How Can Subcontractors Obtain Form V for Labor License in EPC Projects?

Dear all,

Our company has an EPC project in Jhajjar. We have engaged three sub-contractors to work on the site. Now, the principal employer only issues the Form V for labor license to our company. But how can the sub-contractors obtain Form V?

The Contract Labour Regulation and Abolition Act (CLRA) defines the term contractor in section 2(c) - meaning "a person who undertakes to provide a given result for the establishment... through contract labor, or who supplies contract labor for any work of the establishment and includes a subcontractor."

So, I think the principal employer should issue the Form V to the sub-contractors. Can anybody give me some suggestions?

Dear subcontractor,

As the principal employer, you are required to issue them Form 5.

J. S. Malik

Dear Mr. Malik Sir,

I think the above-mentioned person did not convey the message properly. This is my perception. If it is wrong, I am sorry.

The real fact is that:

A. Is the above person's company.

B. Is an intermediate company that is going to manage the subcontractor as one.

I need to understand how the dealings should happen for the following situation: A company provides the contractor rights to B company, and B company organizes, regarding the A company's requirements, with the help of 3 subcontractors. How can this workflow be done in the scenario of B company? Please explain to me.

With Regards, G.R. Vishaka Guru.

Dear Friend,

Especially for the EPC projects, the structure is like this:
1) PRINCIPAL EMPLOYER,
2) PRINCIPAL CONTRACTOR, and the remaining are sub-contractors of the Principal Contractor. So while issuing the Form-V to the sub-contractors, the 1 & 2 should endorse the Form-V, making sure the principal employer's signature is a must on every sub-contractor's Form-V.

Regards,

PBS KUMAR
9848499629

As far as the Form-V issuance is concerned, it is only the principal employer who is issuing Form-V for the immediate employer as well as its subcontractors. In your case, the immediate employer (i.e., your company) will write a letter to the principal employer regarding the engagement of subcontractors and requesting them for the issuance of Form-V for its subcontractors. For that purpose, you have to give the photocopy of your work order along with the LOI of your subcontractors. Based on these documents, the principal employer will issue Form-V to your subcontractors.

Md. Ahmad HR - Executive Bhushan Steel Ltd. Meramandali, Dhenkanal, Orissa

Hi,

It is not the right of the Principal Employer to issue Form 5 indiscriminately. The purpose of Form 5 is only a statutory, formal confirmation on the part of the Principal to the Licensing Authority that a contract labor license can indeed be issued to the contractor. Before issuing Form 5, it is imperative that the Certificate of Registration of the Principal employer is amended to include the new set of contractors.

As for your specific query, based on the authentication of your principal contractor, you may apply for the amendment of your Certificate of registration to include the subcontractors. ONLY AFTER THIS PROCESS IS COMPLETED are you competent to issue Form 5 to the subcontractors to enable them to get a contract labor license of their own.

A word of practical advice - In order to exercise better control over the statutory compliances of the subcontractors, I would suggest that you put the onus on the Principal Contractor, who needs to take a single license covering the maximum employment strength of all the contract workers. This will save you a lot of headache as you can effectively block the attempts of the Principal Contractor to pass the buck in case of issues relating to Minimum Wages, ESI/PF Compliances, etc., provided it is not repugnant to the terms and conditions of the commercial agreement executed between the principal employer and principal contractor.

Regards,
Patrick Ryan

Dear Sir,

The Principal Employer has rightly refused to give Form V to you for the engagement of the subcontractors. As the contract must have been assigned to you. Please examine the contract deed and find out whether you have made an agreement to the effect that you will sublet the work. Issuance of Form V means that the PE is accepting the responsibility for compliance with different provisions in case of failure at the level of the Contractor. There are certain matters in the Contract Labour (R&A) Act and Rules in which the PE has to fulfill the requirements if the contractor fails to do so.

Regards,
R.N.Khola
Sr. Associate
Skylark Associates, Gurgaon
09810405361

Dear All,

As the topic here relates to labour license, I would be very happy to have your advice on whether or not we should emphasize the need for a labor license and other requirements of the Contract Labour (Regulation and Abolition) Act, 1970, and rules made thereunder for those who are engaged for specific technical services for only a few days and are under an Annual Maintenance Contract for some machines, or are certified by the Chief Inspector Of Factories as competent persons to carry out inspections for the maintenance of safety of plants and equipment.

Your valuable suggestions at the earliest will be highly appreciated.

Regards,
Uday Kumar Verma

Dear Udai Kumar,

You may please go through the Gujarat State CL (R&A) Rules for the issue of a temporary license/RC. In Haryana, according to the Haryana CL (R&A) Rules, 1975, we are required to have a temporary license/RC under rule 32 of the said rule if the contract work lasts for less than 15 days. Please review the rules of your state or contact your Government Labour Officer. If any competent person declared under the Factories Act comes to inspect your vessel, chain pulley, etc., then this work cannot be termed as contract work.

Regards,

R.N. Khola
Sr. Associate
Skylark Associates, Gurgaon (Haryana)

Clarification on Issuing Form V to Subcontractors

Officials from the Department of Labour & Employment can shed some light on this subject. There is a lot of confusion. Some principal employers are issuing Form V to subcontractors, but some are refusing to issue it. Nobody is clear on the issue. Similarly, the act is not clear on what documents are required exactly for obtaining a license for a subcontractor. In my opinion, the principal employer is well within their rights to issue a Form V to the subcontractor of a main contractor after obtaining an undertaking from the main contractor to indemnify the principal employer for any irregularities on the part of the subcontractor.

In EPC (Engineering, Procurement, and Construction), it is normal to appoint many subcontractors based on each job, such as civil, mechanical, electrical, etc. The principal employers are also approving the engagement of subcontractors and hence are duty-bound to issue Form V to subcontractors as well.

Regards,
Krishnakumar, Chennai