Navigating Contract Licenses and Policies for Multiple Jobs in One Plant: Need Advice

Our organization, X, is working with Y (PE), and we have received three separate POs for work, all within the premises of a single plant. I have a contract license and workers' compensation policy covering 500 employees. Could we obtain separate licenses and policies for each individual job if all the manpower is within the 500 limit? Kindly advise with reference to any relevant circular if available.

Regards,
Mahesh

I am not sure what you exactly mean by "expecting comment from any senior member, please clear my doubts" as mentioned in your later post. Is it that your doubts shall be cleared except for comments from any senior member? Or are you expecting a comment from any senior member to clear your doubts? Anyway, let me answer to the extent of my limited knowledge and understanding of the Contract Labour (Regulation and Abolition) Act, 1970.

Registration and Licensing Under the Act

Registration of the Principal Employer under the Act is establishment-specific, and licensing of the Contractor is work-specific. In other words, a license granted in respect of a contract work in a particular establishment is valid for a maximum period of 12 months or until the completion of the particular work, whichever is earlier. Similarly, the license granted is only with reference to the maximum number of workmen likely to be employed in that work as contract labor and not with specific reference to particular contract labor. The same or a similar condition applies to the Workers' Compensation Insurance Policy taken.

In other words, both the license and the Workers' Compensation policy are unnamed documents in respect of the contract labor employed in that particular contract work. So, interchanging contract workmen among the various contract works within the same establishment will be permissible, subject to obtaining a separate license and Workers' Compensation Policy for each work and making appropriate entries then and there in the connected documents prescribed.

I apologize for the spelling mistake. If our organization has three separate purchase orders at a single plant premises with the same principal employer, and the total strength of all three projects is a maximum of 350, while initially we obtained a contract labor license for 500 workers and a Workers' Compensation Policy, do we need to acquire separate Contract Labor License and Workers' Compensation Policy? Kindly provide a detailed explanation, including any relevant circular, book reference, or section of the Contract Labor Law. Our management believes that since we are working on all three jobs at a single premises under one principal employer, and the total workforce is within the license limit, it may not be necessary to obtain separate licenses and policies. Could you please provide references if separate licenses and policies are required for each job, even if they share the same principal employer and premises?

The writer needs approval from the management supported by your referenced information.

Thank you,

Regards,
Mahesh Prasad Gupta
[Phone Number Removed For Privacy Reasons]

Dear Mahesh Prasad Gupta,

Interpretation of Legal Provisions

Interpretation of the provisions of any law and the rules made thereunder should not be based on practical convenience and pecuniary advantage of a person who is licensed to carry out a certain act regulated by the particular law. You know well that the objective and purpose of the Contract Labour (Regulation & Abolition) Act, 1970, is to abolish contract labour in industrial establishments primarily and, where not practically possible, to regulate it to ensure economic and social justice for the unfortunate section of the working class that has been denied equal wages for equal work, continuity of employment, and left in an identity crisis concerning their means of livelihood. Hence, an enabling provision under section 10 of the Act prohibits contract labour in "any process, operation, or other work in any establishment."

Definition of "Establishment"

The term "establishment," as defined under the Act, includes the place from which its activities in the nature of any industry, trade, business, manufacture, or occupation are controlled, as well as the places where these activities are carried out. Any activity in the nature of industry, trade, business, manufacture, or occupation consists of divisible and distinct components such as processes, operations, or other work. Thus, in the case of an establishment registered as a Principal Employer under the Act, there may be specific processes, operations, or work where engagement of contract labour is prohibited, and therefore, no license could be granted to a contractor for those tasks.

Contractor's License and Insurance Policy

Please refer to Rule 21 in conjunction with Form-III and Rule 22 with Form-IV of the CLRA Central Rules, 1971, or similar State CLRA Rules, which typically mirror the Central Rules. You will notice that the Contractor's license is specific to the work, as mentioned previously. Similarly, the insurance policy under Workers' Compensation is also work-specific. In essence, a Contractor's License obtained for a specific establishment for a defined number of contract workers cannot serve as a blanket permission to engage them in any work within the establishment by rotation during the license period. Therefore, I recommend obtaining separate licenses for each item of contract work within the same establishment going forward.

Regards,

Sir, when the writer applied for Form-5 to PE, PE informed that another CLL was not required because the writer already holds a CLL with the existing job and the new job falls within the premises. They only advised us that the strength should not exceed the license limit. Furthermore, the writer applied for a separate WC Policy for the new job.

Kindly advise if you think anything needs to be considered as per the CL Act / Factory Act.

Regards,
Mahesh Prasad Gupta

Licensing Responsibilities Under the Factories Act and CLA

Taking a license under the Factories Act is the responsibility of the Principal Employer (PE); under the Contract Labour Act (CLA), it is the responsibility of the contractor. However, your PE's view seems incorrect. The enforcement authority can take a different view. If there is no problem, then it is okay.

Regards

Umakanthan.M, sir,

Finally, the writer has convinced our management and P.E., and they agree with us and have issued Form-V for a new license under CLA.

Sir, I have one more doubt. Can we maintain compliance under CLA, BOCW, MWA, FA, etc., in soft copy instead of a compliance register? Is it allowed with permission from the ALC concern?

I request your valuable advice.