How to determine the applicability of a Contractor License for a software service provider Company?
We work on 2 business models:
1. T&M: Here, our employees work under the direction and supervision of our clients but on our payroll only.
2. Fixed Cost: Clients provide us with requirements and we deliver the products to them.

Please suggest how to understand the applicability. I know the employee number criteria in Karnataka is 2o (Twenty) but when does it get attracted?

From India, Indore
Partner - Risk Management


Contract labour act will apply when your employees are working in the office (premises, meaning factory or office) of another person in order to fulfil a contract you have with that person or to deliver a result promised to him.

All 'Out-workers' are excluded. That means employees working in your premises for a certain client is not counted as contract workers.

If the employees are working in the clients' premises, then if they are more than 20, you need to apply for a license. It does not matter if you are being paid fixed cost or variable cost or if you are paid on a piece rate or a fixed contract for delivery. What is important that they are working in the premises of another person.

There may be some specific exemption for IT employees, you will need to check that out specifically.

From India, Mumbai
Thank you so much for your time. Actually, I had the query for the IT employees only. Unable to get clarity on the same.
From India, Indore

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