Navigating Contract Labour Law: Do We Need to Register Our IT Staffing Company?

Hi everybody,

I am Krishnan, a new member, and I have a doubt regarding Contract Labour Law.

I am working in an IT Staffing Company in Chennai, providing IT manpower to various IT giants in India. We provide on contract as well as permanent placements.

We have agreements with each client separately as per their conditions. Most clients require individuals for a specific period and insist that they be on our payroll as employees with all government statutory benefits. Many also require background verification checks before hiring. Upon selection, these individuals (our employees) work at the client's location. We then invoice based on Time & Materials.

Now, one of our clients has asked if our company is registered with the Labor Department as per the Contract Labour Law!

In my view, our deputed individuals are our regular employees and are assigned to work at the client's place under their work order for a specific period. Therefore, registration is required only for them. Once released, they are on the bench with us and may be reallocated to other clients. In many cases, these individuals are also absorbed by the clients.

Do we need to register our company under the Contract Labour Law? If so, with whom? Where can we obtain the necessary forms? Can someone help us with the relevant rules?

Thanks in advance.

Krishnan

Dear Krishnan,

First of all, I will tell you it is not "contract labour law"; it is the Contract Labour (Regulation and Abolition) Act, 1970. If any employer wants to hire 20 or more manpower on a contract basis, he has to register himself with the labor department. In that registration, it is mentioned which contractor will provide this much manpower to us.

As a contractor, you have to take a license if you are providing more than 29 manpower to him; otherwise, no license is required.

Thank you,

J. S. Malik
09810557181

Dear Malik,

Thank you for the immediate reply and correction. Do you mean to say that if my company decides to depute fewer than 29 persons to X company on a contract basis, then my company need not have registration under that law? Supposing it is more than 29 deputees to X company, then do we have to register despite my company meeting all statutory requirements stipulated by the government such as PF, minimum wages act, leave, etc.?

I don't understand the logic behind so many registrations to be done for a single company doing the same business!

Thanks again for the clarification, sir.

Krishnan:p

Dear Kirshan,

First of all, it is 20 employees, not 29; it was a clerical mistake. If you are providing contract labor to a company, and the number of employees provided by you is less than 20, then you are not required to take any license.

First, I will clarify that you will not get a license directly; the employer must first register to hire contract labor from the labor department.

Thank you.

J. S. Malik