Contractor Liabilities: Does the 20-Employee Rule Apply Across Multiple Organizations?

Dear Seniors, I am working as an HR officer in a private organization, and I need your response to my question/confusion regarding the liabilities of a contractor.

Contractor Liabilities and Employee Count

We are in a contract with a security service agency that is providing 15 guards to serve our organization. This agency is in business with many organizations like us and has provided more than 5,000 employees. However, in each organization, they have not employed more than 15 employees.

As per the contract labor act and all state rules, each contractor employing more than 20 employees is liable to submit a half-yearly return in Form-24.

My confusion lies in the number of employees. Is this meant to be the total number of employees who are all employed in different organizations, or is it the number of employees working in one organization?

Please clarify this for me. It would help me a lot.

Thank you, seniors.

As per my knowledge, it is applicable only if a contractor is deploying 20 or more employees in one organization on a contract basis, but not all the employees are deployed in different organizations. The applicability of this act will consider the employees employed on a contract in any one of the organizations. If the contractor has employed less than 20 employees in each organization, then this act is not applicable at all. Am I right?

As per my knowledge and our AP Contract Labour Regulation and Abolition Act, when 5 or more persons are employed in any organization through a contractor, the act will be applied. You may refer to your state's bare Acts and proceed accordingly. This is for your information.

Regards,
Rajesh K
Human Resources

Dear Yogesh, as per my knowledge and the Labour Contract Act, when 20 or more persons are employed in any organization through a contractor, this act will be applied. Therefore, you may refer to the state bare act and proceed further.

Regards,
Rajesh Sharma

Under the CL Act, a license is required for the contractor to be obtained for 20 or more employees. However, in Maharashtra, the security services fall under the purview of the Maharashtra Private Security Guards Regulation of (Emp & Welfare) Act 1981. Yet, the CL Act is bound to be followed.

Thanks,
Bijay

Employees/workers engaged by the contractor in all organizations will be taken into account to determine the applicability of the EPF & Misc. Act, and not individual establishments. Moreover, once the principal employer is covered under the said Act, all the workers/employees engaged by the contractor will also be covered, irrespective of the number of workers. Therefore, even though the security contractor engaged fewer than 20 guards in each establishment, they are liable to cover all the guards under the EPF & ESI Acts.

Regards,
N. Lokanadha Babu