Navigating Labor License Formalities for a Joint Venture in Construction: What Do I Need to Know?

Hi Everyone,

I am Pradeep Manda, an HR professional for a construction company. My company is in a joint venture with another company. What are the formalities required to obtain a labor license?

Dear Pradeep,

In my opinion, there is no need to have any labor license for working together in the capacity of a joint venture. You have also not specified under which Act you want to have a labor license.

Regards,
R.N. Khola

I need to get a labor license for CL R&A Act, 1970, from the state government and central government. We have a joint venture with two other companies for one project. Our principal employer has issued a Form 5 to the joint venture. Can the joint venture issue a Form 5 to our company?

To obtain a labor license, the principal employer must undergo labor registration, while the subcontractor can acquire the labor license. If the work falls under the jurisdiction of the central government or central government-owned companies, registration with the Central Labor Commissioner is mandatory. Otherwise, you may approach the District Labor Officer. Form 5 will only be issued upon successful registration.

Our principal employer has issued a Form 5 for a joint venture where three companies (including mine) are involved. In such cases, how can I apply for a license under Cl R & A 1970 and BOCW Registration? Should I apply through the joint venture, or can the joint venture issue a separate Form 5 to all three involved companies so that each company can obtain an individual license?

My understanding is that you want to form a JV for a project with some other entities to work as a vendor jointly for an establishment, and the contract is between you and the establishment.

Contractor and Subcontractor Under CLRA

As far as the CLRA is concerned, there is no difference between a contractor and a subcontractor. The Supreme Court has observed this position in Gammon India Ltd. and Ors. v Union of India (UOI) and Ors. The court has placed the contractor and subcontractor on the same pedestal as the establishment in terms of the CLRA Act. They are both doing the work of the establishment, and therefore, Form-V has to be issued by the Principal Employer.

Practical Difficulties and Solutions

Now comes the practical difficulty. Some licensing officers ask for the contract between the subcontractor and the Principal Employer to understand the particulars relevant to the employment of the contract labor along with Form V. It is not practically tenable. The only way is to attach your JV/subcontracting document along with the original contract plus Form V and request the officer to accept the same.

I hope this helps! Let me know if you need any further clarification.