Navigating Labor Licenses for Call Centers Across India: What Do You Really Need?

Dear Senior,

Please brief me regarding the requirement of a labor license for a call center. We have branches in other parts of India. Is it necessary to obtain a labor license and professional tax license in other states? In any case, we are generating employment and reducing unemployment in our country. A simple and transparent policy should be in place to operate smoothly. Please, Senior, provide me with your valuable suggestions in this regard.

Registration and Compliance Requirements for Businesses

Registration under the State Shops and Commercial Establishments Act, a license to run a business issued by the Panchayat/Municipality/Corporation, and Profession Tax are state subjects and should be obtained separately for each branch/office. It is permissible to have a centralized payroll and pay wages directly to employees' accounts from the Head Office, deducting the profession taxes along with other statutory deductions like PF and ESI. However, you must remit these with the local administrations where your offices operate.

Once registered with the labor department, you will be covered by the provisions of various Labor Acts such as the Payment of Wages Act, Minimum Wages Act, Maternity Benefit Act, Industrial Establishments (National and Festival Holidays) Act, Payment of Bonus Act, Payment of Gratuity Act, and Industrial Disputes Act. In addition to these, the Employees State Insurance Act and Employees Provident Fund and Miscellaneous Provisions Act will also be applicable once you employ 10 persons (for EPF, at present, it is 20 but likely to be reduced to 10 for coverage). Separate registration for these is also required.

Importance of Compliance for Call Centers

It is acknowledged that call centers like yours will generate employment opportunities and reduce unemployment. This is also the objective of other firms. Therefore, despite claims of reducing unemployment, you will not be allowed to run the center without obtaining registration from the Labor Department or Local Administration, or operate it without paying the minimum wages fixed for your industry, i.e., call centers. Labor laws are applicable to all establishments regardless of their contribution to the economic growth of India.

Regards,
Madhu.T.K

The answer by our Super Moderator, Mr. Madhu, is very accurate. The only thing I wish to add here is that I believe your question pertains to the Labor License.

Understanding Labor License Requirements

A Labor License is required to be obtained under the Contract Labor Act of 1970 by the contractor if they are executing contract work on the premises of the Principal Employer.

To my understanding, you are operating a call center in a premises you either rent or own, and not on the premises of your Principal. In such circumstances, a Labor License is not applicable to you.

Regards,