The Supreme Court ruling that the privately-owned Delhi International Airport Limited (DIAL) must abolish all contract labour is likely to hit all PSUs that, like their private-sector counterparts, are increasingly using more contract labour. Based on a petition filed by the union of the contract workers whose services were terminated in 2003, the Court has ruled that DIAL was legally required to meet all the obligations of the government-owned AAI. It has said the notification issued by the central government on July 26, 2004, under the Contract Labour (Regulation and Abolition) Act?this prohibited the employment of contract labour of trolley retrievers in the AAI establishment at the international and domestic airports at Delhi?would also be applicable to DIAL. Since many of the workers had been dismissed in 2003, the Court ruled DIAL should pay each of the 136 terminated workers R5 lakh.
The Court judgment regarding the applicability of the notifications issued by the central government to the private entities, which take over the functions of the public sector units, would seriously jeopardise the prospects of using contract labour in specific activities in a host of PSUs, including the railways, FCI, MTNL, ports and so on. In fact, an earlier judgment in December 1996, which ensured automatic absorption of contract labour in Air India, was reviewed and reversed by the Court in August 2001. Restraints on the use of contract labour in PSUs would place them at a severe disadvantage, especially since contract workers account for close to a quarter of the workforce in the manufacturing sector. In fact, the National Commission for Enterprises in the Unorganised Sector has estimated that informal workers accounted for 66% of the formal sector of Indian industry?depriving public sector enterprises of such employees would be debilitating.