Consequences of not obtaining or not correctly obtaining Registration Certificate under Section 7 of CLRA and Licences by Contractors under Section 12 of CLRA

Question 1: What are the possible actions by the Labour Commissioner on a principal employer who has not obtained a Registration Certificate under Section 7 of the Contract Labour Act?

Question 2: What are the possible actions by the Labour Commissioner on a Contractor for not obtaining a license under Section 12 of the CLRA but deploying more than 20 Contract Labours?

Question 3: What are the possible actions by the Labour Commissioner on a Principal Employer for obtaining a Registration Certificate for 200 CL but engaging 400 CL on a regular basis?

The Principal Employer is 100% liable for Penalties/Penal Actions in respect of Non-Compliance by the or Any Contractor engaged by the Principal Employer under CL (R&A) Act, besides the Contractor for blatant breach of Legal Provisions.

Kritarth Consulting Pvt Ltd, Bengaluru Office, 26.7.20

The effect of non-compliance of the provisions of registration by the principal employer is twofold. First, he can be prosecuted under Section 24 of the CLRA Act, 1970, by the enforcement officers under the labor commissionerate. This may include imprisonment, a levy of penalty, or both. The second and most important consequence is that the entire contract labor would be deemed as the direct employees of the establishment concerning all employment benefits and all other statutory purposes.

The reader can refer to Section 23 of the Act regarding the punishment for the violation of any license conditions by the contractor, which is similar to that under Section 24.

The earlier legal position on the engagement of CL without license/registration was that the engagement was sham and the contract labor should be regularized. But now only the penalties are attracted. Still, it is advised to take registration by PE and engage CL only through contractors with a license.

Varghese Mathew
Tvm
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