“Genius BEGINS great works; labour alone FINISHES them”.
Construction industries aim to complete their projects on time with no delay. Although all resources can be obtained ahead of time, the availability of competent labour for any Construction project is always a challenge. As a result, the actual growth of all industries is dependent on ensuring the availability of competent labour at a reasonable cost, making the following compliance requirements mandatory for its stakeholders: Adequate Health, Safety and Welfare Provisions at the Construction site, and timely payment of adequate remuneration.
This article firstly gives an overview of the Indian Construction Sector; Secondly, it discusses the laws governing the labourers involved in the sector; Thirdly, it mentions the “Building and Other Construction Workers (Regulation of Employment and Condition of Services) Act, 1996”, and other applicable legislations. Fourthly, the authors give their suggestions on the New Labour Codes, 2020 and lastly, as a “way forward”, we discuss the lack of an institutional mechanism for skill formation of the labourers involved in this sector.
Keywords: “Construction Laws”; “Labour”; “unorganised sector”; “BOWC Act”.
Overview of the Indian Construction Sector
The Construction industry’s poor image is widely attributed to the nature of the work, which is frequently described as “difficult” and “dangerous”. The true cause of the construction industry’s bad reputation, on the other hand, has far more to do with the working conditions than with the nature of the work itself. Poor working conditions have always been a problem for many construction workers all over the world. Many others, on the other hand, have seen a significant drop in the last 30 years, as the construction industry has led the way in the adoption of “flexible” labour practises. Usually, in the Construction industry, the Contractors are tasked with retrieving skilled labour. However, skilled labour costs nearly twice as much as unskilled labour. In order to save money or time, they hire unskilled labour, which has serious consequences for the job at hand. In India, the Construction industry employs approximately84 percent casual labourers. The industry is highly labour-intensive, and with the majority of workers being unskilled and unorganised, they are subjected to inhumane and lamentable working conditions. To address the problems faced by the labourers and to promote labour welfare in the Construction industry, the Government has taken many steps and enacted several laws.
The Building and Other Construction Workers (Regulation of Employment and Condition of Services) Act, 1996
The workers in this industry are among the most vulnerable elements of India’s unorganised labour. Their job is on a temporary basis; the connection between the employer and the employee is also on a transitory basis, as are the working hours. The basic conveniences and welfare services supplied to these employees are insufficient. There is also a danger to one’s life and limb. Gathering the necessary information about the number and nature of accidents was challenging in the lack of suitable statutory provisions. As a result, determining culpability and taking corrective action was a difficult task. Despite the fact that several Central Acts applied to building and other Construction employees, there was a need for a comprehensive Central Legislation to regulate their safety, welfare, and other working conditions. The Government adoptedThe Building and Other Construction Workers (Regulation of Employment and Condition of Services) Act, 1996 (hereafter “BOCW” Act) to address harsh working conditions, ill-treatment, poor facilities, bad health, and necessary safety measures in the Construction sector.
It provides for the following matters, namely:
(i) a provision to cover any establishment that employs or has employed fifty or more workers in any building or other Construction work on any day in the preceding twelve months;
(ii) define “appropriate Government” in relation to certain establishments, as well as allow the Central Government to notify public sector undertakings for which it will be the suitable Government;
(iii) Establishment of a Central and State Advisory Committee to advise the appropriate Government on issues arising from the administration of the said Ordinance;
(iv) the formation of an expert committee to advise the appropriate government on problems relating to the formulation of rules;
(v) Establishments employing Construction workers must be registered, and registering officers must be appointed;
(vi) Building employees are registered as beneficiaries under the aforementioned Ordinance, and identification cards are provided for them, among other things;
(vii) State governments establish Welfare Boards, and recipients are registered with the Fund.
(viii) allow for the completion and expansion of the resources of the Welfare Board established by the state governments;
(ix) establishing normal working hours, weekly paid rest days, overtime pay, and basic welfare for Construction workers, such as drinking water, latrines and urinals, creches, first aid, canteens, and so on;
(x) supply of temporary dwelling quarters for all Construction employees on or near the jobsite;
(xi) providing suitable preparations for Construction worker safety and health, including the creation of safety committees and safety officers, as well as the mandatory notification of accidents;
(xii) enabling the Central Government to develop model safety standards under the supervision of the Director-General of Inspection at the federal level and the Inspector-General at the state level;
(xiii) appointment of inspecting personnel, including the Director-General of Inspection at the federal level and the Inspector-General at the state level;
(xiv) particular requirements establishing employers’ responsibility for ensuring compliance with safety provisions, including accident prevention, timely wage payment, and so forth;
(xv) Penalties for contraventions, obstructions, violations, and offences; taking cognizance of an offence punishable under this Bill by a court; and protection of actions made in good faith;
(xvi) Building and other Construction employees are covered by the Workmen’s Compensation Act of 1923; and
(xvii) authorising the Central Government to issue directives to the States and to resolve any problems that may arise in carrying out the provisions of the aforementioned Ordinance.
Section 2(1)(d) of the BOCW Act defines building or other construction work as the “construction, alteration, repair, maintenance, or demolition of or in relation to buildings, streets, roads, railways, tramways, airfields, irrigation, drainage, embankment and navigation works, flood control works (including stormwater drainage works), power generation, transmission, and distribution, waterworks (including water distribution channels), oil and gas installations”.
The BOCW Act was passed to benefit the Construction sector by not only regulating it in a manner as explained above but also having such workers registered under this Act for other various benefits.Chapter IV of the Act explains why registering building workers under this Act would benefit no one but the workers themselves. FromSection 11-17, the Act stipulates the procedure of how a Building Worker can get themselves registered under this Act and how can they avail the benefits of the Fund. Section 2 (1) (k) defines ‘Fund’ as the Building and Other Construction Workers’ Welfare Fund of a Board constituted under sub-section (1) of section 24. After getting themselves registered, an Identity Card (defined under section 13 of the Act) is provided to them, which confirms their registration and makes them eligible to receive the benefits from the Fund and any other benefits that may arise.
ImportantSchemes under BOCW Act:
The Model Welfare Scheme for Building and Other Construction Workers and Action Plan (for Strengthening Implementation Machinery) had placed aModel Scheme for Building and Other Construction Workers and Action Plan (for Strengthening Implementation Machinery) in pursuance to the directions of the Hon’ble Supreme Court dated 4th July, 2018 which were an outcome of thedirections contained in the Judgment dated 19th March, 2018 and 7th May, 2018 in Writ Petition (Civil) No. 318 of 2006. Hereafter referred as “Model Welfare Scheme” on the official website of the Government of India, Ministry of Labour and Employment. This Model Welfare Scheme is applicable to both State Governments and Union Territory Administrations.
The following topics have been covered under the Model Welfare Scheme:
1. Machinery for Registration of Establishments
2. Machinery for Registration of Workers
3. Collection of Cess
The social security benefits of the Model Welfare Scheme, which are discussed further below, will take precedence over all other existing benefits, and any fund balance may be used to provide additional benefits only after these priority expenses have been met. UnderSection 22 (h) of the BOCW Act which states that the function of the Boards is “to make provision and improvement of such other welfare measures and facilities as may be prescribed”.
Following are the social security benefits:
1. Life and disability cover
2. Health and maternity cover
5. Skill development
6. Awareness programs
Other Applicable Laws that govern the Labourers involved in the Construction Sector
- The Building and Other Construction Workers Welfare Cess Act, (1996)
ThisAct provides for the imposition and collection of a cess on Construction costs incurred by the employers in order to supplement the resources of the Building and Other Construction Workers Welfare Boards established under the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996.
- The Child Labour (Prohibition and Regulation) Act, 1986
ThisAct applies to children under the age of 14 who are engaged as labour. It forbids their employment in certain establishments. It governs the working conditions of children in situations where their employment is not prohibited. It is the responsibility of the occupier/employer to notify the Inspector of the employment of children. He is also expected to keep a register. Violations of the provisions of this Act are a crime and are punishable.
- The Contract Labour (Regulation And Abolition ) Act, 1970
ThisAct is intended to provide justice for contractual labourers’ rights and to strengthen their welfare. It discusses a series of regulations aimed to safeguard contract workers’ rights and provide them with basic necessities. The Act is primarily concerned with resolving issues involving contract labourers, protecting them from exploitation, and securing their rights
- The Industrial Dispute Act, 1947
This is alegislation that aims is to secure industrial peace and harmony in an industry. The Act also includes full machinery for resolving and adjudicating disputes between employee and employer, workman and workman, and employer and employer provisions concerning strikes and lockouts, layoffs and retrenchments, and unfair labour practices.
- The Inter-State Migrant Workmen (Regulation Of Employment And Conditions Of Service) Act, 1979
ThisAct defines “Interstate Migrant Workmen” as any person hired by or through a Contractor in one state under an agreement or other arrangement for work in another state, whether or not the principal employer in that establishment is aware of it. The Act seeks to protect and regulate such employees’ working conditions. It is applicable to any company or contractor that employs five or more interstate migrant workers.
TheAndhra Pradesh Shops And Establishments Act, 1988 is for small establishments that are not covered by the Factories Act – regulating the conditions of service of employees, as well as the offices of real estate and Construction companies. The Act establishes a minimum standard for an employee’s working conditions, below which the Act forbids the employee from working. It requires that employees be given a set number of days off.
There are provisions for employee safety measures in shops and establishments. Penalties for noncompliance are specified, and they apply to the employer as well as any other persons who engage in noncompliance.
- The Trade Unions Act, 1926
ThisAct regulates the provisions related to registration, regulation, benefits, and protection for trade unions. Minimum 7 persons are required to form a Trade Union. The union should always maintain 10 percent of the total strength as their members. Ministers are not allowed to become office bearers of any trade union.
New Codes – New Challenges
It was in 2002 that thesenew Labour codes 2020 were originally suggested. So, it has taken 17 years for them to see the light of day. With their introduction, bringing a change in regulations is a critical step, and it is pivotal that the labourers involved in the sector are aware of the development and assess the impact that will occur in their organisations.
The most noteworthy change is in the change in definition of ‘wage’ which has an impact not only on the company’s cash flow –increased contribution, revised gratuity and other retiral provisions – but also on employees’ net pay Employees must consider and assess the implications of keeping specific salary structures in mind. Fixed-term employees who are subject to gratuity liability have face implications as well. Aggregators will also have to consider the impact of the proposed contribution to the social security fund, which could be between1 percent and 2 percent of their turnover, with a cap of 5 percent of pay-outs made to gig workers/platform workers, etc. Furthermore, the current policy and process framework will need to be revisited in accordance with the new Code, and an appropriate technology interface should be built in.
Social security benefits are not being extended to the entire Indian workforce in a consistent manner. Instead, we have got inconsistencies that keep millions of low-wage workers out. The vast majority of our unorganised workers are exploited in ‘personal residential construction work,’ which is prohibited; instead, they must be protected.
The need of occupational safety has been emphasised, yet the rules are woefully inadequate. The majority of our unorganised labourers operate in small businesses and groups. Only firms with more than 250 employees will be eligible for the safety committee that the new law intends to establish. This suggests that 90% of our effort is wasted.. Furthermore, the employer’s liability in the event of a death caused by a working accident is minimal, at $100,000. This is despite the fact that India’s workplace is very dangerous, with over 40,000 people killed each year. Even if they are ostensibly in place, safety measures are poor. It was critical to establish criminal culpability for companies who violate workplace safety regulations, resulting in death or injury.
Unorganized labourers, such as gig workers, have not been identified, and this group is the most susceptible.
Self-employed people, piece-rate workers, and people who work from home are simply not covered by any social security system. Inter-state migration have been mentioned in the new acts, possibly as a result of the sad catastrophe that occurred after millions of people were forced to walk home owing to the lockdown. However, almost 80% of the country’s migrants are intra-state workers, who are not covered by the new legislation.
True, India’s labour rules were quite strict, which contributed to the country’s tiny firm size. However, the solution is not to simply modify the law and leave it at that. It’s critical that the government focuses on developing support institutions for skilling and apprenticeship, as well as ensuring social security and basic incomes. Those measures will help to alleviate labour market risks that come with any nation’s transition to a modern, formal economy.
Every day, there are a few new developments, and more notifications and clarifications are expected in the coming days. The employer would need to keep an eye on things to ensure a smooth transition to the new Code; after all, beginning a project well makes it easier to do the rest.
Looking Forward: An Institutional Mechanism for Skill Formation
Construction workers in India continue to be trained by traditional master craftsmen due to a lack of an institutional mechanism for skill formation. The traditional system disregards new technologies and work methods, as well as safety and sustainability, which will become increasingly important in the coming years. The Singapore government initiatedSkillsFuture, an initiative for the Singapore workforce that promotes skill mastery and lifelong learning. It is a key component of the Construction Industry Transformation Map and the Real Estate Transformation Map (for the Facilities Management sub-sector). The Skills Framework for Built Environment, developed collaboratively bySkillsFuture Singapore (“SSG”),Workforce Singapore (“WSG”), and theBuilding and Construction Authority (“BCA”), in collaboration with industry associations, training providers, organisations, and unions, provides useful information on: Information about the industry; Pathways to a Career Occupations and job functions; Existing and developing abilities; and Training programmes for skill enhancement and mastery.
In India, theConstruction Industry Development Council (“CIDC”) an apex organisation, established by the Planning Commission now, Niti Aayog, and the Indian Construction Industry to provide skill development training to all types of Construction workers. Inadequate skilled workers cause delays in the Construction of various projects, resulting in cost increases; thus, to add real, long-term value to the ecosystem, the next generation of workers will require consistent and ongoing upskilling, not just training.
The views, thoughts, and opinions expressed in the article belong solely to the author, and not necessarily to their employers, organizations, committees or other groups or individual to which they are affiliated.
About the Authors
Ms. Ananya Seth is an Associate (Banking & Finance) at ASA Legal, Delhi.
Ms. Aribba Siddique is a 3rd year student at Amity Law School Kolkata, and is an Associate Editor at IJPIEL.
Managing Editor: Naman Anand
Editors-in-Chief: Jhalak Srivastav and Aakaansha Arya
Senior Editor: Hamna Viriyam
Associate Editor: Aribba Siddique
Junior Editor: Vedant Bisht
Preferred Method of Citation
Ananya Seth and Aribba Siddique, “Labour, Legislations, and the Indian Construction Sector- An Overview” (IJPIEL, 18 May 2022)