prevent exploitation. (True/False)

Accepted Answer

True. Regulation aims to prevent **exploitation** and ensure fair wages and welfare (concept).

Question 4

State one compliance requirement in contract labour management.

Accepted Answer

Maintain **wage and attendance (muster roll) registers** and ensure timely wage payment (concept).

Question 5

Contractor licensing may be required under contract labour regulation. (True/False)

Accepted Answer

True. Covered **contractors** generally require a license to supply contract labour (concept).

Question 6

Give one example of welfare facility for contract workers (concept).

Accepted Answer

**Drinking water** / sanitation / rest room / **first-aid** (any one) (concept).

Question 7

List any three reasons why contract labour is regulated (points).

Accepted Answer

Reasons (any three) (concept):

- prevent **exploitation** and ensure fair wages
- ensure welfare facilities and humane conditions (concept)
- stop avoidance of statutory benefits through intermediaries (concept)
- ensure safety and accountability through inspections/records (concept)

Any three points are sufficient.

Question 8

Differentiate principal employer and contractor using a small table (any three areas).

Accepted Answer

Principal employer vs contractor (concept):

| Area | **Principal employer** | **Contractor** |
|---|---|---|
| Registration/license | registers establishment (concept) | obtains license (concept) |
| Wages | ensures wages are paid; may be liable if default (concept) | primary responsibility to pay wages |
| Records | oversight and inspection cooperation (concept) | maintains muster roll/wage registers (concept) |

Any three areas are sufficient.

Question 9

Write any three compliance controls a principal employer should implement in outsourcing (use points/table).

Accepted Answer

Compliance controls (any three) (concept):

- verify contractor **license** and registration details
- include compliance clauses in contracts (wages, statutory payments, records) (concept)
- monitor wage payment and minimum wage compliance (concept)
- periodic audits of muster roll, wage slips and statutory deposits (concept)

Any three points are sufficient.

Question 10

Explain registration and licensing in contract labour regulation (concept) using a small flow/table.

Accepted Answer

Registration/licensing (concept):

Flow:
Coverage check → **principal employer registration** → **contractor licensing** → deployment of workers with records → inspections/audits

| Requirement | Purpose (concept) |
|---|---|
| Registration | accountability of establishment |
| Licensing | control and monitoring of contractors (concept) |

This ensures responsibility for wages/welfare and better compliance monitoring (concept).

Question 11

List any three records/registers typically maintained in contract labour compliance (use points/table).

Accepted Answer

Records/registers (any three) (concept):

- **muster roll/attendance** register
- **wage register** and wage slips (concept)
- deductions register (concept)
- contractor license/registration documents file (concept)

Any three points are sufficient.

Question 12

Explain what is meant by 'sham contract' (concept) and state any two indicators (use points).

Accepted Answer

### Meaning (concept)
A **sham contract** is an arrangement where workers are shown as contractor’s employees, but in reality the principal employer controls them to avoid statutory obligations.

### Indicators (any two) (concept)
- principal employer controls hiring/firing and daily supervision directly
- contractor has no independent business/control; only supplies labour (concept)
- wages are effectively paid/controlled by principal employer (concept)

Any two indicators are sufficient.

Question 13

Write an exam-style note on contract labour: meaning, need for regulation and responsibilities (include a table and conclusion).

Accepted Answer

### Meaning
**Contract labour** means workers engaged through a **contractor** for a **principal employer** (concept).

### Need for regulation (any 4)
- prevent **exploitation** and underpayment
- ensure welfare facilities and humane conditions (concept)
- ensure accountability through registration/licensing and inspections (concept)
- avoid misuse of intermediaries to bypass statutory benefits (concept)

### Responsibilities (table)
| Area | **Principal employer** (concept) | **Contractor** (concept) |
|---|---|---|
| Registration/license | registration of establishment | contractor license |
| Wages | ensure wages are paid (liable if default) (concept) | pays wages and maintains records |
| Welfare | facilities at site and supervision (concept) | provides/arranges welfare as required |

### Conclusion
Effective regulation ensures fair treatment of contract workers and reduces compliance risk for establishments (concept).

Question 14

Explain wages and welfare obligations in contract labour (exam-style) with a table and conclusion.

Accepted Answer

### Obligations (concept)
Contract workers must receive timely wages (at least **minimum wages**) and basic welfare facilities at the workplace.

| Area | Key requirement (concept) |
|---|---|
| **Wages** | timely payment; lawful deductions; wage records |
| **Welfare** | drinking water, sanitation, rest rooms; first-aid/canteen as applicable (concept) |
| Safety | PPE, safe work systems where hazards exist (concept) |

### Conclusion
Wage + welfare compliance prevents exploitation, reduces disputes and protects both contractor and principal employer from liability (concept).

Question 15

Describe common compliance risks in outsourcing and how to mitigate them (exam-style) using a table and conclusion.

Accepted Answer

### Common risks (concept)
- sham contracting / disguised employment
- underpayment or non-payment of **minimum wages**
- missing records (muster roll/wage slips) (concept)
- no license/registration; poor welfare facilities (concept)

### Mitigation (table)
| Risk | Mitigation (concept) |
|---|---|
| **Sham contract** | clear scope, genuine contractor control, proper documentation |
| Wage default | wage monitoring, escrow/withhold clauses, audits (concept) |
| Record gaps | periodic compliance checks and register reviews (concept) |

### Conclusion
Strong vendor due diligence, documentation and ongoing audits reduce outsourcing compliance risk and protect worker welfare (concept).

Contract Labour and Outsourcing: Regulation, Principal Employer and Contractor Responsibilities (Overview)

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