Do We Need a Labor License for Our Data Entry Work with a PSU? Seeking Guidance

We have a Computer Software & Hardware Trade License. We are a partnership firm executing data entry jobs on an annual rate contract basis. We have 20 data entry operators engaged in our different establishments. We are working in a CPUC where only 12 data entry operators are engaged.

Now the question is, the PSU wants us to get a labor license. Is it mandatory to take a labor license for this sort of job as per the Contract Labor Act? Please provide proper guidance.

Understanding the Contract Labour (Regulation and Abolition) Act

1. The principal employer must register your establishment under the CLRA Act.

2. You need to apply for a contract labour license once the principal employer has obtained a contract registration certificate for your firm. In your case, only 11 data entry operators are working in the PSU. If the principal employer registers your establishment under the CLRA Act, you do not need to apply for a labour license because you have engaged/supplied only 11 data entry operators (less than 20 workmen - Condition one will apply).

Condition 1: The CLRA Act applies only to every contractor who employs or who employed on any day of the preceding 12 months 20 or more workmen.

Condition 2: If any notification in the official gazette applies provisions of the CLRA Act to any establishment or contractor employing such a number of workmen less than 20 as may be specified in the notification.

Regards,
D. Pannerselvam
[Phone Number Removed For Privacy Reasons]

Your question is a little bit confusing. When your client is asked for a labor license, why are you asking for a Contract Labor License? You need to obtain a labor license under the Shop & Establishment Act. That is sufficient for your needs.

Regards,
Praveen

Dear Sir/Madam,

Kindly clarify the following:

We have a Computer Software & Hardware Trade License. We operate as a partnership firm and execute data entry jobs on an annual rate contract basis. Currently, we have a total of 20 employees working across our various establishments, with 12 employees engaged in a Public Sector Undertaking (PSU).

Contract Labor License Requirement

Now, the PSU is requesting us to obtain a labor license. Is it mandatory to acquire a Contract Labor License as per the Contract Labor Act?

Please provide us with proper guidance.

Thank you,

Indrajit Sharma

Please follow Mr. Pannerselvam's instructions without any confusion. The Shop & Establishment Act and the Contract Labour Act are different. Regarding your question, you are required to have a labor license.

Understanding the Labour License Requirement

As per the Contract Labour Act, if you engage more than 20 employees, then you are required to apply for a Labour License. However, according to the CLR Act, there is no need to obtain a labour license if you have fewer than 20 employees.

Regards,
Manjunatha E
HR Generalist

Since you have more than 20 employees, you need to obtain a contract labor license. It's better if you comply.

It is not clear from your query in which state you have these 12 employees. Please note that in some states, a labor license is required even if the number of employees is less than 20. I can give you examples of at least two such states: West Bengal and Andhra Pradesh.

Also, note that a labor license is to be taken location-wise. For example, if you operate in Mumbai at 7 different locations, and if a labor license is applicable in all these locations, you have to obtain a separate labor license for each of these 7 locations within Mumbai. From your query, it is not clear whether these 12 employees are working in the same location of the PSU or if they are scattered. If they are scattered (not sitting in the same location), then you need to check if taking a license is applicable to you or not.

Steps to Determine Labor License Requirement

So, please check two things:

1. What is the minimum number of employees required in your state for the applicability of the act?

2. Whether the employees are working in the same location or if they are scattered. If they are scattered, then check whether the CLRA is applicable considering point number 1 above.

Regards,
Kuldeep Singh

Labour License Requirements under the Contract Labour Act

A Labour License under the Contract Labour Act is required for a contractor only if they have employed 20 or more employees in any establishment against a particular work order. To obtain a labour license, the requirements are as follows:

1. The Principal employer must have registration with the Licensing Authority under the CLR&A Act.
2. A copy of the work order.
3. Form V issued by the principal employer and a Demand Draft (DD) towards security and license fee.

Please ensure proper compliance with the above requirements for obtaining the necessary Labour License.

Labour License Requirements Under the Contract Labour Act

A Labour License under the Contract Labour Act is required for a contractor only if they have employed 20 or more employees in any establishment against a particular work order. For obtaining a labor license, it is required.

However, there is one more thing to note: in West Bengal (Labour Department), an internal notification has been issued. The notification clearly states that if a contractor has employed 10 or more employees in any establishment, they must obtain a contract labor license from the authority.

Thanks & Regards,
Abhijit Barua

The labor license is required for more than 20 employees in one work order; it may be in the same establishment.

The labor license is required for more than 20 employees in one work order; it may be in the same establishment.

I would disagree. The license is required for more than 19 workmen (20 or more) at any particular location. You may have different work orders for contract employees from the same contractor working at the same place; then you will still need a license if you cross 20.

In case both locations come under one single factory license, then again you will need to get a license for the contractor. Also, please remember that you will need a registration certificate when the principal employer has more than 20 contractors from all contractors working at a single location.

I am not adding "ji" to your name because it is already a part of your name. Thank you for your clarification. I believe the number of workers required for a labor license varies from state to state, as does the issuing authority. In our state, it has been transferred to the central authority. Our licensing authority is now ACL, previously JCL in the state of AP.

I am happy to see you, sir.

Best regards,
[Your Name]

Yes, sorry. I stand corrected. The number of 20 was in the original act. Various states have chosen to lower it. So the user needs to check the state amendments if any. I did not understand what you meant by "transferred to central." I remember reading on citehr about registration under the central zone, but never got clarity on it. As for my name, I would be happy to be addressed without a "ji" even if it was not in my name :)

License Issuing Authority

The license issuing authority is the Assistant Commissioner of Labour, previously the Joint Commissioner of Labour at both the central and state levels.

Happy to see your reply, sir.

I meant to ask: When does the central government issue a license as opposed to the usual practice of the state government? What conditions do we need to fulfill?

I meant to ask: When does the central government issue a license as opposed to the normal practice of a state government? What conditions do we need to fulfill?

The ALC will notify the establishments for this purpose specifically; the state is the license-issuing authority. Ours is a central government organization; similar to that in our Visakhapatnam, some more central government organizations have been notified in the central ALC's purview. The remaining procedure is the same in both.

Thanks to everyone, but the answers are not categorical. The contractor has more than 20 laborers on his payroll, but by distributing them to different locations, he is able to evade license requirements and, thus, all the responsibilities of an employer.

The act applies to every contractor who has more than 20 workers. The applicability is not restricted to those with 20 at one location. While the license may not be a requirement, the rest of the act and the rules will apply. He does not escape the liabilities of an employer. He has to follow the regulations all through - maintaining relevant records, leave, payment on due dates, deduction of PF, ESIC, etc. The principal employer better be careful and monitor as well since he is responsible for any failure of the contractor, irrespective of whether there is a license requirement.

Dear Seniors, As per the CLRA Bihar or West Bengal Rules 1971, is there any provision for more than 9 employees to get a license under the CLRA Act 1970? Please clarify.

Regards

I have a firm (enterprises) where I am providing labor, but the company is demanding a labor license. My CA says that a labor license is not required in the case of enterprises; only the registration copy of this firm is enough. Can you please provide clarification on this matter?

Thank you.

The Contract Labour Regulation Act (CLR Act) applies if any establishment employs 20 or more workmen. In this case, a contractor is exempt from obtaining a labor license if they employ/employed fewer than 20 workmen. The Payment of Bonus Act also applies in establishments where 20 or more workmen are employed. However, the contractor claims bonus and pays the same to the workmen even if the number of workmen is less than 20. Why?

Dear All,

Can we consider the labor license application if the contractor has deputed manpower without a license for a fresh purchase order? Any writing proficiency available?

Thank you.