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86th Session
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Report V (2B) Addendum
Committee on contract labour
International Labour Office Geneva
1. Introduction
As indicated in the introduction to Reports V (2A) and (2B) on contract labour (International Labour Conference, 86th Session, 1998), the Office is submitting this working document for possible use by the constituents. This step is being taken in response to various concerns expressed by the delegates to the 85th Session of the International Labour Conference and in subsequent communications to the Office. Intended to clarify the various types of situations covered by the definition of "contract labour," this document also points to provisions which might be relevant to each of these particular situations. It also addresses linguistic questions affecting the French and Spanish versions of the instruments.
One of the main difficulties has been that the term "contract labour" generates different connotations in different countries. Before grappling with a universal definition, it may be helpful for a moment to focus on what the sources of concern among ILO constituents in this context have been. That in turn will make it easier to clarify how to address these concerns in terms of international labour standards. The notion of subordination or dependency of the worker is at the core of these concerns within the framework of traditional labour law. The signs that the labour market and thus national law and practice are to some extent breaking out of the traditional mould pose a particular challenge for identifying what can be addressed now at the international level. From the perspective of traditional labour law, this working document attempts to identify the different situations which can be dealt with in international instruments in relation to contract labour at this stage. Research into further labour market and legal developments at the national level may point the way towards consideration of additional standard-setting activities in the future. Here we are simply trying to seize hold of the concerns that contract labour gives rise to today, and to pinpoint how those concerns might be addressed in international instruments.
To assist the discussion, it seems essential to make a distinction between the various situations that appear to come under the concept of contract labour and the extent and nature of the protection that each of those situations might be afforded under a Convention. This distinction might usefully be carried over into the text of the instruments.
2. Situations covered by the concept
Contract labour is understood as covering all situations in which work is performed for a person who is not the worker's employer under labour law as it now stands, but in conditions of subordination or dependency that are close to an employment relationship under that law. Thus at one end of the spectrum, in fact just beyond the border of contract labour, there are the hidden or disguised employment relationships. In this situation, all of the characteristics laid down in national law for the existence of an employment relationship between a worker and an employer are displayed, but in order to avoid legal obligations, an attempt has been made to cloak that relationship in another form. The question here is to establish criteria and procedures to identify whether an employment relationship in fact exists and, where it does, to ensure that adequate procedures exist for enforcing the law that governs that relationship. This will primarily be labour law, which has a protective function given the inequality of bargaining power between the parties. There seems to be overall agreement on the need to combat fraudulent arrangements, but there are differences of opinion as to the usefulness of reaffirming a given proposition, i.e. that the law is to be obeyed and enforced. In any event, where a relationship is "unmasked" to reveal a genuine employment relationship, it would then be governed by the law applicable to that relationship. Since the parties would be in an employment relationship, such a scenario would not then involve contract labour as regards them. However, an additional provision concerning procedures for determining whether an employment relationship exists could be added to an instrument on contract labour, for purposes of distinguishing the two situations.
Just beyond the border of contract labour at the opposite extreme is the independent contractor who performs work or provides services on his or her own account to an enterprise under conditions that are characteristic of a purely commercial relationship. This relationship would be governed primarily by commercial law, which presumes that the parties are on an equal footing when entering into the contract. This too would not constitute contract labour. Nor would the decision of an employer to outsource or subcontract certain activities formerly performed by his or her own employees, such as cleaning services or the like, although that decision might give rise to the use of contract labour as described immediately below.
Between those two extremes, there are situations in which a worker is in an actual relationship of dependency on or subordination to another party who is using his or her labour (the "user enterprise") but where the worker is not considered to be the employee of the user enterprise under national law. Where the conditions of dependency on or subordination to the user enterprise are similar to those that characterize an employment relationship between the user enterprise and its employees, there would be contract labour.
This common denominator for all contract labour in the context of international standard-setting may occur in several different configurations. Contract labour could take the form of a direct, bilateral relationship between the worker (who is not an employee of the user enterprise or an independent contractor) and the user enterprise. This category could be called dependent contractors or employee-assimilated workers. Alternatively, contract labour could take the form of an indirect relationship involving a third party who makes the worker available to the user enterprise. In the case of such a triangular relationship, the concept of contract labour would come into play where the workers' subordination or dependency is in relation to the user enterprise even if they are the employees of the enterprise which made them available to the user enterprise. Indeed, even when the worker is not considered under national law to be the employee of either enterprise, the worker could, for different purposes, be subordinate to or dependent upon either or both the user enterprise and the enterprise which provided the workers. This category could be termed "workers who are made available to the user enterprise" to perform contract labour. Use of such language would also avoid the difficulties encountered in earlier discussion by referring to "subcontractor" and "intermediary", which causes particular problems in the French and Spanish texts. As to workers in this group, however, opinions differ on the feasibility of international standard-setting; in addition, national law and practice varies as to the distribution of responsibilities, if any, between the user enterprise and the other enterprise vis-à-vis the worker, and the procedures to be used to establish this. In practice the main problems involving contract labour appear to occur in relation to occupational safety and health protection, compensation in case of employment injury or occupational accident, payment of amounts owed to the worker and in some countries exercise of the rights to organize and to engage in collective bargaining.
3. To what extent are the various situations
already addressed in existing instruments?
A further step in identifying how to address the various situations involves looking at other ILO standards. Within the confines of this document, it is not possible to provide a comprehensive review of the extent to which the various situations described above are already covered by existing international labour standards. For cases such as those just mentioned, it could be useful to look at how they may already be covered by other ILO standards. Again, this may vary depending upon whether the contract labour is performed by a dependent contractor or by a person employed by an enterprise which provides workers for a user enterprise. The provision of the draft Convention stipulating that it would not affect more favourable provisions under other international labour Conventions applicable to the workers concerned is pertinent here.
Many ILO standards are applicable to "workers" in general, and are not limited to "employees". A prime example is the Freedom of Association and Protection of the Right to Organize Convention, 1948 (No. 87), which would apply to all types of contract workers. A number of substantive provisions of Conventions, however, refer specifically to "employees" and/or "employers" and would apply only in the context of an employment relationship; the Termination of Employment Convention, 1982 (No. 158) and the Protection of Workers' Claims (Employer's Insolvency) Convention, 1992 (No. 173) illustrate this point. The Occupational Safety and Health Convention, 1981 (No. 155), refers to "workers" but defines them as "employed persons", and covers workplaces under the direct or indirect control of the employer (Art. 3). The Safety and Health in Construction Convention, 1988 (No. 167) contains a detailed provision addressing the question of responsibility when two or more employers undertake activities simultaneously at one construction site (Art. 8). There are also Conventions covering workers who have been categorized in another way, such as the Home Work Convention, 1996 (No.177) and who may in some circumstances also be engaged in contract labour while they work at home. Finally, the provisions of the Private Employment Agencies Convention, 1997 (No. 181) would apply where such agencies employ workers with a view to making them available to a third party in circumstances constituting contract labour. The provisions of Convention No. 181 provide protection that is in some respects greater and in some respects lesser than the protection that has been envisaged so far in the draft instruments on contract labour.
To sum up, then, for purposes of possible new international instruments, it is important to identify the gaps that remain in protection for contract workers in different situations, and to devise provisions appropriate to those situations that could realistically be applied in an international instrument. The suggested changes to the text of the proposed instruments, annexed to this working document, present an illustration.
4. Possible elements for a Convention and Recommendation
The various contract labour situations outlined above give rise to the same questions, but not necessarily to the same answers in all national systems. Therefore it may help to focus on the areas in which the workers involved in these various situations need protection most, and how such protection could be afforded. The Convention itself could have two parts, the first one containing a minimum level of protection directed towards all contract workers, whether they are in a direct or a triangular relationship with the user enterprise. The definition of contract labour would exclude work performed by employees of a user enterprise, but would encompass employees of another enterprise, as well as workers without employee status, as long as they perform contract labour. The first Part could also take up the commonly shared concern to have clear-cut, adequate procedures for determining whether an employment relationship exists. The second Part, which would be optional, could address the special situation of contract workers who are employees of the enterprise which is making them available to the user enterprise, in order to take into account whatever rights and obligations they would have by virtue of this employee status. These would be employees of an employer other than a private employment agency, by virtue of the exclusion in draft Article 2 of the proposed Convention.
Elements for such a possible Convention are set out in an appendix to this working document. In outline form, its Part I (General Provisions) could:
- define "contract labour" for purposes of the instruments,
- state automatic and permissible exclusions from the scope of the instruments, as well as the option of accepting the obligations of Part II,
- provide for procedures for determining whether an employment relationship exists,
- contain substantive minimum protection applicable in relation to all types of contract workers, as follows:
i) ensuring that rights or obligations are not denied or avoided when contract labour is used,
ii) providing for measures appropriate to national law and practice to ensure that adequate protection exists for contract workers in relation to a limited list of subjects,
- provide for the means of application of the draft Convention, and
- state the relationship of this Convention to others.
The subjects appearing in the list for purposes of protection were tentatively chosen because they appear to be the principle areas of concern identified up to now and could have application irrespective of employee status. It is a list that has been pared down from what appeared in Report V (2B) as Articles 3, 4 and 6 of the proposed Convention, blended with the drafting style of Article 11 of Convention No. 181. However, further consideration of such a list, taking into account a more precise notion of the problems encountered in each instance and how they might best be addressed, is no doubt needed.
Part II of a possible Convention would first specify that it is to apply to contract workers who are made available to the user enterprise by another enterprise of which they are employees. This Part would take as given whatever rights these employees might have under national law and practice in relation to the subjects listed in Part I or any others (such as maternity protection, working hours and conditions, and remuneration, which have been omitted from the proposed list of minimum protections for all contract workers because it is difficult to see how they might be applied where the contract worker is not an employee). This Part would then provide for the Member to determine and allocate the respective responsibilities of the two enterprises as regards such contract workers, drawing upon Paragraph 8 (1) of the proposed Recommendation in Report V (2B) and by analogy Article 12 of Convention No. 181.
The Recommendation would then pick up on any remaining points. Primary among them would be equality of treatment, which in a Convention could pose difficulties of application in practice, given the various comparisons that could be made. The Office wonders whether in reality inequality of treatment as was envisaged -- that is where the worker is performing work which is essentially similar, under similar conditions (which implies a degree of continuity) and with similar qualifications -- goes beyond a situation of disguised employment. This latter situation is addressed in the suggested changes for both the proposed Convention and the proposed Recommendation. However, considering the discussions which the issue of equality of treatment gave rise to during the first discussion, the Office has included it in the suggested changes for the proposed Recommendation in a modified form. The whole issue clearly deserves further discussion. Since contract labour is an evolving phenomenon, a new proposal for having a periodic review of national law and practice has been added for consideration in the context of a Recommendation. The elements of text annexed to this document have to the extent possible retained the language of the proposed instruments set out in Report V (2B), although a few minor drafting changes to simplify the text have also been suggested.
5. Linguistic questions
Considerable dissatisfaction has been expressed by French and Spanish speakers over the terminology used in the draft instruments as proposed so far. The words "sous-traitance" in French and "subcontratación" in Spanish, used in the instruments to refer to "contract labour," also correspond to the idea of "outsourcing" (also called subcontracting or contracting out) in English. As explained earlier, outsourcing is not the direct subject of this standard-setting exercise. In Report V (1), the Office invited member States to express their views on possible alternative renditions in French of the English term "contract labour". The observations of several member States are reproduced in Report V (2A), and support was expressed for the following options: "travail sous contrat", "travail sous contrat autre qu'un contrat de travail", "travail sous contrat pour l'exécution d'un certain travail ou la fourniture de certains services", and retaining "travail en sous-traitance". With this diversity of views, it is difficult for the Office to propose an alternative to "travail en sous-traitance" that would be understood in the same way in all French-speaking countries.
6. Possible options for discussion
Several options are available to the delegates of the International Labour Conference in relation to the discussion on contract labour. At the opening, the Conference sets up the committees and determines the basis on which their discussion is to take place. The discussion will, in principle, be based on Reports V (2A) and (2B), which in accordance with normal practice will be referred to the Committee by the Conference. However, if at the same time the Conference also decided to refer this working document to the Committee and there was a general view in that Committee that such an alternative text provided a better basis for discussion than the texts in the Reports, a motion could be made to replace Report V (2B) with another text as the basis of discussion.
If, during the discussions, it becomes clear that delegates consider that an additional discussion of the topic is necessary, the Committee could propose a resolution for adoption by the Conference which could request the Governing Body to place the question on the agenda of a future International Labour Conference.
7. Conclusion
This working document, including the elements that follow for possible changes in the text of the proposed instruments, has sought to give elements as to how the discussion could be approached, by taking account of the broad areas of agreement and of disagreement. There are situations which are clearly in need of redress, in particular the disguised employment relationship. As regards the actual agenda item, many constituents believe that there are also situations involving contract labour that call for redress. There may also be broad agreement, at least in principle, that all situations constituting contract labour in the sense indicated above should be examined, clarified and regulated where the workers concerned are not guaranteed certain basic labour standards. The disagreement is essentially over how such situations are to be characterized, whether they should be covered by these particular instruments and how they should be regulated, if at all. The basic purpose of instruments on this topic would therefore be (a) to identify what Members mean by the concept of "contract labour" as well as the situations that are in need of redress, (b) to achieve agreement that Members will provide minimum protection covering the situations so identified through measures that best accord with their national conditions, and (c) that Members will seek to identify other situations involving contract labour with a view to taking corrective action where necessary in the future.
ANNEX
Suggested changes to the text of the proposed instruments
A. Proposed Convention concerning contract labour
The General Conference of the International Labour Organization,
Having been convened at Geneva by the Governing Body of the International Labour Office, and having met in its Eighty-sixth Session on 2 June 1998,
Having regard to the growing recourse to contract labour, and recognizing that it is appropriate to adopt new standards on the subject with a view to ensuring that contract workers enjoy adequate protection,
Having decided upon the adoption of certain proposals with regard to contract labour, which is the fifth item on the agenda of the session, and
Having determined that these proposals shall take the form of an international Convention;
adopts this ... day of June of the year one thousand nine hundred and ninety-eight the following Convention, which may be cited as Contract Labour Convention, 1998:
Part I. General provisions(1)
Article 1
For the purposes of this Convention,: (a) the term "contract labour" means work performed for a natural or legal person (referred to as a "user enterprise") by a person (referred to as a "contract worker") where the work is performed by the contract worker personally under actual conditions of dependency on or subordination to the user enterprise and these conditions are similar to those that characterize an employment relationship under national law and practice but where the contract worker is not the employee of the user enterprise. and where either:
(i) the work is performed pursuant to a direct contractual arrangement other than a contract of employment between the contract worker and the user enterprise; or
(ii) the contract worker is made available to provided for the user enterprise by another enterprise by a subcontractor or an intermediary;
(b) the term "subcontractor" means a natural or legal person who undertakes by a contractual arrangement with a user enterprise to have work performed for that enterprise;
(c) the term "intermediary" means a natural or legal person who makes contract workers available to a user enterprise without becoming formally the employer of these workers.
Article 2
1. Subject to the exclusions permitted under paragraph 2 below, the The Convention shall apply to all branches of economic activity and to all contract workers. It shall not apply to workers who, in accordance with national law and practice, have a recognized a contract of employment with the user enterprise. It shall not apply to employees of private employment agencies who are made available to a user enterprise to perform contract labour within the meaning of paragraph 1(b) of Article 1 of the Private Employment Agencies Convention, 1997.
2. The competent authority, after consulting the most representative organizations of employers and workers, may exclude from the application of the Convention or of certain provisions thereof:
(a) other particular categories of contract workers who otherwise enjoy adequate protection; or
(b) particular branches of economic activity when the application of the Convention in respect of them would raise special problems of a substantial nature.
3. A Member which ratifies the Convention shall specify, in its first report under article 22 of the Constitution of the International Labour Organization, any exclusion of which it avails itself under paragraph 2 and give the reasons therefor.
4. A Member which ratifies the Convention shall be bound by the provisions of Part I. If the Member accepts the obligations of Part II of the Convention, it shall so specify in a declaration accompanying its ratification. A Member which has initially accepted only Part I of the Convention may thereafter extend its acceptance to Part II.
Article 7 3
The Member shall take measures to ensure that rights or obligations under labour or social security laws or regulations are not denied or avoided when contract labour is used.
Article 4
1. Procedures shall be established, in accordance with national law and practice, to allow the determination of whether an employment relationship exists.
2. Such procedures shall be accessible, expeditious and based upon objective criteria.
Article 5
Measures appropriate to national law and practice shall be taken to ensure that adequate protection exists for all contract workers in relation to:
(a) the right to organize and the right to bargain collectively;
(b) freedom from discrimination on the basis of race, colour, sex, religion, political opinion, national extraction or social origin;
(c) minimum age;
(d) payment of amounts due to such workers for the work performed;
(e) occupational safety and health;
(f) compensation in case of injury or disease resulting from the performance of contract labour;
(g) payment of social insurance contributions, if any, payable on behalf of such workers in relation to the performance of contract labour.
Article 8 6
1. The Convention shall be applied by means of laws or regulations or by any other means consistent with national practice, such as court decisions, arbitration awards or collective agreements.
2. Effective measures appropriate to the means chosen pursuant to paragraph 1 shall be taken to ensure the proper application and enforcement of regulations or provisions concerning contract labour through adequate inspection or otherwise.
3. Adequate remedies, including penalties where appropriate, shall be provided for and effectively applied in case of violations of the regulations or provisions referred to in paragraph 2.
Article 9 7
The provisions of the Convention shall not affect more favourable provisions under other international labour Conventions applicable to the workers concerned.
Part II. Protection for contract workers who
are employees of another enterprise
Article 8
This Part applies to contract workers who are made available to the user enterprise by another enterprise of which they are employees. This other enterprise may be a natural or a legal person.
Article 9
The Member shall allocate, in accordance with national law and practice, the respective responsibilities of the user enterprise and the other enterprise in relation to the employees referred to in Article 8.
Article 3
The Member shall ensure that adequate measures, in accordance with national law and practice, are taken to prevent accidents and injury to the health of contract workers arising out of, linked with or occurring in the course of contract labour.
Article 4
Measures shall be taken, in accordance with national law and practice,:
(a) to promote adequate protection in relation to the payment of:
(i) amounts due to contract workers for the work performed; and
(ii) any social insurance contributions payable on behalf of such workers in relation to this work;
(b) to ensure that the responsibilities for fulfilling the financial obligations envisaged in subparagraphs (a) above are clearly determined.; and
(c) to ensure that contract workers receive compensation in case on injury or disease resulting from the performance of contract labour.
Article 5
The Member shall promote equality of treatment between contract workers and workers with a recognized employment relationship, taking into account the conditions applicable to other workers performing work which is essentially similar, under similar conditions.
Article 6
(1) Measures shall be taken to ensure that contract workers receive the same protection as workers with a recognized employment relationship with regard to:
(a) the right to organize and the right to bargain collectively;
(b) freedom from discrimination in employment and occupation on the basis of race, colour, sex, religion, political opinion, national extraction or social origin;
(c) minimum age.
(2) Measures shall be taken, as appropriate, to ensure that contract workers enjoy adequate protection as regards:
(a) working time and other working conditions;
(b) maternity protection;
(c) occupational safety and health;
(d) remuneration;
(e) statutory social security.
B. Proposed Recommendation concerning contract labour(1)
The General Conference of the International Labour Organization,
Having been convened at Geneva by the Governing Body of the International Labour Office, and having met in its Eighty-sixth Session on 2 June 1998,
Having decided upon the adoption of certain proposals with regard to contract labour, which is the fifth item on the agenda of the session, and
Having determined that these proposals shall take the form of a Recommendation supplementing the Contract Labour Convention 1998;
adopts this ... day of June of the year one thousand nine hundred and ninety-eight the following Recommendation, which may be cited as the Contract Labour Recommendation, 1998:
1. The provisions of this Recommendation should be applied in conjunction with those of the Contract Labour Convention, 1998 (hereafter referred to as "the Convention").
2. In determining, for the purpose of the definition of the term "contract labour", whether the conditions of dependency or subordination referred to in Article 1(a) of the Convention are met exist, a Member could consider, inter alia, the following criteria:
(a) the extent to which the user enterprise determines when and how work should be performed, including working time and other conditions of work of the worker;
(b) whether the user enterprise pays amounts due to the worker periodically and according to pre-established criteria;
(c) the extent of supervisory authority and control of the user enterprise over the worker with respect to the work performed, including disciplinary authority;
(d) the extent to which the user enterprise makes investments and provides tools, materials and machinery, among other things, to perform the work concerned;
(e) whether the worker can make profits or run the risk of losses in performing the work;
(f) whether the work is performed on a regular and continuous basis;
(g) whether the worker works for a single user enterprise;
(h) the extent to which the work performed is integrated into the normal activities of the user enterprise;
(i) whether the user enterprise provides substantial job-specific training to the worker.
3. Measures should be taken to ensure that contract workers are informed, in an appropriate and easily understandable manner, about their conditions of work, the amounts due to them and how these amounts will be determined.
4. (1) Measures should be taken, as appropriate, to ensure that contract workers are afforded equal treatment with to promote equality of treatment, as appropriate, between contract workers and employees of the user enterprise or, as the case may be, with employees of the subcontractor or of the intermediary enterprise making these workers available to the user enterprise. for performing work which is essentially similar, under similar conditions and requiring similar qualifications.
5. (2) In specified circumstances (for example, where contract labour is used mainly or solely for the purpose of denying rights or avoiding obligations under labour or social security laws and regulations), contract workers should be treated as employees of the user enterprise or, as the case may be, as employees of the subcontractor or as the employees of the intermediary enterprise making these workers available to the user enterprise, as the case may be.
6.5. In accordance with national law and practice, contract workers should not be made available to a user enterprise to replace workers of that enterprise who are on strike.
7.6. Measures should be taken to ensure that contract workers may refuse to perform work which they have reasonable justification to believe poses a serious danger to their safety and health.
8.7. (1) In allocating the responsibilities of the user enterprise and the other enterprise as referred to in Article 9 of the Convention, the Member should take into account the extent of the workers' dependency on or subordination to each enterprise. National law and practice might allocate the respective responsibilities of the subcontractor (or the intermediary, as the case may be) and the user enterprise for fulfilling obligations towards contract workers, taking into account the extent of the workers' dependency on or subordination to them.
(2) When the party responsible for fulfilling the obligations referred to in subparagraph (1) does not meet them, the other party, where appropriate, should be made responsible for doing so. When one enterprise referred to in Article 9 of the Convention does not meet its allocated responsibilities, the other enterprise referred to in that Article should, where appropriate, be made responsible.
(3) To the extent provided for by national law, financial obligations towards a contract worker may be jointly and severally shared by the enterprise making the worker available subcontractor and the user enterprise or by the intermediary and the user enterprise, or by all of them, as the case may be.
9.8. In the event of insolvency of the user enterprise or the enterprise making contract workers available to it, the subcontractor or the intermediary, the outstanding claims of a contract worker should be given the same priorities as those established by national law and practice with regard to a worker's claims against his or her employer.
10.9. (1)Recourse to contract labour might, according to national laws and regulations, be made subject to an obligation incumbent on the enterprise making contract workers available to a user enterprise subcontractor or the intermediary to register with or to obtain a licence from the competent authority.
(2) Registration or licensing might depend upon the enterprise making contract workers available to a user enterprise subcontractor or the intermediary demonstrating its viability and capacity to meet its obligations towards contract workers, or posting a bond sufficient to cover its obligations to such workers.
11.10. (1) Measures appropriate to national conditions should be taken, where necessary, to encourage collective bargaining as a means of determining and improving the terms and conditions of work of contract workers.
(2) Any obstacles to the exercise of the right of contract workers to join organizations of their choice and to participate in the activities of such organizations should be identified and eliminated.
12.11. Members should, where possible, compile, keep up to date and make publicly available statistics and other information on contract labour.
13.12. Members should take measures, as appropriate, to provide protection to contract workers from other countries who perform work in their territory.
14.13. Members should, in consultation with representative organizations of employers and workers, periodically review national law and practice to determine whether there are situations involving the use of contract labour that call for the adoption of new measures.
1. New proposed text is in bold characters. Text which is proposed for deletion is struck out.