Contract Labour License Applicability - CL agreement with a big manpower supply company

Dear All Seniors, Especially Madhu Sir & Umakanthan Sir,

I have a few questions on Contract Labour License Applicability. I would appreciate your expert view on this, please.

A company has entered into a CL agreement with a large manpower supply company, and the agreement has been executed in the city where the company's head office is located. More than 3000 Contract Sales Employees have been deployed under that manpower supply company in various cities, states, and rural areas on a pan-India basis. Not more than 20 employees, not even more than 5 employees, are working at one premises/place. When considering state-wise distribution, around 100 to 120 people are working in a state, operating in markets across different cities and rural areas of that state.

1. Is the Contract Labour License applicable or not?
2. If applicable, how can the License be obtained - state-wise, location-wise, or all under the head office? Note that there are not more than 5 employees in one place.
3. In case the principal company does not have offices in all states, what is the solution? P E cannot register for issuing Form - V.
4. Are there any rules for Centralized registration from the Head office?
5. Is there any provision or section under the CLRA Act where it is mentioned that the License is only applicable when 10 or 20 employees are working at one premises under one roof? Please inform me.

Thank you.

Please check whether you engaged 5 or 20 workers through contractors in your premises. As per section 1(4), it applies if you are engaging more than the specified numbers.

Though you are engaging workers at different places, it is better to cover them with a license from the contractor for all statutory protections. However, it is suggested to obtain licenses for the places where they are working.

This is my opinion. Let us have opinions from experts in this regard.

Dear Provati,

In State of Gujarat v. Vogus Garments [1983(1) LLJ 255], the honorable Gujarat High Court has categorically observed that all contracts undertaken by one for another would not necessarily be contracts of contract labor. At times, certain activities of an establishment can be outsourced by entrusting them to some other to be accomplished through the latter's employees. In such a case, the agreement is only a contract for service distinguished distinctly by the absence of control and supervision over the activities as well as the employees by the contractee as the activities are performed elsewhere other than the contractee's establishment. It depends upon the business model of the contractee rather than the activities performed by the contractor on his behalf.

Therefore, please explain the nature of the business of the Company with pan-India operations and state whether the 3000 contract sales employees are required to work in its various direct branches or franchisee establishments situated across the country.