Navigating Labor License Requirements: What to Do When Workmen Are Below 20?

Contract Labour License

Respected Senior Professionals,

I am working as a Senior Officer in the HR Statutory Compliance wing of the company. Our company's labor license capacity is 1500 as the Principal Employer. During discussions with the Labor Officer, he mentioned that even if the number of workmen is below 20, the contractor should still obtain the license.

In this scenario, please advise on how to handle the situation.

Regards,

Sarmakpk1981@gmail.com

To me, a labor license requires engaging contract labor of more than 19 individuals in a single day. Therefore, if the principal contractor holds a valid labor license for 1,500 workers, contractors employing fewer than 20 individuals will be covered under the license, unless it is specifically stated otherwise in the contract.

It might be possible that your appropriate government has issued a notification to apply the provisions of this Act to contractors employing fewer than twenty workers. Otherwise, why is the labor officer insisting on this?

Regards,
R.N. Khola

If the principal contractor has a labor license for 1,500 workers, are contractor workers covered under the principal contractor's license even if the contractor employs more than 20 workers?

Amending the Principal Employer's Registration Certificate

On the Principal Employer's Registration Certificate, the strength of one of the contractors is 20, and the contractor labor license strength is 50. Is it necessary to amend the Principal Employer's RC?

Subcontractor Labor License and Payment Queries

If a main contractor (A) engages a subcontractor under him, and the subcontractor obtains a Form V from the Principal Employer and acquires the labor license separately, my question is: Will the labor license capacity of the subcontractor come under the main contractor or not?

Secondly, are all the subcontractor payments cleared by the main contractor (A) or the Principal Employer?

Looking forward to your favorable reply.

Regards,
Ratikanta

According to the definition of the contractor, a sub-contractor is also included in the definition of the contractor under the Contract Labour (R&A) Act, 1970. Therefore, all the sub-contractors, including the main contractor, are required to have contract labour licenses if they are employing 20 or more workers. The Registration Certificate must show all the details of the contractor and sub-contractors engaged with the due permission of the principal employer. The labor license capacity of the sub-contractor will not come under the main contractor as both of them show their workers' strength separately.

Regards,
R.N.KHOLA

Thank you for the quick response. I fully agree with your suggestion that since both the main contractor and subcontractor have separate Labour Licenses, the subcontractor's labor strength will not come under the main contractor's license. However, my concern is whether this is defined in the CLRA Act or if there is any legal amendment copy or case studies to present to the labor office in case of a contractor dispute. This is because the payment to the subcontractor is made by the main contractor and not the principal employer.

I am eagerly awaiting your valuable advice.

Regards,
Ratikanta

Currently, no labor authorities are asking us. My concern is if any amendment or official letter is available to prove the labor license capacity of the subcontractor, it will not come under the main contractor as both of them are showing their worker's strength separately. If any problem occurs in the future, kindly circulate it to all the members of Cite HR.

Thank you,

Regards,
Ratikanta Rath

Dear Ratikanta Rath, In my opinion, we do not need any amendment or "official letter" for this point as the definition of the contractor clearly shows that a subcontractor is also a contractor for the purposes of implementing this Act. Therefore, I do not think any agency will raise any dispute.

Regards,
R.N.KHOLA

My question is, if a contractor is engaging his own regular/permanent employees, is he supposed to obtain a labor license?