India: BOCW Act, 1996, Applies to Construction Workers

There are more than 28 million skilled and unskilled workers engaged in the construction sector in India. The sector is labour-intensive and most of the labourers are unskilled, unorganized and tend to work under inhuman and pitiful conditions. To address such inhuman working conditions and poor health and safety standards in the real estate industry, the Government of India enacted the Building and Other Constructions Workers (Regulation of Employment and Conditions of Service) Act, 1996 (hereinafter referred to as the "BOCW Act"). The BOCW Act is a social welfare legislation that aims to benefit workers engaged in building and construction activities across the country. The preamble of the BOCW Act explicates the said purpose:

"An act to regulate the employment and conditions of service of building and other construction workers and to provide for their safety, health and welfare measures and for other matters connected therewith or incidental thereto."

The ambit of the BOCW Act is wide, particularly in a country where the infrastructure and construction sectors have seen significant growth. The object of the BOCW Act as well as its framework is analogous to other labour law legislations, but in particular, the BOCW Act is similar to the Factories Act, 1948.

Limited Coverage of the Factories Act, 1948

The BOCW Act stipulates health, safety and welfare measures applicable to building workers. Building worker is defined in Section 2(e) of the BOCW Act as "a person who is employed to do any skilled, semi-skilled or unskilled, manual, supervisory, technical or clerical work for hire or reward, whether the terms of employment be expressed or implied, in connection with any building or other construction work."

Since a building worker is basically defined as a person involved in building or construction work, the definition of "building or construction work" is to be looked into.

As per Section 2(d) of the BOCW Act, "building or other construction work" includes "the construction, alteration, repairs, maintenance or demolition- of or, in relation to, buildings, streets, roads, railways, tramways, airfields, irrigation, drainage, embankment and navigation works, flood control works (including storm water drainage works), generation, transmission and distribution of power, water works (including channels for distribution of water), oil and gas installations, electric lines, wireless, radio; television, telephone, telegraph and overseas communication dams, canals, reservoirs, watercourses, tunnels, bridges, viaducts, aquaducts, pipelines, towers, cooling towers, transmission towers and such other work as may be specified in this behalf by the appropriate Government, by notification but does not include any building or other construction work to which the provisions of the Factories Act, 1948 (63 of 1948), or the Mines Act, 1952 (35 of 1952), apply."

Hence, the term "building or other construction work" is defined in a manner that it does not include any building or other construction work to which the provisions of the Factories Act, 1948, apply. This exclusion clause of Section 2 (d) has been used by employers to evade registration and payment of tax under the BOCW Act. Employers covered under the Factories Act, 1948, refuse to come under the purview of the BOCW Act.

As per Section 2 (l) of the Factories Act, 1948, "worker" means a person employed in any manufacturing process, or in cleaning any part of the machinery or premises used for a manufacturing process, or in any kind of work incidental to or connected with, the manufacturing process, or the subject of the manufacturing process.

As under Section 2 (k) "Manufacturing process" includes the following:

• Making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing, or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery or disposal.
  
• Pumping oil, water, sewage or any other substance.
  
• Generating, transforming or transmitting power.
  
• Composing types for printing, printing by letter press, lithography, photogravure or other similar process or book binding.
  
• Constructing, reconstructing, repairing, refitting, finishing or breaking up ships or vessels.
  
• Preserving or storing any article in cold storage.
  

In view of the above, it is inferred that the term "worker" under the Factories Act, 1948, does not involve a person involved in the construction of buildings. Also, the term "manufacturing process" does not involve any process for construction of buildings. Hence, the Factories Act covers only those workers who are engaged in the manufacturing process or any work that is incidental to the manufacturing process, and not workers who are involved in building and construction works.

Seminal Case

The fact that construction workers are not covered under the Factories Act, 1948, and are therefore entitled to welfare measures under the BOCW Act was put forth in the case of Lanco Anpara Power Ltd. V. State Of Uttar Pradesh & Others dated Oct. 10, 2016.

Facts of the case. The petitioner construction companies were issued various show cause notices for failing to register under the BOCW Act and for payment of tax under the BOCW Act. The validity of these notices were challenged in several writ petitions before various High Courts on the ground that the BOCW Act was not applicable to these factories as they were registered under the Factories Act. The petitioner construction companies, which are engaged in construction activities, argued that once the undertaking or the establishment had obtained a license for registration under the Factories Act, the BOCW Act was not applicable on account of the exclusion under Section 2(1)(d) of the BOCW Act. However, the respondents called for a more beneficial interpretation to the exclusion clause on the ground that the legislation must cater to the benefits of construction workers.

Issue. The issue before the Supreme Court was whether the BOCW Act was applicable to those premises that are registered under the Factories Act, 1948.

Judgment. The Court held that the establishments/premises registered under the Factories Act, 1948, employing construction workers in the construction of factory premises were not excluded from the application of the BOCW Act in terms of the exclusion clause. The Court reasoned that an establishment/premise would become a factory under Section 2 (m) of the Factories Act only when the manufacturing process as defined under Section 2(k) of the Factories Act commenced. Consequently, the provisions of the Factories Act would apply only when the manufacturing process commences, and even upon commencement of the manufacturing activity, it only covered those workers who are engaged in such manufacturing activity under the Factories Act and not construction workers.

Hence, construction activities which are carried out in relation to establishments/registered premises /licensed under the Factories Act, 1948, would not attract the exclusion clause of the BOCW Act by itself. Workers carrying on such activities would be covered under the BOCW Act.

Takeaway

It is laudable that the Indian government has made welfare provisions for long neglected construction workers. However, there have been gaps in the clarity and enforcement until the courts have stepped in. The Supreme Court has clarified that building and construction workers engaged in factory premises are entitled to welfare measures under the BOCW Act. However, now the question arises as to who is responsible for obligations under the BOCW Act. The term "employer" in the BOCW Act is defined to include both contractors and owners. Hence, the owners and the contractors pass the responsibility to one another.

It is understood that the Central Government is also planning to make amendments to the BOCW Act to widen the scope of applicability of the BOCW Act to enable the respective state governments to implement the Acts and it is hoped that the amendments will truly benefit the construction workers by providing better and safer work conditions.

Sudipto Mitra is an attorney with SS Rana & Co. in New Delhi, India. © 2017 SS Rana & Co. All rights reserved. Reposted with permission of Lexology.