Labour management is one of the most crucial task of an entrepreneur. In order to surpass the stringent labour regulations, Indian industry has largely resorted to contract labourers, who are governed by the “Contract Labour Regulation and Abolition Act of 1970”. This paper discusses the findings from a primary survey carried out in one of the industrially developed states of India, Karnataka. It reveals that many of the stipulations made in the Act to safeguard contract labourer are not followed in practice. It has also been felt by the workers that collusive agreement between the labour inspector, the protector of law, and the principal employer has aided the violation of law. It shows why it is economically optimal for an enterprenuer and a labour inspector to collude. It also examines whether any provision of reward for the labour inspector would help to protect the law.
URL : 20141210061837.pdf