Industrial Relations And Labour Laws
Partner - Risk Management
Adoni Suguresh
Sr.executive (per & Adm)
Loginmiraclelogistics & Management) Pg
Hr Manager
Deputy General Manager
+1 Other

Thread Started by #SOLMONRAJU

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?
12th December 2015 From India, New Delhi
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.

12th December 2015 From India, Kannur
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
12th December 2015 From India, Mumbai
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.
13th December 2015 From India, Pune
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.
13th December 2015 From India, Bangalore
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.

14th December 2015 From India, Mumbai
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
14th December 2015 From India, Kannur
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
15th December 2015 From India, Pune
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.
15th December 2015 From India, Kannur
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
16th December 2015 From India, Pune
You have issued 3 form V for the same contractor.
In each of the firm V yiu have stated that the contractor has only 19 workers deployed in your factory.
That is definitely falsification of records and in effect a fraudulent activity.
A complain by any worker will being the entire government machinery on yiu like a ton of bricks. Your RLC would not have given you the ruling in writing

17th December 2015 From India, Mumbai
The Act, Rules and Regulations are made for the benefit of the public in general may be industry or factory est etc. The applicable act should be followed strictly by the industries as stipulated and should not interpreted or misrepresent the act. This not prepared for any one industry/factory. If any lapse in implementing the same , the every acts, rules are having a Penal clause also. The law cannot be twist as per the individuals requirement.
Our friend Mr.Madhu has gien his opinion elaborately in this subject thread. Thanks for him.
Adoni Suguresh
Labour Laws Consultant
17th December 2015 From India, Bidar
Thanks to all. Yes we are registered under CL Act. In register of contractors (form-12) we mention the name of contractor, his work period and maximum no of labour deployed. It is possible that same contractor name is found in the register with the same or different work period.Madhu sir is right in this regard.Since nature of job is different, we see no wrong and RLC has also inspected this without any comments.
17th December 2015 From India, Pune
In spite of what the RLC has said, you are going to get into trouble for allowing a contractor having more than 20 workers to work without a license. The law requires license for each contractor not for each contract or activity.

18th December 2015 From India, Mumbai
I hasten to add that the process of verification of all records of the contractors' compliance with statutory obligation should be followed before payment of his each monthly bill. A. S. Bhat
18th December 2015 From India, Pune
Thanks to all once again. I want elaboration on Mr. Banarjee’s thread that " The law requires license for each contractor not for each contract or activity".
19th December 2015 From India, Pune
Please refer to sec 1 of the act
It very clearly says that the act applies to all contractors who have 20 or more contract workers. There is no stretch of imagination by which it can be said that it will only apply to each different activity in the same factory.
20th December 2015 From India, Mumbai
Mr.S.Bannerjee has given his valuable opinion on your query in the thread by interacting with the posts by step by step as regards to your contractors licence. Other members also have elaborated their opinion in the thread. I hope that with this you must have understood your query without any further interpretation on the law.
Adoni Suguresh
Labour Laws Consultant .
21st December 2015 From India, Bidar
Hi i am 9 months old to HR Field, can you give me valuable advise with regards to my query it is being observed that one of the field employee is very lethargic & is not doing reporting properly. The manager has given him several warnings but is of no use. The employee has given two apology from his side that he will improve. He is non confirmed employee, can we terminate him ?
21st December 2015 From India, Mumbai
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