License Of Contractor Under Contract Labour Act

If license of contractor expires what will be liability for principal employer in such case as per contract labour act

Regarding monetary dues pending settlement to the contract labour engaged by the deceased contractor in the establishment of the principal employer, the PE is liable.

pl delete the words "deceased contractor" in the reply and read it in stead as " the contactor whose licence expired" - sorry for the mistake.

Once the license expires, if renewal application has been filed at least 60 days in advance, the license is deemed to be renewed. In Maharashtra, with the new amendment, licenses are deemed to be renewed in 7 days of online application.
In all other cases, the license actually expires.
The principal employer should immediately stop using contract labour from that contractor. If that does not happen, the courts can presume that the contract was a sham, since you have continued their deploy contract labour even though the contractor no longer has a license.

Every Contractor has to get the license renewed as and when it expires.Principal Employer is liable for the act. As at the time of obtaining license Form V is issued by principal employer for the purpose.

Hi,
If license expired, or there is no license with the contractor, one and same situation. Its situation where no license and no contractor. Obviously, all labourers employed with or without contractor will be company employees, clarification through various judgments given by High and Apex court in this regard.
Best regds,
RDS Yadav
Labour Law Adviser

Mr. Yadav
I have seen Supreme Court judgements stating that simple absence of license does not make the contract workers direct employees of the principle employer. I have also seen other judgements where they have been declared permanent on grounds of contract being a sham.
The contract labour act it's self does not say they will be made permanent.
It only provides for punishment in form of penalty and imprisonment.
Ofcourse all judgements are based on facts of the case, various circumstances surrounding it and also how good lawyers in both sides are ....
So your inputs to understand the impact better will help is all.

Not obtaining license or non-renewal of license is a procedural lapse and does not ipso facto render the contract labour as employees of the principal employer.However, it may support the inference that the contarct is sham if other factors that may make the contarct sham exist. it is advisable to ask the contractor to renew license in advance as per your State Rules.
B.Saikumar
HR & Labour Relations Advisor
NMumbai

Irrespective of whether the contract employees will become your employees or not, and (again irrespective of the licence is renewed or not), you i.e. Principal Employer (PE) company, will be liable to settle all the statutory dues (salary/wages, PF, ESI, and any other laibility) of the contractor's employees working on your (PE Company's) premises.