Compliance with Contract Labour Act: Licensing, Leave Benefits, and Employer Defense Options

Dear All,

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

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

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

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

1st work order - issued in Jan 13 – housekeeping job – labours engaged 10

2nd work order - issued in Mar 13 – maintenance job – labours engaged 08

3rd work order -issued in May 13 – Blasting job – labours engaged 07

In that case as the contractor engaged/crossed 20 labours (10+8+7=25) in may 13, so he has to apply for license. In that case should he need to apply for 3 different license for 3 different jobs or he can apply for 1 license mentioning 3 jobs there.

4. In case a contractor engaging 5 workmen and thus not taken any license and completed the job. In that case, isn’t he liable to submit FORM VI A.

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

guidelines on 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 Indent 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.