07/02/2026

Contract Labour Is Not a Cost-Cutting Tool

Contract Labour Is Not a Cost-Cutting Tool
As organisations continue to balance agility, productivity, and cost pressures in an increasingly dynamic business environment, the debate around contract labour has gained renewed significance. In this exclusive conversation, Madhu T K shares his perspectives on the evolving contract labour landscape, the implications of the new labour codes, emerging workforce models, and the long-term industrial relations strategies organisations must adopt to build trust, ensure compliance, and sustain workplace harmony.

In your view, what are the most common blind spots organisations continue to overlook while engaging contract labour, and how do these gaps eventually translate into IR disruptions, Brand damage and trust deficit?

MT Legally, all the provisions of the Occupational Safety, Health and Working Conditions Code, 2020 (OSHWC Code) or the state Shops and Commercial Establishments Acts abouthealth, safety, welfare and working conditions and provisions relating to minimum wages and payment of wages are required to be extended to the workers of the contractors also. It is true that the responsibility that a contract labour will shoulder is always much lower than that borne by a regular worker. But the contract labour and the regular worker doing the same work are equally rated with regard to the fixation of wages.The responsibility factor cannot be put under the ambit of fixation of wages. Even though the responsibility of payment of bonus, social security contributions like ESI, EPF, etc., is on the contractor, ultimately, these payments by the...

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Madhu T K

is Founder and CEO of DefusIR Solutions Pvt. Ltd. Kannur, Kerala. He is a Seasoned HR Professional committed to building a strong HR team for the organisations by mentoring, directing and guiding the budding HR Professionals. He gained expertise in managing Industrial Relations by working with establishments having multiple trade unions and carried out several Long Term Settlements involving Trade Unions for various organisations.

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Madhu T K

is Founder and CEO of DefusIR Solutions Pvt. Ltd. Kannur, Kerala. He is a Seasoned HR Professional committed to building a strong HR team for the organisations by mentoring, directing and guiding the budding HR Professionals. He gained expertise in managing Industrial Relations by working with establishments having multiple trade unions and carried out several Long Term Settlements involving Trade Unions for various organisations.

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