Labor Licensing Confusion: Should We Count 200 or 310 Workers for Compliance?

We have a labor license for 200 workers and have engaged a subcontractor. They have obtained a labor license for 110 workers. The question is whether the number of workers for the principal employer should be counted as 200 or 310.

Applicability of the CLRA Act, 1970

The applicability of the CLRA Act, 1970 to the Principal Employer's establishment commences whenever the employment of 20 or more contract laborers takes place therein. The liabilities of the Principal Employer under the Act revolve around their one-time registration based solely on the application of the Act.

Licensing and Registration Amendments

However, not only is the licensing of the contractor subject to amendment, but the registration of the Principal Employer is also subject to changes. This is because the fee for registration is based on the subsequent variation in the maximum number of contract laborers actually engaged by one or all the contractors in their respective contract works in the establishment as a whole.

I agree with the explanation provided by Mr. Umakanthan. The maximum strength is determined based on the registration obtained by the principal employer. The total engagement of contract labor on any day, under both the contractor and subcontractor, should not exceed the number for which the principal employer obtained the registration.

Further, the combined strength of your workforce and that of the subcontractor should not exceed 200. There is no provision for subcontractors under the statute; instead, the subcontractor operates around the principal employer and the contractor. You need to check the nomenclature of Form V issued by the principal employer to the subcontractor for obtaining a labor license. If your name is not mentioned in Form V issued by the principal employer to the subcontractor, then the strength of your workforce and that of the subcontractor would be treated as 200 and 110, respectively, as mentioned in the license.

Clarification on Subcontractor Licensing Under the CLRA Act

Please clarify how your subcontractor obtained a license under the CLRA Act. Did the principal employer issue a Certificate of Engagement to them separately using FORM V? If your answer is "yes," your principal employer has two independent contractors, and in the Register of Contractors, your subcontractor should be included. The total licensed capacity in that scenario would be 310.

However, if you issued a separate Work Order to your subcontractor, and their laborers are working within the work periphery assigned by the principal employer, they would be considered your workers. This means that your licensed capacity would be affected by the number of workmen engaged, and you would be responsible for all statutory liabilities related to those workers.

It's worth noting that your subcontractor can independently quote and secure contracts directly from your principal employer, potentially becoming your competitor.

I have a doubt to be clarified by the seniors. In outsourced contracts (like hiring of HEMM for excavation purpose), PE is not liable under CL Act for licensing even if the contractor employs more than 20 workers. As per their say, since the job is outsourced, there is no direct involvement of contract labour. Moreover, if the work period is less than 15 days, then there is also no need for a license for contractors.

Kindly elaborate on this.