Is A Licensed Contractor Can Give Sub Contracts?

Respected seniors,

I, Ramu, work in the manufacturing unit as DM-HR at Vijayawada. My query is regarding our company's expansion project, where we have awarded a construction contract to a construction company for building construction. The construction company is governed by the Contract Labour Act. Now, the construction company intends to subcontract work to other individuals. Is this permissible? If so, what norms must we, as the principal employer, follow?

Kindly advise me on this issue.

Ramu

I hope, Ramu, your company, while awarding the construction contract to 'A' Construction Co., should have included a clause prohibiting them from resorting to 'subcontracting'. Check your contract conditions. Generally, such clauses are added with a rider saying "sub-contracting whole or part of this contract is prohibited. In case the need arises, it shall be at the discretion of our company either to accede or deny. Failure to do so may result in the cancellation/termination of your contract."

So, first check your contract/Work Order and then decide how to deal with it.

Thank you for your reply, sir. We have not mentioned such conditions in the work order. Construction Company A is planning to give some portion of the work to "B" Agency. The "B" Agency has separate PF and ESI codes. Is it permissible? Does the "B" Agency have to obtain a labor license under CLRA? Can Construction Company A issue Form-V to the "B" Agency?

Kindly advise on this issue.

Ramu

Provision must be there to engage a subcontractor. For the exigency of work, you can still approach the Principal Employer to allow the services of a subcontractor. Once the Principal Employer accepts, they can extend Form V to the subcontractor to obtain a license from the concerned labor authorities. The provision exists.

Are you willing to accede to their intentions of 'sub-contracting'? You should be convinced of the sincerity and purpose of this on the part of your contractor. Check their license and other documents beforehand.

If you are willing, you should issue the amended work order to this effect and take an indemnity bond from your contractor to indemnify you against all consequent liabilities.