The All India Lawyers’ Association for Justice (AILAJ) has drafted a bill to ensure permanent status for workers in Karnataka if they’ve worked in an organisation continuously for 180 days. The draft bill covers both private and state-run establishments and is similar to such legislations passed in Tamil Nadu and Assam in the late 1980s.
The draft Karnataka Conferment of Permanent Status to Workmen Act 2026 was presented for discussion during a day-long consultation on the contract labour system and the contractualisation of the workforce on Saturday, April 11, in Bengaluru.
The consultation was jointly organised by the Centre for Labour Studies and Human Rights Collective at the National Law School of India University and AILAJ.
The consultation discussed the political economy of contract labour, court rulings that became major impediments to workers’ rights and those which furthered them, the Occupational Safety, Health and Working Conditions Code, and the labour codes in general.
At the end of the consultation, Maitreyi Krishnan, national president of AILAJ briefly presented the draft bill. It was decided that the draft law would be presented to the state government after participants of the conference had had time to give comments on the draft law to AILAJ.
The bill envisions granting permanent status to people employed continuously for 180 days over 12 months in an establishment. This includes establishments under the Factories Act, those run by the state and Union government, any other business or establishment, including journalistic or printing work.
While the Tamil Nadu Industrial Establishments (Conferment of Permanent Status to Workmen) Act 1981 applies to a wide range of establishments similar to the draft Karnataka law, it leaves out establishments employing under 50 workers and also provides for exemptions to certain types of establishments.
Maitreyi told TNM that exemptions to the protections of labour laws were like a “fraud” played on people who were hired to do work that is of a permanent and perennial nature but are treated as temporary workers.
She said that AILAJ had made the threshold 180 days or six months because it was “evidence” that a particular type of work was of a permanent nature.
The Contract Labour (Regularisation and Abolition) Act 1970 also hinges on the perennial nature of work. It prohibits the contractualisation of work that is of a permanent nature.
“The point of a law is to provide a basic level of protections and to include people in those protections. Exempting someone from these laws is basically discrimination that says ‘You don’t have the right to these protections’,” said Maitreyi, who was also a member of the expert committee constituted by the The Kerala government had set up a committee to examine the Labour Codes enacted by the Union government. The committee submitted its report in March.
Giving an example, she said that the IT industry was exempted from the Industrial Employment (Standing Orders) Act 1960 which outlines the terms and conditions of work. “Increasingly, labour legislations have been about exempting certain groups from the protections of these laws. Why should the IT industry be exempted?”
The Karnataka draft law also covers workers who have been employed for 180 days, compared with TN which applies to people who’ve worked 480 days in 24 months at a particular establishment. While the TN law allows for exemptions in the construction industry, the Karnataka bill has no such provision.
Penalties
Employers who do not comply with the law are liable to be punished with up to one year of imprisonment or a fine of Rs 1 lakh, or both. The draft law would also penalise people for making false statements under the law with up to one year of jail, or a fine of Rs 50,000 or both.
The draft law provides for penalising offending companies by holding both its managerial personnel and the company itself guilty.
Increase in contractualisation, decline in wages
The organisers pointed out in the concept note that not only had the scale of contractualised labour grown over the years, data showed that workers on contract earned significantly less than those who were permanent.
Citing a paper by Kulvinder Singh at the Centre for Economic Data and Analysis at Ashoka University, the organisers said that between 2002-03 and 2021-22, the number of directly employed workers increased from 4.7 million to 8.1 million, a growth of 72.3%. However, in the same period, the number of contract workers grew from 1.4 million to 5.5 million—a staggering 292.9%.
By 2021-22, the share of directly employed workers had decreased to 59.8% and the share of contract workers had increased to 40.2%.
Amit K Bhandari and Almas Heshmati who studied wage differences, found that contract workers earn 45% less than permanent counterparts because of cost cutting strategies. The International Labour Organisation’s (ILO) India Wage Report 2018 shows that the average wage for casual work was still 36% of what was paid to regular workers, according to the concept note.
During the session on the political economy of contract labour, speakers spoke of the ways in which the contract labour system replicated the caste system.
Ramadevi from the Bruhat Bengaluru Mahanagara Palike Pourakarmika Union argued that the contract labour system was a form of caste-based discrimination considering that a majority of workers were from lowered caste communities.
Ramadevi said that sanitation workers, who used to previously be contract workers with the BBMP had laboured under slave-like conditions—denied salary for months together and without access to social security like insurance and provident fund.
Vijayakumar from the HAL Contract Workers’ Association spoke of another kind of discrimination in public sector units which hire some workers on contract and others as permanent employees.
He said that contract workers face double discrimination—from both their employers and permanent workers who treat them as inferior. He said that the PSUs have made it impossible for contract workers to organise by creating a fear of job loss, and that only HAL has a union for contract workers.
Contract labour in Karnataka
About a third of 9,68,922 workers employed in factories in Karnataka were hired through contractors according to the Annual Survey of Industries 2023-24. This is slightly lower than 41% of 1,55,19,957 total factory workers labouring under the contract system across the country.
The state government had drafted a bill last year to prohibit outsourcing of personnel in government offices with the intention of tabling it during the winter session. The draft bill came after a Cabinet sub-committee headed by Law and Parliamentary Affairs Minister HK Patil recommended that the government phase out outsourcing of government jobs by March 2028.
However, the Karnataka Outsourced Employees (Regulation, Placement and Welfare) Bill 2025 did not see the light of day.
At present, about 2.5 lakh posts of a total of 5.2 lakh government jobs across departments have been largely filled with workers hired on contract. There are about 96,000 contract workers in Karnataka.