SOLMONRAJU
Deputy General Manager
Hi Folks, One of my Labor Contractor wanted to cancel his old license and take a new one in his relative's name and continue the labours working under his old license. what are implications, complications and consequences for this act?
From India, New Delhi
Madhu.T.K
3459

Industrial Relations and Labour Laws
There is no such cancellation of licence, but there can be suspension of license by the Licencing officer if he finds that the licence has been obtained by misrepresentation or if the rules are not being followed by the Contractor. He can also amend it. The licence will stand cancelled if he does not renew it after its expiry.

Now if he does not want to be a contractor, he can terminate the contract with you. After that you can issue form VI to his relatives so that he can take a fresh licence in his name and continue working with the same employees. These are the possible ways by which he can get way from the legal formalities. But I would say that, as a principal employer, you should not encourage it. Keeping the employees unchanged under various contractors would be viewed as an attempt to defray the legal rights of workers and the contract will be treated just as a camouflage or wind screen and thus a sham contract. Once it is established that the contract is sham or is executed for name sake only, you will be in trouble and may even lead to regularisation of service of contract workers. Taking legal opinion on behalf of the contractor itself is an evidence to show that your contract with the contractor is sham. Therefore, get out of it, if your firm believes in genuineness.

Madhu.T.K

From India, Kannur
saswatabanerjee
1975

Partner - Risk Management
A better way is for the contractor to sell his business to his relative, and inform you of the same with a request to transfer the contract. However, you must make sure that the agreement for sale includes a clause to protect gratuity dues of the workers
From India, Mumbai
hotgautam
9

HR Manager
Dear Madhu Sir,
In our establishment, we outsource intermittent jobs to contractors. Sometimes it happens that one contractor succeeds in getting multiple jobs (say three) in competitive bidding process. He deploys 19 labours in each contract resulting in deployment of 57 labours in a particular day. He doesn't have the license. We talked to Regional Labour Commissioner and he told us that since he is deploying 19 labours in one contract, he doesn't need any license. The CL Act says about the employment of contract labours not deployment. Your esteemed opinion will be solicited by me. Moreover what precautions should a PE take when one contract Labour changes his contractor in the same establishment.

From India, Pune
loginmiraclelogistics
1039

Asso.Prof.(Commerce & Management)
This type of change over is very common in offloading/outsourcing certain regular work of medium and large industry/Co. with a view to avert demand for regularisation, payment of bonus, gratuity and other benefits. But your problems as PE is not going to be solved for ever since the same workers are going to continue almost in one and the same duties. Better close the contract after completing the work order assigned by completing the formalities especially wages over due,EPF/ESI contribution and other dues and take fresh contractor.
From India, Bangalore
saswatabanerjee
1975

Partner - Risk Management
I think either you conveyed a wrong information to the RLC or on the forum.
Else I don't understand how the RLC can give such a reply.
If a contractor has more than 19 workers at one site, he needs a license. It does not matter what each of them are doing or whether the contracts are single or multiple. So, in your case, the contractor should have obtained a license. You as PE should have not allowed him to deploy the 20th worker with license from the RLC.
The only difference would be if the contractor was deploying people under different organisations - say in partnership with different people. However, in an investigation it would not stand scrutiny. Either the PE Will be penalised or the workers made permanent, both of which you would like to avoid.

From India, Mumbai
Madhu.T.K
3459

Industrial Relations and Labour Laws
As pointed out by Saswata, if you are the principal employer for 57 labours deployed by the same contractor, though for three different work of the same PE, you are in trouble and you should ensure that the contractor has licence.
Madhu.T.K: Contract Labour
Madhu.T.K

From India, Kannur
hotgautam
9

HR Manager
Dear all,

If I had furnished false information ,I would not have discussed it in the forum. I'm an old subscriber to this forum and added various inputs to different quries for which I got appreciation also. Contributing members should be respected. Any way the issue is very real. I tried to get it clear through our senior HR bosses but I got conflicting views. When RLC of Bilaspur region came for visit at our area, I specially asked him this question. His contention was, since PE is issuing form-V for individual works seperately for the purpose of license, deployment of 57 contract labours in three contracts absolve him with the responsibility of issuing form-V due to less than 20 labours in each contract. I tried to convince RLC that in CL Act, when a contract "employs" word is mentioned not "deploys". Contractors are naturally very happy with this ruling and if I do anything further without any legal or official confirmation, I would be considered as a throne in present system.

Now what course should I follow to rectify this.

Thanks and regards

From India, Pune
Madhu.T.K
3459

Industrial Relations and Labour Laws
It is true if you issue form V to separate contractors, but you have issued three Form V to one contractor. What will you show in your Register of Contractors ( a register required to be maintained wherein the names and addresses of all contractors will be listed) ? You will be writing one name only. That means you have only one contractor who has deployed 57 workers in your establishment. This is what we have said as not as per law.
Hope that your establishment has obtained Registration under the CLRA Act.
Madhu.T.K

From India, Kannur
asbhat
51

finance head, chartered accountant (retired)
I agree with Madhu T K in the immediately preceding mail in the thread. You are the PE. In case of contravention no one will look at the contractor, because most probably he will vanish in the thin air. You will be held responsible for all his actions or lack of actions. You have also asked what other things you should be careful of. Before you pay his bills, ask him to provide the proof of payment of wages to his workers, ensure minimum wages are being paid to his workers, OT is being paid as per rules, proof of PF payment / returns, ESI payment /returns and so on. If you pay him without verifying all these documents you are in trouble with the labour officer of your area.
A S Bhat

From India, Pune

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