Navigating the Contract Labour Act: Are We Compliant When Hiring External Agencies?

Engagement of External Agencies and Compliance with the Contract Labour Act

Ours is a large-scale automobile dealership sales and service setup with a staff strength of 400+. We have engaged various external agencies for inward/outward security for office and stockyard premises and housekeeping job works. The agencies render services through their own manpower forces for the purpose and are not directly engaged by us.

Now, my queries are as follows:

- Does engaging such agencies come under the scope of the Contract Labour Act?
- Are we liable to fulfill the relevant statutory compliance under the provisions of the CL Act, i.e.:
- Registration as Principal Employer on our part and issuing them the relevant form for Labour Licence for engaging their services.
- Asking them to furnish all the mandatory details under the Act for our reference and record.
- Submission of Annual Return, etc., to the Labour Department.

We understand that only government agencies are required to get registered as Principal Employers with the Labour Department and issue forms to the vendor contractor for engaging the laborers for the execution of contract jobs.

Please note that the security and housekeeping agencies have obtained a labor license on their own for engaging the labor services.

Regards,
Madhucon Pcl

I invite your kind attention to the applicability clause under section 1(4) and the definition of the term "establishment" under section 2(1)(d) of the CLRA Act, 1970, respectively. Being an automobile dealership engaged in sales and service, your establishment certainly falls under the purview of the aforementioned Act. It is important to note that not only government agencies but government establishments also fall under the Act. Therefore, you are required to register yourself as a Principal Employer under the Act.

The contractor's license as envisioned by the Act is specific to both the establishment and the work, granted based on the form provided by the Principal Employer for each specific job and contractor, and hence, it is non-transferable. Therefore, the labor license mentioned in your post is irrelevant to your establishment.

Please ensure compliance with the necessary regulations and procedures to avoid any discrepancies in the future.

Best regards, [Your Name]

Dear Sir,

For all practical purposes, when engaging outside agencies for designated job works, we must register ourselves as the Principal Employer in the prescribed form and issue Form V to the agencies to obtain a labor license under the Contract Labor Act, even if they already hold their own labor license.

Additionally, please provide us with details regarding the necessary statutory compliances for our reference.

Regards,
Madhucon Pcl.