Do Small Contractors Need a Labor License in the Chemical Industry? Seeking Clarity on Regulations

Is it a compulsory requirement to get a labor license for a contractor who is supplying labor (less than 10 individuals) in a chemical formulation industry? Can we engage with the contractor by providing a monthly work order for the same?

Dear members, please help me as I am a beginner. It is URGENT. We, as a contractor providing staff to one of the MNCs, recently received Form V from that company, and they asked us to obtain a license.

Your valuable reply is needed for the following:

1. As a contractor, do I need to apply for registration or a license? (To my understanding - Registration means the registration of the establishment by the Principal employer. A License means permission to deploy staff by the contractor). Please correct me if I am wrong.

2. Where do I apply, i.e., the jurisdiction of the establishment or the contractor?

3. The contract commenced in March 2011, can I apply now?

4. What are the procedures and forms involved?

Note: The Principal employer & establishment are in Chennai. We, the contractor, have our head office in Bangalore, as mentioned in Form V.

Regards, Sundar.K

Another point which I missed: If there are two companies to which we provide staff, one with 40 employees and another with 5 employees, is it required to obtain a separate license for each company, even though the number of staff is less than 20?

1. Correct the jurisdiction of establishment.
2. I am not sure, but you might have to pay half-yearly returns from the date of commencement of work to the licensing officer for the previous year.
3. Get Form V from PE-Form IV for the application of a Labor license (in triplicate). Security deposit amount at the bank through challan for each number of labor (amount applicable as per the labor office). Also, deposit labor license fees at the bank through challan.
4. Individual licenses for different establishments.
5. If the labor strength is 5, then there is no need for a license.

Regards

I see that your location is Vadodara. Here in Gujarat, it is necessary for the contractor to have a contract labor license (for any type of factory) with 10 or more workers working at any point in time.

Work Orders and Agreements

Regarding the work orders, it is advisable to issue work orders/agreements for a longer period, such as 6 months, a year, or more. This practice not only increases documentation but can also prevent complications in the long run.

Let me address your issues one by one:

1. Here, I assume that the MNC firm is asking you to register your firm as a contract labor supplier. This means you need a license to supply labor to any company. You should get in touch with your local labor office to apply for a contract labor supply license.

2. You need to apply for the license under the jurisdiction where your office is located. It has nothing to do with the MNC firm. Basically, you need to apply for a labor license and then send a copy to the MNC firm so they can include your firm's name in Form 25 as a registered contract labor supplier.

3. You need to apply for the license ASAP. The authorities do not generally conduct background checks; however, the sooner you apply, the safer it is.

4. All the procedures and forms would be available in the local labor office.

5. NO. You do not need separate licenses. You just need one license, and you can get work orders/agreements signed with your client companies.

Hope this solves your queries.

Regards,
Aditya Joshi

I disagree with Aditya on the following points.

1. Contractors need a labor license for carrying out work at a PE establishment, and that license is not valid at other establishments.
2. Contractors have to apply for a labor license at the jurisdiction of the PE establishment.
3. PE issues Form V.