Umakanthan53
Labour Law & Hr Consultant
Bijay_majumdar
Freelancer In Hr &indirect Taxes For
Bhartiya Akhil
Freelancer
Sitaramsn
Hr Freelancer
CA Tushar Jain
Chartered Accountant
+1 Other

If the principal employer has hired (all from third party contractors) the following strength: -

1. No. of manpower (office boys) from third part contractor = 6

2. No. of Housekeeping staff from third party contractor = 5

3. Security personnel from DGR empanelled contractor = 4 (including 1 supervisor and 3 security guards without arms)

4. Under Canteen "rate contract", the contractor provided canteen workers(cook, waiter, cleaner) = 5

5. Software company (third party) has provided a computer technician to the principal employer under AMC/FMS services = 2

The total count of above goes to 22 during the previous year. So, will the principal employer be required to take registration under THE CONTRACT LABOUR (REGULATION AND ABOLITION) ACT, 1970?

Further, in the case as mentioned above, as per exception to the definition of "workmen" defined in clause (i) which says

-who, being employed in a "SUPERVISORY CAPACITY" draws wages exceeding five hundred rupees per mensem or exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature.

Thus, since we are employing one supervisor in our security personnel, then the number of workmen will be 19 (excluding supervisor and 2 computer technician).

Can you please advise whether such interpretation is correct on my end and thereby making the entity exempt from taking labor license registration?

In relation to the above question,

I would like to get clarification as to whether the staff provided by the contractor under "Rate contract" will be counted while checking the applicability of the Act. Since, the organization has entered into a contract with the third party to provide the canteen services and accordingly, the contractor has provided 5 workers which can manage the canteen services of the organization.

Suppose, in the future, the contractor increases the strength of the staff provided to say 6 or 7, to provide a good level of service to the organization (though the rate will still be fixed as per rate contract which is generally as per no. of plates consumed), then do such workers provided under rate contract be counted while checking the limit of 20 workmen employed during the year?

Thanks

From India, New Delhi
Dear Tushar,
When the total no of workmen employed through different contractors or a single contractor is 20 and above, the principal employer has to do registration u/s 7 of the CLRA Act,1970; only those contractors employing 20 or more workmen will have to obtain licence u/s 12 of the Act.
Irrespective of the nature of contract, every contract for service executed through contract labor within the premises of the principal employer would come under the purview of the CLRA Act,1970. Please, carefully read section 1(4) of the Act which explicitly mentions the threshold of 20 workmen employed as contract labor with reference to any day of the preceding 12 months for application of the Act. Therefore, the no of plates consumed has no relevance.

From India, Salem
Dear Umakanthan Sir,
Greetings of season!
With due respect, I would like to draw your kind attention to the threshold limit differs in some of the States. In Maharashtra, A.P, Karnataka, Punjab, Gujarat, Goa, it is 50. In Telengana it is 5.
In Goa it was 10 some years back which was then increased to 20 and now to 50 effective from June 20.
This is what I know.

From India, Mumbai
It is mandatory for the contractor and principal employer to get registered under contract labour act as and when the threshold limit is crossed as per the given limit of the state.
Akhil sir and umakantan sir has rightly mentioned.

From India, Vadodara
Without going into the merits, I would suggest that the employer must get the registration under the Act 1970. In future, if any employee of the contractors raises an industrial dispute, seeking reinstatement in the establishment of the principal employer, the registration comes to rescue of the principal employer.
- S. K. Mittal
9319956443

From India, Faridabad
Very useful information given by Mr. Bhartiya Akhil . Thank you
From India
I appreciate the detailed clarification provided above. Further, canteen services are under prohibited activity in some states to my knowledge. Please check.
Further, to avoid future litigation of employment etc., better to get registered as Principal Employer.

From India, Hyderabad
Respected All,

I would like to put my inputs ,

1. The contact labour act is merged under code "Occupational safety, health and working conditions code, 2020"
2. Any contractor in any state employing more than 50 workers should hold license.
3. Contractors holding various licenses can apply for common under PAN India license.
4. House keeping, security, canteen contractors not required to take license as not to be treated as core activity.

Thanks

From India
Dear Himanshu Saraiya ji,

It will not be proper to tell person like you who is a Head Hr that the new labour codes will come in to force from the date of notification to that effect after coming out rules under it and as such till such time the provisions of existing CLRA would apply.

I would like to ask you that from which section in the code you inferred that House keeping, security, canteen contractors not required to take license?

From India, Mumbai
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