How to Handle a Labour Enforcement Officer's Visit: Seeking Guidance on Compliance Issues

Dear All,

I'm working in a manufacturing company located in Pondicherry. Recently, my factory was visited by a Labour Enforcement officer who noted that,

"The Management engaged contract laborers without obtaining the contract license under the Act, in violation of section 12(1) of the Contract Labour (Regulation & Abolition) Act, 1970. In this regard, you are directed to provide your explanation on the following contraventions:

i) Section 7(1) of the Contract Labour (Regulation & Abolition) Act, 1970 read with Rule 17(1) of the Pondicherry Contract Labour (Regulation & Abolition) Rules, 1973 - The contractor engaged contract workers without obtaining a Registration Certificate.
ii) The contract laborers were not covered under the ESI & EPF.

Therefore, you are directed to immediately rectify the above contraventions within a week, failing which appropriate legal action will be taken against you for non-compliance of the provisions of the Act and Rules."

During that time, they verified the records and found that we were using a maximum of 15 contract workers from 3 contractors, each providing a maximum of 15 manpower per shift.

1. What should I do now? Kindly guide me on how to explain to the Labor office that my company does not fall under the Contract Labour (Regulation & Abolition) Act...
2. Are the Pondicherry Rules and Acts in the Contract Labour (Regulation & Abolition) Act and Rules the same when compared with CLRA?

Thanks & Regards,
Saravana Kumar.T

Dear Saravana Kumar.T,

It is hereby clarified that a Registration Certificate is to be obtained by the principal employer, and a License is also to be taken by the contractor if they are employing 20 or more contract workers. The principal employer is liable to have a registration certificate if the total number of contract workers employed through one contractor or by a number of contractors is 20 or more on any day of the preceding 12 months. Similarly, if the contractor is employing 20 or more workers on any day in all the shifts, then these contractors are also required to have licenses from the appropriate Licensing Officer of the area. Why would a Government Officer misguide you? It is due to our ignorance of the law that we think this way. State Rules are made/framed to have procedures for the implementation of the Act. You are also advised to go through the Act and Rules before finalizing the matter at hand.

Opinion Submitted as requested.

Regards,

R.N. Khola

(Labour Law & Legal Consultants)
09810405361

If in a year 20 or more contract workers are engaged, the above act is applicable. So irrespective of 15 workers per contractors, you have actually hired 15 * 3 workers on contract, so this act should be applicable to you.

Dear Saravana,

Altogether, you have hired 45 contract workers, so you are required to have registration with the labour department for hiring contract labour. Each contractor has 15 workers, so they are not required to have a license, but you have to take registration. ESI & PF are immaterial; you have to deposit the same if you are hiring only two persons on contract. If the contractor does not have a code, then you are required to deposit it on your code.

Regards,
J S Malik

As you mentioned, there are three contractors who are each providing 15 manpower, resulting in a total of 45 manpower. Please correct me if I misunderstood your statement. If this calculation is accurate, then the Contract Labour Act shall be applicable to you.

Thank you.

Dear Saravanakumar, Since you haven't answered Tushar's follow-up question, we have to presume that based on the number of contract laborers engaged in each shift by a single contractor on your behalf in the establishment, you disown your responsibility under the CLRA Act and the Puducherry Rules. Once again, carefully read Mr. Khola's explanation and check the total number of contract laborers supplied by all three contractors in a day. Come to a conclusion accordingly.

As you have mentioned that you are engaging 3 contractors who are providing a maximum of 15 manpower each, the total number of manpower provided by the contractors is 45. Therefore, it is necessary for the Principal Employer to obtain an RC. In this case, the contractor does not need to obtain a license as it is required for 20 or more employees. As a principal employer, it is your responsibility to obtain an RC under the CLRA.

Regards,
Dinesh Kumar