The provisions contained under sub-section (4) of section 1 of the Contract Labour
(Regulation and Abolition) Act, 1970 (Act No. 37 of 1970) are applicable to every establishment of
which twenty or more workmen are employed or were employed on any day of the preceding
twelve months as contract labour. The Act also applies to every contractor who employs or who
employed on any day of the preceding twelve months, twenty or more workmen. Because of this
threshold limit, the principal employers while hiring personnel or procuring commodities from
small entrepreneurs and petty contractors, find it difficult to execute contracts, as the small units
face hardships in ensuring formalities under the Act. It has been observed that lower limit either
encourages non-compliance or restrict the engagement of required labour as per demand.
