Contract Labour Act Dilemma: Do You Need to Renew Your License with Fewer Workers?

Contract Labour Act Compliance

As per the Contract Labour Act, it applies to every contractor who employs or has employed twenty or more workmen on any day during the preceding twelve months. A contract labour license is valid for one year, i.e., from January 1, 2013, to December 31, 2013, in Maharashtra state. For instance, if XYZ contractor had 100 laborers and obtained a CL license for the year 2013 (from January 1, 2013, to December 31, 2013), but after December 31, 2013, the number of laborers reduced to 15, with only 15 contract laborers on January 1, 2014.

It is now mandatory to renew the contract labour license for the year 2014 for the contractor, even though the number of laborers has decreased from 100 to 15.

Regards,
Sacheein

Yes, he has to renew his contract with the current number of employees employed by him. The license has to be renewed every year regardless of the number of employees, whether increased or decreased.

I think the concern of Sachin is that if the number of employees falls below 20 (the contract workers now going to be engaged is only 15), should he be required to take a license?

Though I have not come across such a situation, referring to the CLRA, I think it is not mandatory that he should take a license because when the Act itself says that a license is required only when the contractor engages 20 or more persons. A license is issued for a period of one year, and it is not that a contractor once covered by the Act will continue to be covered, as with PF, ESI, or Gratuity Acts, where the dropping of the minimum number of employees will not exempt them from the provisions of the Act. Similarly, a contractor can take a license based on Form V issued by the Principal Employer only. For the Principal Employer, the contract is time-specific, and he may not issue Form V unnecessarily, although providing Form V and making his contractor a licensed one is always good.

Therefore, I feel that the contractor need not renew his license in respect of this particular Principal Employer.

Regards,
Madhu.T.K

State Labour Rules and Contract Labour License Requirements

You have to check the State Labour Rules as the minimum number of contracted personnel required to obtain a contract labour license differs from state to state. States are allowed to change the minimum number of contracted personnel needed for a contract labour license. However, in Central Government undertakings or in undertakings where the Central Government holds the majority, the minimum number of contracted personnel is 20.

There is no need to renew the Contract Labour License. You need to submit the application to the Assistant Labour Commissioner, stating that in the year 2014, we had only 15 employees working on contract, and surrender the said license.

Regards,
Dilip Nandanwar
For Vidarbha Industries
(Labour Law Consulting & Outsourcing, Payroll Outsourcing & Management)
Navi Mumbai
[Phone Number Removed For Privacy Reasons]

There is no need to renew the Contract Labour License. You need to submit the application to the Asst. Labour Commissioner stating that in the year 2014, we had only 15 employees working under contract, and then surrender the said license.

However, your principal employer needs to amend their RC under the Maharashtra Contract Labour Rules-1971 accordingly. By doing so, there will be no need to renew the license for the year 2014.

Regards,
Dilip Nandanwar
For Vidarbha Industries
(Labour Law Consulting & Outsourcing, Payroll Outsourcing & Management)
Navi Mumbai
[Phone Number Removed For Privacy Reasons]

Attribution: https://www.citehr.com/483258-applic...#ixzz2s9qMfRWe

I think since the act says "20 or more workers in the preceding 12 months," and he has more than 20 workers during the preceding 12 months, he will have to renew the license. When 12 months have passed without having 20 workers, he need not renew the license.

Hi,

I am an individual engaged with a software company in a SEZ in Bhubaneswar as a consultant. I invoice for my services every month. Does CLRA apply to me too?

Thanks and Regards,
Mithil

Independent Contractors and the CLRA Act

Independent contractors who are not governed by the service rules of the company, such as working hours, leave rules, dress codes, etc., are not employees. Therefore, the CLRA will not apply in such cases.

Employee Status and CLRA Applicability

At the same time, if you work exclusively for an establishment and are expected to be present in the office from a specific time to a specific time, then your role is not that of a consultant. Instead, your relationship with the employer is that of a servant and master, and you will fall under the purview of an employee. Also, if you are receiving a salary directly from the employer, you will not be covered by the CLRA Act in such a scenario.

Contract Workers and the CLRA Act

However, if you are appointed by another agency to work with an establishment, then you will be considered a contract worker falling under the CLRA Act.