Navigating the Contract Labour Act: Who Needs to Apply for a License and How?

Hi,

Can anybody suggest to me who is required to apply for a license under the Contract Labour (Regulation and Abolition) Act, 1971? What is the procedure for applying for registration? Which is the proper authority to apply to?

Thanks,
Armaan

Dear Armaan,

The Contract Labour Act and the employment of contract labour are applicable in the following two conditions:

(a) to every establishment in which twenty or more workmen are employed or were employed on any day of the preceding twelve months as contract labour

(b) to every contractor who employs or who employed on any day of the preceding twelve months twenty or more workmen: Provided that the appropriate Government may, after giving not less than two months' notice of its intention so to do, by notification in the Official Gazette, apply the provisions of this Act to any establishment or contractor employing such a number of workmen less than twenty as may be specified in the notification.

Procedure for application:

By Principal Employer: The Principal Employer also needs to obtain a license for availing the services of contract labour. The process is as follows:

Every principal employer of an establishment to which this Act applies shall make an application in triplicate in Form I to the Registering Officer of that area. It should be accompanied by a demand draft showing payment of the fees (fees vary depending upon the number of persons - for details on this, please refer to the rules framed under this Act) for the registration of the establishment and should be delivered either personally to the registering officer or sent to him by registered post.

Regards,
Nilendra

You are right, but the contractor also has to submit the required trade license and open a PF code, and submit the details to the principal employer to assist in submitting Form 1.

Dear Armaan,

In addition to what is stated by other fellow members, I would like to state that when you engage any contractor who is deploying 20 or more workmen, the Principal Employer has to enter into a legal contract with the Contractor as well as issue Form V to the Contractor to obtain a license under the CL(R&A) Act. Since you are based in Mumbai, I believe the premises are in Maharashtra. The labor authorities are very strict and vigilant about the CLRAA issues. Also, retain copies of the licenses obtained by the Contractor for your records and reference.

The Registration and License is valid during a calendar year, i.e., Jan to Dec, and before the expiry of the annual Registration/License, a system has to be kept in place to renew these contracts at least 60 days in advance, i.e., before the end of October. Similarly, if there is any change in the number of contract labor registered or a change in the contractor, ensure that immediate intimation is filed with the Competent Labor Authority. Hope this is sufficient to have an overview of the registration/license processes. In case you want more info, please write to me at abhirutu@rediffmail.com. Regards and wish you all the best.

Hi, I would like to add some more to the matter in question:

PRINCIPAL EMPLOYER
The principal employer has to obtain RC (Registration of Certification under Section 7A of Contract Act). The first principal employer shall apply for RC if they hire a contractor. After registering under Section 7A, the principal employer issues Form No. V to the contractor. Subsequently, the contractor applies for a labor license on Form No. IV in triplicate copy along with a copy of RC, security deposited challan, and the labor license fee, which depends on the total workmen to be engaged at the site/factory.

Renewal
Generally, the contractor applies for the renewal of the labor license before 30 days of its expiry. If the contractor fails to apply within the stipulated time, they shall have to deposit 25% excess amount as a penalty. In addition, the principal employer also maintains records and submits an annual return, while the contractor must maintain various registers required under the Contract Act and submit half-yearly and yearly returns in prescribed formats.

ASHOK KR SHARMA
GENERAL MANAGER - HR
BLK GROUP OF COMPANIES
MATHURA ROAD (MOHAN CO-OP INDL ESTATE)
NEW DELHI 110044

Actually, it is clearly mentioned in the Contract Labour (R&A) Act 1970 that the Principal Employer shall obtain RC under Section 7 of CLA 1970. Thereafter, he shall issue Form No. V to contractors. After the receipt of Form No. V, the contractor shall apply for a labor license because the contractor is required to apply for a license under Section 12 of the Contract Labour (R&A) Act 1970. Therefore, the contractor is required to obtain the license, not the Principal Employer.

ASHOK KUMAR
GENERAL MANAGER - HR & IR
M/s. B.L. KASHYAP & SONS LTD
A21/B1 MOHAN CO-OP INDL ESTATE
MATHURA ROAD, NEW DELHI
Mb 09350578043

Dear All,

We are engaging a consultant through a contractor who has 30 contract laborers, among which 20 are consultants. The remaining 10 are skilled/semiskilled laborers. Therefore, we kindly request your advice on whether a license is required under the CLA Act. Please treat this matter as very urgent.

Regards,
RNS

We want to get registered as a Principal Employer in the State of Rajasthan. What is the procedure and the forms to be filled up, fees with the security deposits, and the proof for being a Principal Employer? Kindly guide.