Applying Late for a Labor License: Are There Penalties for Contractors?

We are working as a manpower contractor with a government institute (principal employer) for the last five months. Now, we want to apply for a labor license. Is there any penalty for applying late?

Just apply for the license, giving a fresh start date based on the current contract. You need to get a Form V from the employer. Whatever date he puts on it is what you need to put in your application as well.

There may be some minor penalties, but the bigger issue is the investigation by the Labour Commissioner regarding the use of contract workers without a license for 5 years. Therefore, it is better to apply, giving the current date as the commencement of the contract.

Dear RD Industries, I differ from the suggestion made by the learned member Mr. Saswata, who assumed 05 years instead of 05 months, regarding applying on the current date. I would suggest applying for the Labour Licence based on the actual date. There are three main reasons:

1. During the license process, an agreement is attached, and the date may not match the already signed agreement.
2. Generally, clients do not issue Form V with an incorrect commencement date.
3. The commencement date and closure date will never match in the renewal process, leading to difficulties each time in the future.

As rightly pointed out by Mr. Saswata, there may be penalties and other expenses, but my advice is to obtain the license with the correct date.

Thank you.

My apologies, Mr. Dangwal. I did read the period wrong. Also, because few people would be worried about it being a few months late. That said, I have seen PEs happily changing dates on documents to avoid scrutiny by authorities (not judging the legality or morality of the same here). Again, I agree with your suggestion that, as far as possible, the correct dates are to be used.

Checklist for Applying for a Labour License

Is there any specific checklist (list of documents) to be attached along with Form V for applying for a Labour License, or does it vary as per the jurisdiction of the labour officer?

Dear Shiba-Swain,

Labour Licence Process

The Labour Licence process is now online in many states. Please note the certain standard documents which are required (either to upload in the online process or to be submitted to the Labour Officer).

1. Agreement (duly mentioning period, price). If it is a sub-contract, there should be a clause "the prime contractor can sub-let the job/part of the job" or the contractor can engage sub-contractors, etc.
2. Form V.
3. Employee List with PF-ESI details.
4. Last month's wage proofs (Attendance, Wage sheet, Bank Transfer Letter, etc.).
5. Pay Slips.
6. Appointment Letter.
7. Self Declaration.
8. Authority Letter (if the person who is supposed to sign docs is other than the Proprietor, Partner, MD).

In the online process, maybe not all of the above are required, but any one of the above can be asked during the inspection process. Moreover, before applying online, you have to create an account and Login Id (through representative's mobile, Aadhar, PAN, etc.)

You can take any consultant's services; they will help in meeting the incidental expenses as well.

You are working as a manpower contractor for a government institute (principal employer) for the last five months. Let your principal employer get its registration for the engagement of contractors/contract workmen; only then can you apply for a license.

Dear Mr. Prabhat,

I slightly differ from your view.

Though as per the Act, primarily the Principal Employer (PE) should first get the Registration Certificate (RC) for the contract work, only then can the contractor(s) apply for a Labour Licence. However, it is seen that many government departments don’t take the RC.

If the contractor doesn’t take a labour licence and later, in case of any labour dispute, contingency, or visit by a Labour Inspector, the whole liability shifts to the contractor. Moreover, I have seen in many cases that a Labour Licence is issued to the contractor even if the PE doesn’t have any RC.

So, based on my practical experience, it is advisable to at least apply for the Labour Licence and pay the Security Deposit and Licence Fees. Later, if the Inspector denies issuing the Labour Licence, the contractor will not be held responsible.

Determining the Appropriate Government Authority

M/s RD Industries has to check who is the appropriate government (State or Central Government) for the Institute. If it is the Central Government, then the CLRA Act, 1971 Central Rules will be applicable, and the Labour Licence will be issued through the Shram Suvidha Portal. If it is the State Government, then in the case of an Online Process, the Labour Licence will be issued through the E-District Portal of the state, and in the case of an Offline Process, the Labour Licence will be issued by the Labour Office of the area.

Since the query was posted from Jaipur, Rajasthan, where under State Government jurisdiction, the Labour Licence is issued through an Offline process.

We have one reliable consultant who has been providing outsourcing and labour consultancy services for a long time. If you need the services, I will share the details.

Dear Mr. Pansingh, it is considered a violation to engage a contractor or employ contract labor (up to the stipulated number) without registration by the Principal Employer as per the Contract Labor (Regulation and Abolition) Act.