Question

Discuss the use by processors of production contracts and of labor contracts. How do they differ from each other?

Answer 1

production contracts are those type of contracts whereby agreement between an employer and employee generally labour which may be skilled or semi skilled is enabled on the terms that the labour will be paid the wages on the basis of amount of production or number of units they produce for the employer . for each specific unit or quantity depending upon industry to industry a standard rate is set and agreed upon by the labour and the employer accordingly for which the labourer are paid depending upon the number of units they produce . the payment can be done on daily basis , weekly basis or even monthly basis as decided upon . in this case the employer has the advantage of maximum production as the labourer will be keen in producing more and more so as to get high wages on multiplication with the number of units by agreed rate per unit .

whereas in the case of labour contracts the employer enters into contract with a contractor who is also known as labour contractor who is incharge of all the labourer working in the industry . under this type of contract the employer will pay a definite amount as agreed amongst the employer and contractor and it is the duty of the contractor to get work done from the labourer and pay the labourer adequate amount of their work . in this case the labourer are not paid on the basis of number of articles they produce rather a fixed salay or wages are paid to them as in the case of production contracts the wages of labourer will vary on the basis of number of articles they produce but in these type of contracts the wages remain constant but work load may vary . in this the employer has to take pain to be on head of the contractor to get maximum work done because they are going to be paid the same even if they work less which is the main drawback of this system .