Contract Labour Model: A Cost Benefit Tool or IR Trigger?, Cover Story

Contract Labour at Crossroads: Time to Rebuild, Not Patch Up

18 hours ago

Haresh Chaturvedii argues that India's traditional contract labour model is fast losing relevance in its current form. As Labour Codes redefine employer accountability, younger workers demand dignity alongside wages, and ESG scrutiny intensifies, he believes organisations must move beyond cost-driven contracting towards a more humane and accountable workforce model. In this candid conversation, he shares why contract labour remains essential, where industry is getting it wrong, and how HR and IR leaders can prevent today's flexibility from becoming tomorrow's industrial relations flashpoint.

More than three decades at the frontlines of workplace relations reveal an uncomfortable truth- the old contract model is cracking, and Indian industry must choose between a patch-up or a rebuild.

India’s contract labour workforce – estimated at over 50 million workers across organised sectors – has long been the silent engine of industrial growth. The contractor-on-call model gave enterprises the flexibility they needed during liberalisation and the infrastructure boom. But in 2026, with four Labour Codes reshaping the statutory landscape, younger workers demanding dignity alongside wages, and unionists filing fresh grievances daily, this model is being weighed on scales it was never designed for.

Is the traditional model losing relevance?

Bluntly, yes, in its current avatar. The traditional model was built on a three-legged stool: low cost, easy exit, and legal insulation via contractors. All three legs are wobbling. The Code on Social Security, 2020, extends provident fund and...