This act is enacted to regulate the conditions of services of Contract Labour. It applies to every establishment and contractor who employs 20 or more workers as contract labour. It has also provisions to empower Government to prohibit contract labour system in any process, operation or other work in any establishment.

gCentral Advisory Contract Labour Boardh and gState Advisory Contract Labour Boardh are established to advise matters arising out of the administration of this Act.
The principal employer has to register itself with Registering Officer under this Act. It also makes mandatory provisions of licensing for contractors.

The act has provisions for welfare and health of contract labour. It has provision of canteen and rest room in certain conditions. It also provides facilities for drinking water, washing facilities, latrines and urinals for contract labour. Provisions of first aid facilities are also made. Contractor is also made responsible for payment of wages to labour.

In case, contractor does not provide facilities, principal employer is made responsible for providing facilities to contract labour. The principal employer is authorized to recover any expenses incurred by him for providing such facilities by deducting from any amount payable to contractor.

By various judgments of courts, it is clear that provisions of ESI and PF are also applicable on contract labour. After contract is over, contract labour has no right to employ in regular services.