Navigating Contract Labour Act: Do Short-term Contractors Need Registration and Licensing?

Dear All, I am working in a manufacturing company in Chennai in the IR department, looking after the administration of the Contract Labour Act. I request fellow professionals to clarify and guide me on the following relating to the Contract Labour Act:

Registration and Licensing of Contractors

We have obtained a Registration Certificate from the Factory Inspectorate for engaging contract labour. The contractors have also obtained a licence to work as contractors in the following areas on a daily basis:
- Packing
- Housekeeping
- Material movement

We also engage certain contractors who are not included in the Registration Certificate to carry out the following work:
- Cleaning of fume extractor
- Repairing the roof of the factory to arrest leakage of rainwater
- Painting of machinery periodically
- Whitewashing and painting
- Chair repair
- Various annual maintenance contractors who come to the factory to do periodical preventive maintenance

Most of the above work would take only a day or two to be completed.

Please advise whether these contractors also should be included in the Company's Registration Certificate issued by the Factory Inspectorate and whether the respective contracts should also get a licence since the nature of the work is intermittent and casual.

Protection from Prosecution in Case of Accidents

In the event of a serious accident, how should the occupier and the manager be protected from prosecution?

Regards

Understanding Registration Certificates and Licenses for Contract Labor

Though the Registration Certificate (RC) by the Principal Employer is a one-time certificate, you can include new contractors for new types of work by filing an application. It is usually amended in the same RC itself. Similarly, contractors can also amend their licenses by adding new work.

If you are giving new work (such as painting) to a contractor who is expected to engage fewer than 20 workers, you do not need to include it in the contract registration. Likewise, you do not need to issue Form V to such a contractor who rarely requires any license since the number of workers to be engaged by them is less than 20.

I was under the impression that the contract labor registration certificate and license are issued by the Labor Department (either Central or State) and not by the Inspector of Factories and Boilers. The former are the appropriate authorities under the Contract Labor (Regulation and Abolition) Act, I presume. Please correct me if I am wrong.

Regards,
Madhu.T.K

Contractor Registration Requirement

Any contractor having more than 20 laborers working or holding a license needs to be mentioned in FORM-1 (Registration Certificate of Principal Employer); otherwise, they will be treated as the same contractor.

Thanks,
Mritunjay Nath Sahu
GM (HR)

In addition to what Madhu Sir has explained, the Certificate of Registration makes no mention of all the activities being outsourced. As long as the maximum number of workmen being employed is not exceeded, you do not require an amendment to the certificate. It is clarified that the duration of employment, whether it is a day or two, does not matter concerning registration. For example, when the Labour Inspector comes and verifies, even if the excess labor is deployed for that day alone, it would still violate the Act. As pointed out by Madhu Sir, an application for an amendment of the Certificate could be submitted up to thirty days of such a change.

Regards,
KK

I am sure you can promote and market yourself, but definitely not in this way. The question of Karthik and your answer have no relation in any way. A better approach would have been to provide some information to Karthik regarding the question he has asked rather than using this forum as a 'free marketing tool' or 'brochure'. I hope you take this comment positively and refrain from 'free marketing' without demonstrating any authority in your responses.

Dear Karthik, in addition to what Madhu, Mnsahu, and Kknair have contributed, please note that the initial responsibility still lies with the Principal Employer. Furthermore, in the event of prosecution being sanctioned by the appropriate authorities, the manager or occupier can avoid penalties if they can clearly establish that they had delegated the power and authority to another competent person employed by them for this purpose. I hope this clarifies the matter.

Thank you.

Thank you for your valuable question. I do not have much knowledge, though I have experience in HR. As most of the experts have already replied, I would like to add my perspective.

If your workmen are below 20 and you are engaging them for 1 or 2 days of work, you can amend the existing agreement accordingly. Consider adding employee risk coverage through a workmen loss policy with an insurance company. This approach not only enhances employee welfare but also safeguards the employer.

I hope this information is helpful to you.

Best regards,
Regards