Navigating Contract Labour Law: Do We Need to Register and Ensure PF for a Small Contractor?

Hello,

The company has around 220 employees. The company has hired a new garden contractor, but the company has not registered under the Contract Labour Law. The contractor has only 8 employees under his roll.

Questions:
1) Is it compulsory to register under the Contract Labour Law when you employ a contractor for any job?
2) Does the contractor need to pay PF, and do we need to ensure that he pays it even though he has less than 10 employees?

Please help.

Thanks and Regards,
Gaurav

Hi Garurav,

I am answering two questions. If your contractor does not pay the PF amount, you are the only one responsible to pay the PF amount.

Hi Arun,

Yes, I know that, but in this case, does he have to pay? So, does he have to pay even though he has less than 10 employees and the company has only 9 contracted staff? I mean, is the PF rule applicable for more than 10 employees, and is the contract labour law applicable if there are more than 10 employees? I am confused!

Regards, Gaurav

When your establishment is covered by PF, any person who works in your establishment and is not otherwise excluded shall be covered by PF. The same applies to ESI as well. Therefore, even if the contractor has fewer than 20 employees, their employees working for you should be covered by EPF. As a result, the contractor has to obtain PF registration. An establishment that employs nine employees may need to opt for voluntary coverage under PF. If voluntary coverage is not obtained, you as the principal employer will have to provide coverage to the contractor's workers (engaged in your establishment) under your PF code.

In terms of the requirement for contract labor registration and licensing, since you engage only eight contract laborers, you are not required to obtain contract labor registration. Similarly, the contractor also does not need to obtain a license. However, if the total number of contract laborers engaged by you from various contractors (e.g., security personnel from one contractor, housekeeping labor from another contractor, etc.) exceeds 19 (reaching 20), you must obtain registration from the District Labor Officer.

Regards,

Madhu.T.K

I agree with the PF part as discussed. But for contract labour registration, if you are appointing a contractor, you have to fill out a registration form with the Labour Department under The Contract Labour (R & A) Act, 1970. As a principal employer, your registration is compulsory. The Labour Department will issue you a Registration Certificate (RC), and then the contractor does not need to obtain a license from the Labour office unless their workforce exceeds 20.

Dear Vivek, Mr./Ms. Madhu T. K. has illustrated this very correctly. There is no confusion about the Contract License for the Principal employer. The registration for employing contract labor by one or more contractors may be obtained only in the case of 20 or more contractor employees.

Regards, Ajay Shukla Consultant Labour Laws, Kanpur [Email Removed For Privacy Reasons]

Understanding Contract Labor Registration and Licensing

There are two things which you are mixing:

1. Registration of the principal employer who is appointing a contractor.
2. Obtaining a license by the contractor from the labor office if his workers exceed 20 or more.

As a principal employer, if you hire a contractor, you come under the definition of the Contract Labor Act and you have to apply for RC. Furthermore, when the contractor labor is less than 20, they need not apply for a license, and if the contract labor exceeds 20, then the principal employer will issue Form-5 to the contractor, and he has to obtain a license from the labor office.

You know some labor departments also issue an NOC to the contractors whose labor is less than 20 based on the Principal Employer registration.

Suggestions are welcome.

Regards.

Can a contractor cover another contractor's P.F & ESI for less/excess of 20 workmen?

Is the principal employer responsible, or can it be disburdened by merging with another contractor?

Dear All,

I am working in a construction company. Presently, PF is compulsory for all employees. The labor movement on the site is frequently changing, with two to three batches arriving every month. They do not have Aadhar cards or bank accounts to create UAN numbers and generate PF codes. Due to this, it is challenging to ensure PF coverage. Please suggest how to overcome this problem.

Regards,
Nagesh
09063416644

Dear All,

If workers from a contractor are casual workers and fall into the irregular category, what about the PF coverage of the contractor, i.e., daily wage workers?

Ashok K.