Navigating Form V and Labor Licenses: Can a Contractor Work Across Multiple Departments?

Can a principal employer issue more than one Form V if the contractor is awarded work in the same company but in a different plant or department?

Can one contractor have more than one labor license in the same city or the same company?

Understanding the Provision of Form V

First, look at the provision about Form V in the act as written below:

"Every application for the grant of a license shall be accompanied by a certificate by the principal employer in Form V to the effect that the applicant has been employed by him as a contractor in relation to his establishment and that he undertakes to be bound by all the provisions of the Act and the rules made thereunder insofar as the provisions are applicable to him as the principal employer in respect of the employment of contract labor by the applicant."

As per my understanding, the interpretation of the above enlightens us that there is no requirement for more than one Form V for one contractor in the same establishment, but the nature of the contract work must be written in the form.

Sorry, I beg to differ from the interpretation of our friend Mr. R.K. Singh. The license granted under the CLRA Act, 1970 is basically work-specific. A contractor is required to obtain a separate license for every contract he enters into with the Principal Employer. Every such application for a license has to be accompanied by a Form-V issued by the PE. Therefore, it automatically follows that the same contractor may have different contract works from the same PE and thus require different licenses for such different contract works.

Since the Form-V issued by the PE is not only a certificate of engagement of a particular contractor by name but also an undertaking to abide by the vicarious liability enjoined upon himself under the Act in respect of that contract work, I am of the view that when more than one contract work is awarded to the same contractor, he has to issue a separate Form-V for each of the contract works that require a license under the Act.

Contract Work and Form V Issuance

It is true and correct that each contract work is work-specific and place-specific. Normally, the Certificate of Registration for the engagement of Contractors is issued to the Principal Employer. Based on that, if any Contractor engages 20 or more contract workmen, the Principal Employer gives Form V to enable the Contractor to apply for a License. The Contractor may be given different contract works such as Packing, Loading & Unloading, and Housekeeping, etc. In this case, he may be issued with one Form V to get a License for the total number of persons to be engaged by him in different jobs. Though the nature of work and the maximum number of persons to be engaged are specified (Contractor-wise) in the Registration Certificate and License, there is no such thing mentioned in Form V. The same is being issued by the Principal Employer only as an undertaking to abide by the provisions of the CLRA Act and the Rules.

Regards, N Nataraajhan
[Phone Number Removed For Privacy-Reasons]
[Email Removed For Privacy Reasons]

If contract work locations are different, a separate Form V has to be issued for each location. The license bears the address of the principal employer's location where the contractor is required to work.

Mr. Singh, this is a legal forum; here, knowledge is important, not just understanding. Please don't take this amiss.

Dear Mr. Shrikant,

I acknowledge your point regarding Form V being required separately for each location. An issue arises when the same contractor is involved in different contract work at the same location. In practice, we usually provide one Form V for one contractor at a particular location, as suggested by Mr. Natraj. The interpretation of the law may vary in this regard.

Thank you.

It may not be out of context to mention that the interpretation of a particular rule or provision of any section in a law becomes necessary only when there is more than one way or possibility of giving effect to that provision. I cannot think or accept that interpretative brooding, accentuated by practical or personal inconveniences, is possible regarding the compliance of procedures set down by a rule. If a section of a law or a rule made thereunder prescribes that a particular thing must be done in a specific way, no deviation or departure from such dictum is permissible.

Regarding the procedure for application for a license

Rule 21(2) of the Contract Labor (Regulation & Abolition) Central Rules, 1971, states that every application for the grant of a license shall be accompanied by a certificate by the principal employer in Form V. In my opinion, this means that every license granted is distinct from the rest of the licenses, if any, granted to the same contractor in respect of any other works under the same principal employer. Therefore, the question of any difficulty due to redundancy of the issue of Form V does not arise.

Dear Umakanthan ji,

You are absolutely right. Today, I have also confirmed with one of my friends who is a labor commissioner in the central government. He stated that the number of Form III (earlier Form V) depends on the number of work orders given by the organization.

I am sorry to differ from the comments of Mr. R.K. Singh and rather feel that the issuance of FRESH Form V against separate Work Orders (even within the same premises) is not only preferable but also advisable.

Issuance of Form V for Separate Work Orders

Think of a situation where a large construction company is entrusted with a contract for "Pile Foundation" for a Thermal Power Plant of the State Electricity Board, and the Principal Employer issues Form V. Subsequently, during the currency of the said contract, the Principal Employer (the "Client") decides to entrust the same construction company with a second contract for "Construction of Civil Works for Coal Handling Plant," a third contract for "Construction of Chimney," a fourth for "Construction of Cooling Tower," and issues separate work orders for each contract.

Now, the contractor has the option of either increasing the strength of the "Labour Licence" (obtained for "Pile Foundation" work), thereby adding further numbers to the licensed capacity of the licence, or approaching the Principal Employer for a separate Form V for the execution of each work.

Advantages of Separate Form V Issuance

The advantage of the second option is that the licence obtained for each individual contract can be surrendered for cancellation upon submission of a "Certificate of Completion" from the Principal Employer. This option is more acceptable as otherwise the "Licensed Capacity" (strength of the first license taken) would be reduced to the required extent. This proposition is beyond law since the Act does not provide for a reduction in the strength of "Licensed Capacity."

The principal employer issues Form V on the basis of a work order issued to a contractor. If multiple work orders are issued within one premises, the principal employer is bound to issue a separate Form V. On that basis, a contractor can have a separate license.

Amendment to the License Under Rule 28 of the Contract Labour Rules

Rule 28 of the Contract Labour Rules provides for an amendment to the license already granted. This means that when the contractor is given new or additional contract work by the Principal Employer (PE) in the same premises, the contractor has to apply for an amendment. The application should mention the nature of the required amendment, the reason for it, and any changes in the particulars already furnished in Form IV.

Single License for Multiple Contracts

When the statute provides certain procedures for the contractor to amend their license upon receiving new or additional jobs, it is advisable for the contractor to hold only a single license for all the contract work in a particular establishment. This approach is preferable to requiring the contractor to obtain several separate licenses. We have obtained more than 40 contract licenses in various companies for different works in Tamil Nadu, Karnataka, and Andhra Pradesh, using only one Form V.

Regards, N. Nataraajhan, Sakthi Management Services

[Phone Number Removed For Privacy-Reasons]
[Email Removed For Privacy Reasons]

Advantages of Issuing a Separate Form V

Very fruitful discussion on the issue. Looking at the following advantages, it is always advisable to issue a separate Form V if the nature of the job is different from the issued work order/PO.

1. The contractor can surrender the labor license for which the job is completed and claim the refund of the security deposit.
2. As an employer, it will be easier to monitor the productivity of each job as the allocated MPs have different skill sets, and the contractor can't manipulate the numbers of labor.
3. In case of any accident, the employer can hold the contractor accountable for any unlawful use of labor.

Sometimes we have to think beyond the law considering the current scenario and the contractor's smartness, and most importantly, to safeguard the organization's interests.

Discussion on Contractor's License Amendments

The follow-up response of our learned colleague Mr. Nataraajhan and his arguments favoring a single contractor's license through amendments to an existing license for multiple contract works under the same principal employer within the same premises adds piquancy to the discussion. His personal experience as a contractor under the CLRA Act, 1970 across the Southern States is duly noted. Of course, perceptions differ among the authorities who enforce the Act, and so do the procedures accordingly. Yet, what is more appropriate has to be decided based on the principle underlying every such rule relating to procedure, rather than assumptions based on the ease of compliance.

Amendment of an Existing License

Amendment of an existing license is provided for under Section 14(2) of the Act read with Rule 28 of the Central Rules, 1971, as observed by our friend. In this context, I think what could be an amendment to an existing license is a pertinent issue. Since the license is non-transferable, there cannot be an amendment regarding the licensee or the principal employer. Since the renewal of the license is also provided for in case of extension of the contract work beyond the period already stipulated, there is no possibility of any amendment in this regard either. Therefore, what could be amended in respect of a contractor's license already granted, if at all, are (1) any additional work similar to or in extension of the work already mentioned, (2) any upward revision in the total number of contract labor to be employed, or (3) any change in the name and address of the Agent or Manager of the Contractor.

Experience as a Licensing Officer

Therefore, my experience as a Licensing Officer for about 8 years and a Registering Officer for about 12 years under the CLRA Act, 1970 prompts me to state, with due respect to a seasoned contractor like Mr. Nataraajhan and the learned officers mentioned by him in his reply, that a single license for the already licensed contractor in respect of subsequent different nature of contract works with similar or different duration under the same principal employer by means of time-to-time amendments is not a correct procedure either on the part of the contractor or the licensing officer.

Can multiple scopes of work be added to the labor license if the location and PE are the same?