Can We Engage Contractors? - CiteHR
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We are a Trust registered u/s 12 AA of the I.T.Act as a public service organisation. We collect garbage from about 1,500 homes in Hyderabad for a monthly fee, segregate and remove the recyclables, and send the rest to landfill through the municipal corporation trucks. 15 workers carry out this task, and, apart from these, we have a bill collector and a supervisor.
My query is whether we can make a few of the garbage collection workers as contractors who employ the rest of the workers. Do we need a licence for this and does the contractor need a licence? We have to keep in mind that the work we are wanting to assign to the contractors is perennial work throughout the year, but, even taking into account the number of workers the contractors will engage, the total workforce will be less than 20. We will of course deduct TDS as required from our payments to the contractor
Would greatly appreciate the advice of the experts in this group.
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Since the nature of work is perennial your act of getting the things done through some contract labour will be illegal even if the number of workers so engaged is less than 20. At the same time, you can have a contract for service with a few vendors (contractors) who manage to supply garbage for you. In such arrangement the contractor is only a supplier of material and you pay for the goods delivered to you. It is upto the contractor to decide wherefrom the garbage should be collected and how many workers should be engaged in the process. By doing this, you will not become the (principal) employer of the workers and you will not be responsible for the payment of wages, ESI/PF etc. Since this arrangement is a contract "for" service and not contract "of" service, the provisions of the Contract Labour (Regulation and Abolition) Act will not be applicable to you and therefore, you need not take any registration under the Act at a time when the workers become 20.

Under the above system, the contractor will engage sufficient number of workers to collect garbage, supervisors to supervise them and bill collectors to collect payments from the households or business houses from where garbage is collected. You cannot have your own supervisors and bill collectors in the scene. You will be employing workers to segregate/ sort out recyclables and also workers to take out the rest for landfilling. Again if you have another contractor who is ready to take it out for an agreed fees, that activity can also be made another contract for service.

I would expect more comments on this topic.

Madhu.T.K
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