Navigating Labor Licenses: Do Contractors Need One for Multiple Small Work Orders?

As per the Contract Labor Act, it is necessary to obtain a labor license for a contractor if they are engaging 20 or more contract workers under them.

If a company's contractor has contracts in different workplaces with various work orders and is engaging more than 20 contract workers altogether, is it necessary to obtain a labor license? If, in five different work orders, they are engaging five workers each, are they not required to obtain a labor license? Is it correct to get a labor license for a particular work order, or should they obtain a combined one?

Hi Dear,

If we are working for earning/profit motive, we have to respect all legal aspects that cover employees and employers. What does the Factory Act say?

(m) "factory" means any premises, including the precincts thereof - (i) where ten or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried out with the aid of power, or is ordinarily carried out in such a manner, or (ii) where twenty or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried out without the aid of power, or is ordinarily carried out in such a manner. However, it does not include a mine subject to the operation of the Mines Act, 1952 (35 of 1952), or a mobile unit belonging to the armed forces of the union, a railway running shed, or a hotel, restaurant, or eating place.

If you engage a contractor with 20 or more workers altogether in different work orders at different places but in the same state, the contractor is required to obtain a labor license.

Thank you, sir, for the information.

In a company, the practice is such that the contractor has to obtain a labor license as per the work order. Every work order is viewed as a separate establishment. So, if a contractor is involved in different works in various areas and is engaging more than 20 workers altogether, but individually, as per work order, less than 20, then he is not required to obtain a labor license.