On another issue, I would like to have your valuable comments.

1. Can a Contractor be contract labor in the contract awarded to his company?

2. Being contract labor of some contract can he take other service contracts in his name i.e, as an employer.

From India, Faridabad
Labour Law & Hr Consultant
Industrial Relations And Labour Laws
Doctor Siva Global Hr
Management Consultancy
Nagarkar Vinayak L
Hr And Employee Relations Consultant

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I have a preliminary doubt about the very origin of the question. On whose behalf, it is raised - on behalf of the Principal Employer, the contractor or any contract labour?

If it is the Principal Employer, I don't think that he has got any concern about the contractor himself being the part of his own work force and covered under the licence of the contractor under the CLRA Act,1970 so long as the contractor complies with the particular clause of the contract for service pertaining to the number of workmen to be engaged for the contract work.
Besides, in the absence of any specific prohibitory clause in the contract between the PE and the contractor against the contractor's simultaneous engagement of other contract works elsewhere, the PE has no locus standi to raise such a question.

If the questioner is the contractor himself, it is well within his discretion to work along with his workmen and claim wages for himself subject to his income tax liability. It is just like a working partner in a partnership firm or an executive director/ managing director receiving salary from a corporate entity registered under the Companies. Act,2013 in which he is a share holder.
As such a contractor being his own boss, it is his discretion as well as capability to execute any other simultaneous contract work by appointing a separate manager or supervisor for the purpose.

No contract labor has the right to raise the above questions against his own employer i.e., the contractor. Suppose if it is a contract labor formally taking up any similar contract elsewhere in his own name, of course, the contractor, in his capacity as the employer, can raise such objection for it can be a clash of interest between themselves.

From India, Salem

In addition to what learned Umakanthan Sir has said, there can be self employed contractor, he can be the contractor as well as the labourer executing the contract. Being the contract labour, he can take some contract too, particularly looking to the pandemic situation, but will he be able to do justice to both/either. That is to be seen.
From India, Mumbai

It is a case of independent contractor. A independent contractor is not only a contractor but he works as a contract labour also. being a contractor per se, he is free to have contract with other firms and engage workers at such other places while working with your plant.
From India, Kannur

Dear Colleague,

On this interesting subject, evaluate from both Legal Perspective as well as Management Perspective on this subject as both are equally important insights to bear in mind. We had very bad experiences in the past where few of the contractors worked in their own contract as labour and during crisis situations, they stand and fight against Principal Employer ( PE) on certain demands where the presence of Immediate Employer ( IE - Contractor) was not felt really. Everything was to be soled by PE and his Team of Officials which defeats the whole purpose of Awarding a Contract.

Here are few questions for deeper insights:


No law provides any ban for such work by the contractor.

Technically from Legal angle there is no bar in the system where Contractor (Immediate Employer- IE) is also an employee in his own contract awarded by Principal Employer (PE).

This is subject to few and more factors like:

- In reality it is not a sham contract in the eye of law later on test and based on facts

- It is not an arrangement type of contract between IE and PE

- The Contractor cum Contract Labour is also covered under all Statutory requirements like number mentioned in license, PF, ESI or WC policy if any, Bonus provision as and when arise and things like that.

- The Contractor has a valid license ( if the number stipulated is insisting in the state)

- As a contractor he complies with all legal requirements for his establishment

- There is no "supervision" from the side of PE on the contract workers in the absence of Contractor who also work in the filed


However also evaluate from Management Perspective based on following questions in mind:

- Whether he is able to Manage the contract as well work full time on floor?

- Whether he is able to concentrate in contract awarded by you - his work as labour- his other contracts awarded by other clients ?

- Whether he will be capable of handling any " Industrial Dispute " arise against him in the capacity of Contractor as immediate employer and defend the interest of Principal Employer?

- Whether he is able to manage the various inspections by Statutory bodies and Internal audits effectively?

- In case of any crisis or dispute how he stands for himself as a Contractor and for the PE?

- Whether the said contractor can be developed further by providing more inputs on Managing Skills and given him a good margin to become full fledged Service Provider Contractor with more self identity as a " Competent Contractor" as part of your Vendor Development Process so that you develop him much more in his capabilities?

If the contractor is really good why not to develop him further effectively and make him more and more capable in " Supervision, Management, Services levels at higher levels with more and more quality and to develop internal bench mark to have highly competent contractors who are fully dedicated in delivering he Service Level Agreements" etc

Kindly have your own evaluation keeping long term focus in mind beyond legal angle and then judiciously take steps. All the Best !!!

From India, Chennai
Nagarkar Vinayak L

Dear colleague,

While I share views expressed by the learned colleagues above, briefly from purely legal angle, I would like to emphasize that the CLRA Act , does neither prohibit the Contractor being employed as contract worker in the PE's establishment nor his entering into contract with other PE simultaneously for rendering the contracted services. As long as the contractor cum worker fulfils his obligations as Contractor as per the Act and as contract worker, there should not be any issue.


Vinayak Nagarkar
HR and Employee Relations Consultant

From India, Mumbai

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