Robust Services Agreement : A Precursor to Engaging Contract Labour

Engagement of Contract Labour proves to be beneficial in speedy completion of assigned work according to specifications and eases burden of the principal employer with respect to extensive supervision and control. Though well intended, the engagement may raise suspicion and questions by labour authorities and courts, if not executed with proper care and caution. The most essential pre-requisite for engagement of Contract Labour in a legally compliant way is to execute a robust services agreement between the Principal Employer and the contractor and clearly stipulate the contractor’s role and responsibilities, including, inter-alia, timely payments to the employees of the contractor and renewal of statutory registrations, with proof of the same submitted to the Principal Employer. Among other important terms, the Company must also include provisions of non-exclusive engagement, indemnity provisions requiring compliance with Indian laws, termination and quick dispute resolution, etc., as appropriate. It’s crucial to ensure on the part of the Principal Employer that the Services Agreement is used as a culvert to engage the right contract labour in a timely manner but must avoid participation in their selection and management.