Understanding the Contract Labour Act: Does the 20-Person Rule Apply Per Establishment or Location?

I am having confusion with the Contract Labour (Regulation and Abolition) Act. In the view of the contractor, it applies to every contractor who employs, or who employed on any day of the preceding twelve months, twenty or more workmen. A contractor means a person who undertakes to produce a given result for the establishment through contract labour or who supplies contract labour for any work of the establishment.

The query is whether the limit of 20 persons is in an establishment or at a place.

Understanding "At Place" in Municipal Limits

What does "at place" mean? If within a municipal limit there are three offices of a company, do we have to consider the total of all three or just one location?

If you are a contractor, when will you obtain the license? If your contract labor strength is more than 20 employees, then it's required. However, the authority needs some documents for the contract labor license. The list of documents is as follows:

1. Form - V (Who will issue this?)
2. Form - IV (to be filled out by the contractor)
3. Trade license
4. TR - 7
5. Partnership deed, if in a partnership.

Why is Form - V issued by the employer?

The employer confirms that they have engaged more than 20 contract laborers at their factory or establishment. Do you understand?

The number of contract laborers on a site determines the license requirements.

Clarifying the Definition of "Place" in the Context of CLs

Confusion still exists regarding the definition of a "place." Is it defined as a state municipal limit or just a specific location? In a company where there are more than 20 Contract Labourers (CLs), but separate divisions exist, and under one division, there are fewer than 20 CLs, how does this affect the application of the rules? Additionally, if each division has a different controlling authority, how is the rule applied?

It applies to the establishment. If, in a particular establishment, the contractor has more than 20 workmen on any given day, he should register himself under the Contract Labour (Regulation & Abolition) Act.

Thank you!

Understanding License Requirements for Multiple Offices

One license, one place means: For example, your first office address is 420 XYZ Road, and your second office address is 130 ABC Lane. Your first office employs 8 contract laborers, and the second office employs 19 contract laborers. There is no issue with different management. The authority issues a license only for one place that is applicable, but in the above case, both factories/establishments are not applicable.

Example 2: Your first office employs 25 contract laborers, and the second office employs 20 contract laborers. There is no issue with different management. The authority issues two licenses for both addresses.

Understood?

Registration and Licensing Requirements for Establishments

Each establishment engaging 20 or more workers shall have registration for the establishment, and contractors shall have licenses. If you have different factories or establishments at different locations or addresses, you shall have separate registration and licenses. If you are engaging 20 workers altogether through different contractors, even then, all shall be included in your registration certificate, and they shall have licenses. It is the total number of contract workers that will be considered.

I am under the impression that a license is "contract specific." If I am a contractor and receive an order for a job/manpower supply in which I may have to deploy more than 20 persons on any given day, then I must obtain a license from the competent authority, providing details of this contract. A precondition is that the principal employer has a valid license to use contract labor on its premises.

If I am a principal employer, then I need to obtain a license from the competent authority to use contract labor. If I am operating three contracts and under each contract, the number of persons deployed is less than 20 (although together in three contracts it may be more than 20), then none of the contractors need to have a license, but I would still require one.

I am not completely sure if my understanding of this is correct.

Please see the attachment. Most of your doubts will be clarified from this.

Regards,
PBS KUMAR

Please see section 13 of CLRA 1970. The license is specific to the PLACE (the place where the work has to be carried out) and specific to the work/process to be carried out. Hence, the applicability of the license is with respect to the total number of CL the contractor would engage at the specific place for the specific job. Thus, a contractor can't carry out work at two different places (geographical locations) with one Labour License; he will have to obtain a separate license. Therefore, the applicability of the license will be when a total of 20 laborers are to be engaged by the contractor at one place.

Hope this helps.

Regards,
Shailesh Parikh
[Phone Number Removed For Privacy-Reasons]