PROHIBITION OF EMPLOYMENT OF CONTRACT LABOUR :
This is the most significant provision in the Act. It empowers the appropriate Government to prohibit employment of contract labour in any process, operation or other work in any establishment by issuing a notification in the Official Gazette. The following steps are, however, required to be taken before such a notification is issued:
(1) the appropriate Government shall consult the Central Board or as the case may be, the State Board,
(2) the appropriate Government shall have regard to the conditions of work and benefits provided for the contract labour in that establishment and other relevant factors such as:
(a) whether the process, operation or other work incidential to, or necessary for the industry, trade, business, manufacture or occupation that is carried on in the establishment.
(b) whether it is of perennial nature, that is to say, it is of sufficient duration having regard to the nature of industry, trade, business, manufacture or occupation carried on in that establishment;
(c) whether it is done ordinarily through regular workmen in that establishment similar thereto;
(d) whether it is sufficient to employ considerable number of wholetime workmen. (Section 10)
Explanation: If a question arises whether any process or operation or other work is of perennial nature, the decision of the appropriate Government thereon shall be final.
But where the government fails to disclose the basis for refusing to abolish contract labour, it amounts to nonapplication of mind to the requirements of Section 10(2) and the court can order abolition of contract labour (GEA v. Union of India, 1997 Lab IC 1701 Bom.).