It all depends on the Principal Employer (PE) whether to accept it or not. Generally, in the manufacturing/process industry, engineering industry, or in small and medium-scale industries, there is rigidity. The contractor is not permitted to subcontract, and therefore, the contractor cannot delegate labor compliance under the codes allotted to somebody else.
Multi-Tier System in Construction
However, in construction or in a turnkey project, a multi-tier system is well accepted. In a multi-tier system, there are many subcontractors and sub/sub-contractors under the main contractor. One contractor gives the contract to another; that other contractor gives it to somebody else. That somebody else gives the contract further to a person who actually executes the contract work. In such a case, the labor compliance is made by this person who actually executes the contract work with the help of laborers engaged by him. The PE has to accept the compliance by such a person under his code as a subcontractor to the main contractor. He, i.e., the PE, has no option.
However, in this case, it is advised to take an appropriate/suitable undertaking cum indemnity from the main contractor by the PE.