Contract Labour Act Confusion: Do We Need to Renew the License if Workers Drop Below 20?

Please clarify, under the Contract Labour Act, if the contract labor strength falls below 20, is it still necessary to apply for the renewal of the labor license or not? If "NO," why?

Regards,
Tapan

Yes, dear, he has to renew his license because once it is implemented, he has to follow the same.

Regards,
Raju Makwana

Hi everyone, I still have one question. I'm working with Gammon India in the HR department. We have our project site in Delhi, and their labor license has expired. However, there are no laborers there as we hire laborers from a labor shop on a daily wage basis. Is it still necessary to renew the license?

Regards,
Omkar Jambhekar

Once you have obtained the license, it is immaterial what the strength of your workmen is. You must renew the labor license unless you receive Form VI-B from your principal employer and surrender the labor license.

Regards,

All departments act in a similar way. For coverage, you need a minimum of 20 employees (Contract Labour, EPF, and 10 for ESIC). After obtaining a license/RC, even if the number of employees falls below 10, you still have to continue to pay contributions, file returns, etc.

It is advisable to keep the license as you may require it later, and obtaining a new license involves a lot of formalities.

Regards,
Siva

It is well said by Mr. S. Baskar. You need to renew the Labour License unless you surrender it. Since your labor strength has reduced to less than 20, you need to continue your entries in registers and simply pay a renewal fee to renew your license. Once it has expired and not been renewed by you, it will be viewed seriously by the department, which is an additional burden for us.

Regards,
T. Kumar

Referring to my earlier question, I sought a reply from all of you. Please go through Section 1 of subsection 4(b), which states that if the strength is below 20, then the provision will be applicable unless the appropriate government, after giving less than 2 months for coverage, publishes it in the Gazette. Is this really happening? I am unable to understand the above. Could anybody help me?

Regards,
Tapan

First of all, you run the contract in AP or some other state. In the contract, labor is divided into two types: one is state, and the other is central. In AP, the contract falls under the state. If more than 5 members are involved, you need to take a license. In the central, if more than 20 are involved, you need to obtain a license. If the number is below that, you just need to maintain all records under the Contract Labour Act. You do not need to apply for a renewal license.

Regards,
Anji

Dear Tapan,

A labor license is issued by the labor department if you have more than 20 personnel working in your establishment. Generally, it is for a one-year duration, after which you may renew it if your contract is extended or renewed.

License Renewal Requirement

There is a clause that clearly states you are bound to obtain a license if you have employed 20 or more personnel at any time during the past 12 months. So, keeping that in mind, once you have obtained the license, you have to continue it for the remaining currency of the license period. If you continue the contract after that with even fewer people, the last twelve-month rule will imply that you have no choice but to renew your license.

Remember, it is simpler to renew than to apply afresh.

Good luck.

Regards,
Colonel Gahlot, Proprietor
'TRURECRUIT'

Hi, please clarify, under the Contract Labour Act, if the contract labour strength falls below 20, can we surrender the labour license that was obtained?

Regards, Amit

Dear Tapan,

Your labor license is linked to your Principal Employer's registration, who is using the services provided by you. So, if there is a decrease in your employee strength but your contract is current, you cannot surrender your license. Remember the last twelve-month clause?!

Good luck.

Regards,
Colonel Gahlot 'TRURECRUIT'

If you feel that a license is not required, then under Rule 31, make an application for a refund of security.

Refund of Security

(i) On expiry of the period of the license, the contractor may, if he does not intend to have his license renewed, make an application to the licensing officer for the refund of the security deposited by him under Rule 24.

(ii) If the Licensing Officer is satisfied that there is no breach of the conditions of the license or there is no order under section 14 for the forfeiture of security or any portion thereof, he shall direct the refund of the security to the applicant. This way, you can prove that you don't need a license.