Navigating Contract Labor Challenges: How Do You Handle Compliance and Licensing Issues?

In our factory (PSU), we engage contract labor on a regular basis. For administering the contract labor matters, I have come up with the following issues:

1. Contract laborers are getting leave benefits (1 day for 20 working days), which is being paid to them by the contractor as leave encashment during the final settlement. However, contractors do not maintain a separate leave register for that as the CL (R&A) Act has no provision regarding a leave register. The factory inspector, in their report, insists that contractors must maintain a leave record (in the form prescribed by the Factories Act and rules).

2. In case the factory inspector starts prosecution, what are the options available for the employer (occupier) for immediate defense?

3. Regarding the licensing of contractors, in case we issue three different work orders to one single contractor for three different works in the same establishment during different times of the year as follows:

- 1st work order: Issued in Jan 13 – housekeeping job – laborers engaged: 10
- 2nd work order: Issued in Mar 13 – maintenance job – laborers engaged: 08
- 3rd work order: Issued in May 13 – blasting job – laborers engaged: 07

In that case, as the contractor engaged/crossed 20 laborers (10+8+7=25) in May 13, does he have to apply for a license? Should he need to apply for three different licenses for three different jobs, or can he apply for one license mentioning all three jobs?

4. In case a contractor engages 5 workmen and thus has not taken any license and completed the job, isn't he liable to submit FORM VI A?

5. In case a company is engaged for the testing and inspection of machinery, where the job of testing & inspection is done by its own employees who come to the factory on an average of 2-3 days a week, should the matter be regularized by the CL (R&A) Act?

Guidelines on the above cases are required urgently.

Regards,
DG

Dear DG,

Even though you are following the CL(R&A) Act, the licensing authority is the same Factory Inspector. Hence, you need to maintain the Leave with Wages register and be able to produce the records of payment of wages for the earned leave period along with the F&F Settlement, as followed in other construction sites.

As a principal employer, you might have issued the Work Order/Letter of Intent to the contractor. As the strength increased from May, please issue the Form V (as per CL Act) and instruct the contractor to obtain the license. Furthermore, you have to give an amendment to your RC by adding the contractor's name to your RC.

Please try to understand the purpose of any form. Form VI-A is nothing but the commencement and completion of the contract job to be submitted by the Contractor. If the contractor has not obtained any license, then what is the point of submitting the Form VI-A to the authorities?

Regarding your query No. 5, the subject has been discussed earlier as well. If the contract agreement is for maintenance by the manufacturer, then it will be considered a service and will not come under the CL Act. However, if the same is regularly done by the Agency by supplying the manpower for maintenance, then it will be considered as contract work. Additionally, the maintenance team normally comprises 2 or 3 members, so they do not need to obtain any license.

If you have any other doubts, please seek clarification.

Regards