Contractor Registration Dilemma: Do You Need to Register with Fewer Than 20 Laborers?

If any contractor has more than 20 laborers, the contractor is bound to register under the Contract Labor (Regulation and Abolition) Act 1970. So, kindly clarify whether a contractor with fewer than 20 laborers needs to register or not. What is the reason?

Contractor Licensing Requirements Under CLRA 1970

Contractors are required to obtain a license and not registration under the CLRA 1970. If the number of workers is less than 20, a license is not necessary.

Regards,
jpratap

A contractor employing fewer than 20 workers need not take out a license as the Contract Labour (Regulation and Abolition) Act requires only those contractors employing 20 or more workers to obtain a license.

The fees vary from state to state. Please check with the office of the Labour Commissioner in your state.

With regards,

The license has to be taken from the official having jurisdiction over the area in which the contract workers are employed.

Regards,

Does the contractor have to register himself as an establishment if his overall count is above 20 employees? Or is it only necessary if, in a particular location, he has more than 20 employees, and then only for that location, the registration is done?

Regards

Dear Dinajoseph, a labor license is required for each project that employs more than 20 workers. Let me clarify here that it is not registration. Registration is required for an organization that employs a contractor to execute work for them. Based on this registration, the contractor applies for and is granted a labor license if he employs more than 20 workers. There is a fee attached to it (Security deposit + Fee per worker), which, as pointed out by Mr. Harikrishan, differs from state to state. Generally, any good bookstore would be able to provide a copy of the state labor act and rules. It might be a good idea to get one.

Good luck.

Regards

If an organization can employ two contractors, each having 15 workers, to avoid licensing requirements for contractors, is this a viable strategy under the Contract Labor (Regulation and Abolition) Act 1970?

Regards

Understanding Registration vs. Obtaining a License

Please understand the difference between registration and obtaining a license.

The Principal Employer has to get the registration for their establishment in Form I, in which they have to add the names of the Contractors whom they have planned to engage for accomplishing the work. Whereas, the Contractors have to get the license for commencing the work.

The Registration of Establishment is a one-time process, whereas the license is to be renewed every year until the completion of the job.

The Registration of Establishment will be done by the Principal Employer with Registration Fee Charges, whereas the license must be obtained by the Contractor for which the contractor has to pay License Fee & Labour Security Deposit as prescribed by the appropriate Government.

If the Contractors engaged by the Principal Employer deploy fewer than 20 workmen, then the contractor need not obtain a license. But the onus of maintenance of PF and other statutory compliances lies with the Principal Employer.

Regards

Clarification on Licensing for Contractors

Licensing is for contractors. The CLRA Act does not state that the contractor should obtain a license only if 20 or more workers are employed by him in a specific establishment. In other words, if he provides a total of 20 or more workers to different employers, he must obtain a license.

With regards,

I disagree with your reply. The contractor has to obtain the license only as per the job location and principal employer. If a person engages workers in the same place with two different Principal Employers (e.g., Hyderabad Airport Runway work by M/s GMR and Passenger Terminus & Lounge work by M/s China State), the location is the same but the principal employer is different. Hence, we have to obtain 2 licenses to carry out the contract work. If the workplace is different even though the same Principal Employer, then also we have to obtain 2 different licenses.

Regards,
v.harikrishnan

Dear Chandanmis,

A contractor employing fewer than 20 workers need not obtain a license, as the Contract Labour (Regulation and Abolition) Act requires only those contractors employing 20 or more workers to get a license.

Clarification on Licensing Requirements

Respected sir, kindly tell me if a contractor having fewer than 20 workers needs to take a license. Why is it required for more than 20 workers?

Regards,

Dear Sir, what is the process when a principal employer takes registration when the principal employer engages a contractor, and what are the formalities and forms required?

Clarification on Contract Labour (Regulation and Abolition) Act, 1970

Mr. Boss, please go through my previous post again. In that post, I have not at all adverted to the issues with which you say you disagree in your latest post in this thread. Please also see section 1(4)(b) of the Contract Labour (Regulation and Abolition) Act, 1970. I extract below this section here for your ready reference.

"(4) It applies

(a) -------

(b) to every contractor who employs or who employed on any day of the preceding twelve months twenty or more workmen."

I also reproduce below section 12(1) of the Contract Labour (Regulation and Abolition) Act, 1970:

"12. Licensing of contractors - With effect from such date as the appropriate Government may, by notification in the Official Gazette appoint, no contractor to whom this Act applies shall undertake or execute any work through contract labour except under and in accordance with a license issued in that behalf by the licensing officer."

In the sections above extracted for your ready reference, there is no mention of the "Principal Employer" or "job location" as stated by you in your last post in this thread. If you would be kind enough to indicate the provisions of the Contract Labour (Regulation and Abolition) Act, 1970, which specify, as indicated by you in your last post, that the contractor has to obtain the license only as per the job location and principal employer, I will be much obliged and enlightened.

With regards,

Process for Principal Employer

1. Land Document must be (either ownership or Power of Attorney) in the name of the Principal Employer.
2. Form I (Application for Registration of Establishment) to be filled.
3. Challan is to be prepared, and the requisite fee is to be remitted in the designated bank/treasury, with the original challan to be attached.
4. Establishment's Certificate of Incorporation, Memorandum of Association.
5. In the Labour Commissioner's Office, they will make an entry in a Register about the details of the Establishment and its Contractors proposed to be engaged.
6. Then, you will receive Form II (Registration of Establishment Certificate).
7. Please ensure that all the statutory compliances are being adopted by your contractors because you will be held responsible if your contractors are not following the Statutory Compliances. You can check their records every month on a specific date.

Process for Contractor

1. Obtain a copy of Form II (Registration of Establishment Certificate).
2. Obtain Form V (Certificate from Principal Employer).
3. Fill Form IV (Application for obtaining License).
4. Remit License Fee through challan in the designated Bank/Treasury.
5. Remit Labour Security Deposit through Challan in Designated Bank/Treasury (Please preserve a copy of the Security Deposit challan, which will be required while surrendering the License and for applying for a refund of the Security deposit).
6. Letter of Indent or Work Order issued by the Principal Employer.
7. Prepare a covering letter and submit the same to the License Issuing Authority.
8. You will get Form VI (License).
9. Please submit Form VI-A (Commencement of Work) within a week's time.
10. Please maintain all the statutory compliances as required by the Law.

Thank you for the detailed opinion on the applicability of the Contract Labour Act. The views expressed by Mr. Bhaskar relate to obtaining a Contractor's license. However, in the case where a Contractor engages 15 workers in Hosur (Tamil Nadu), 5 workers in Kolar (Karnataka), and 3 workers in Kuppam (Andhra Pradesh), the Act will be applicable to the Contractor. Still, he cannot apply for a license, and the authorities will also not issue any license. I would appreciate hearing your views on this matter.

Regards,
N. Nataraajhan
Sakthi Management Services
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