Understanding Contract Labor: How Do Principal Employer and Contractor Relationships Work?

I need some guidance regarding contract labor. What are the grounds for establishing the relationship of principal employer and contractor under the Contract Labor Act? Is payment made on a manpower basis a ground, or are there any additional requirements? Also, does the principal employer have the power to inspect the records of the contractor? Please share your valuable comments.

Regards

This is your first post ever since you became a member of this forum. If you read the definition of Principal Employer and Contractor as given in the Contract Labour Act, you will not have any doubt about the grounds establishing the relationship of Principal Employer and Contractor.

Understanding Principal Employer and Contractor

PE is essentially an owner of premises or the business activity. A contractor is a person who undertakes to produce a given result for PE through contract labor. (For a detailed definition, please refer to the Act.) I hope this is good enough for you to understand the grounds establishing the relationship of PE and Contractor.

Responsibilities of the Principal Employer

PE is responsible for the Contractor's defaults. Therefore, PE has the power to inspect the records of the Contractor. There is even a provision in the Act by which the Contractor should make payment to his employees in the presence of PE.