Compliance to Statutory requirements in engagement of contract labour by Indian Railways 

Compliance to Statutory requirements in engagement of contract labour by Indian Railways – CAG’s Report No. 19 of 2018

(रेलवे बोर्ड/ RAILWAY BOARD)

RBE No.20/2020

No. 2017/E(LL)/AT/CNR/33

New Delhi, dated:18.02.2020

The General Managers,
All Zonal Railways, PUs,
Metro Kolkata and RDSO Lucknow

Sub: C&AG’s Report No. 19 of 2018 on “Compliance to Statutory requirements in engagement of contract labour by Indian Railways”.

Ref: i) Board’s letters No. 2017/E(LL)/AT/Misc/Channels-CAG/2016-17 dated 07.12.2017, 30.01.2019 and the Board (MS)’s D.O. letter of same number dated 09.12.2019.

ii) Board’s letter o. E(LL)70AT/CNR/1-3 dated 15.10.1971

iii) Board’s letter Mp/ 2018/E(LL)/AT/CNR/3 dated 24.01.2018.

Attention is drawn to the referred letter dated 07.12.2017 whereby chapter-wise comments on Audit observation on C&AG’s Report No. 19 of 2018 were sought from Railways concerned. Thereafter, this report on “Compliance to statutory requirements in engagement of contract labour by Indian Railways” for the year ended March 2017 was finalized and laid on the table in Lok Sabha & Rajya Sabha on 8th January, 2019. Full report may be downloaded from https://cag.gov.in/content/report-no19-2018-compliance-statutory-requirements-engagement-contract-labour-indianAfterwards, this Report was selected by Parliamentary Committee i.e “Public Accounts Committee” (PAC) (2019-20) for examination. In this connection, PAC has already studied working of few ZonaRailways during their study visit of ER, SER, Kolkata Metro, ECoR, CR, WR, SR and SWR during year 2019-20.

2. Attention of the Railways is also drawn to the provisions in regard to nominations of “Principal Employer” as contained in Board’s letter No. E(LL)70AT/CNR/1-3 dated 15.10.1971 and also to the directions contained in Board’s letter No. 2018/E(LL)/AT/CNR/3 dated 24.01.2018 and other relevant instructions issued by Civil Engineering directorate to ensure that all the relevant statutory and other related provisions are strictly complied with.

3. However, C&AG has pointed out many violations/irregularities/non-compliances of statutory provisions governing contract labour. These violations etc. are summarized as Annexure-1 to this letter. It can be gleaned from the Annexure that as many as fifteen types of non-compliances etc. have been detected by C&AG’s auditors. Railways should go through these infractions and strive to ensure that these are not repeated.

4. Furthermore, in order to facilitate compliance of statutory provisions by the designated Principal Employers as well as by the contractors, the following controls/measures have been recommended by C&AG in Para 7.2 of the said Audit Report:-

i) Preparation of estimates for labour component may be done duly taking into account the minimum wages fixed by Central/State Government from time to time plus additional amount of contribution required to be made by the contractors towards ‘Employees’ Provident Fund’ (EPF), ‘Employee State Insurance Corporation’ (ESIC) and any other related cost.

ii) A comprehensive list of conditions towards ensuring compliance to statutory provisions relating to labour laws may be included in the tender documents/General Conditions of Contracts/Special Conditions of Contract, including penalties for non-compliance. The tender documents should include terms and conditions relating to timely payments of wages due, amenities for labour, safety of labour, etc.

iii) Contracts may be awarded to contractors/agencies who have been registered with the Labour Department, EPFO and ESIC etc.

iv) Principal Employers for the various Departments of the organisation may be identified and nominated. A comprehensive list of responsibilities for Principal Employers may be issued as a checklist for the Principal Employers.

v) A mechanism may be put in place for effective monitoring by Principal Employers such as forming a dedicated cell/team, which will be entrusted with the overall responsibility for enforcement of Labour laws compliances in the organisation. These teams should be given powers to inspect work sites and records for checking compliance and also give a go-ahead before payments are made to the contractors. Detailed checklists for such inspections should also be issued.

vi) A mandatory list of documents may be prescribed for submission by the contractor, without which the contractors’ bills should not be processed. A comprehensive checklist may also be prescribed for checking of compliances before passing of contractors’ bills.

vii) For the contracts which are already in progress, Railway Administrations of all Zonal Railways may consider directing the Principal Employers in various contracts to examine the number of contract labour under their jurisdiction in preceding 12 months for all the contractors, determine if they are required to register themselves with the prescribed authorities under the Acts and get themselves registered with the prescribed authorities, where required.

viii) In works, where the applicability of the CLRA, 1970 on the contractor is established, the contractor may be directed to apply for license from the Labour Commissioner. If he fails to do so, Labour Commissioner may be informed, so as to take necessary punitive action against the contractor.

ix) Joint Procedure Orders should be issued by Zonal Railways, clearly indicating obligations of Principal Employers, functions of the designated nominee of Principal Employer, functions of paying authorities and the functions relating to filing of relevant returns with the prescribed authorities.

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x) In all ongoing contracts, the short payments, short deduction and short contribution may be identified, verified and amounts short-paid/not paid may be paid to the concerned contract labour by the Railway administration as per the provisions of Acts. The amounts so paid should be recovered from the contractors, where applicable.

xi) Railways may encourage the contractors to follow provisions of the EPF & MPA, 1952 and EPFS, 1952 and effectively avail of the incentives under the newly introduced ‘Pradhanmantri Rojgar Protsahan Yojana’ to promote recruitment of unemployed persons and bring into books the informal employees.

xii) Railways may consider putting in place an effective control mechanism through Internal Audit and/or inter-disciplinary teams to monitor compliance of statutory requirements. Measures may also be taken for creating awareness amongst various levels of Railway officers on the issue.

5. The Railway administrations/PUS should talbe note of all the aforementioned recommendations for strict compliance.

6. Recommendation at para 4(iii) above shall be enforced only in such cases where such registration is required as per prevailing law.

7. In this regard, Civil Engineering Directorate has also issued following important supplementary instructions. These too should be strictly implemented so as to avoid violation of applicable labour laws.

(i) Board’s letter No.2012/CE-1/CT/0/22 dated 14.12.2012.
(ii) Board’s letter No.2018/CE-I/CT/4 dated 17.10.2018 (Shramikkalyan Portal)
(iii) Board’s letter No.2017/CE-I/CT/8/GCC/Committee dated 05.11.2018.
(iv) Board’s letter No.2018/CE-1/CT/37/GCC/Policy dated 06.09.2019. (General Conditions of Contract)

8. This issues with the approval of Board.

9. Please acknowledge receipt.

DA: As above. [Click here to view Annexure]

(Alok Kumar)
Executive Director Estt.(IR)
Railway Board

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