Understanding Principal Employer Duties Under the CLRA Act: Are You Compliant?

Responsibilities of the Principal Employer under the CLRA Act
The principal employer has specific responsibilities outlined in the Contract Labour (Regulation and Abolition) Act (CLRA Act). These include ensuring the welfare and safety of contract workers, maintaining records of contract laborers, and complying with all statutory requirements related to contract labor. The principal employer must also ensure that the contractor they engage abides by all labor laws and regulations.

Compliance Requirements for the Principal Employer
Compliance by the principal employer involves adhering to the provisions of the CLRA Act, ensuring timely payment of wages to contract workers, providing necessary facilities such as canteens, restrooms, and first aid, and maintaining registers and records as mandated by the law. Non-compliance with the CLRA Act can lead to legal consequences, penalties, and reputational damage for the principal employer. Therefore, it is essential for the principal employer to understand and fulfill their obligations under the Act to avoid any legal issues.

A comprehensive answer to the responsibility of the principal employer under the CLRA Act and the compliance required by the principal employer necessitates a full study of the Act itself. In short, it can be said that the principal employer (PE) is primarily responsible, and the contractor has a supporting role. Primarily, all issues regarding compliance have to be addressed by the PE, and the compliance carried out by the contractor can be utilized.

There is only one difference between company employees and contractor employees, and it is about being on-roll and off-roll. So, if you talk about the responsibility of the principal employer in the contractor arrangement, you have to look into the following:

- Registration of the principal employer (RC) under the CLRA Act (if the worker limit is as per the state act).
- Separate contractor license for the respective unit.
- Employees' muster roll or employees' application form where all information related to employees should be filled, including education/technical qualification certificates.
- Employee induction program regarding company policy, safety policy, products, HR policy, and other rules belonging to the company.
- EPF Act - Employee declaration form, employee E-Nomination, and their contribution remittance on a monthly basis. If possible, a training program should be conducted about the passbook and portal operations, as well as how to read the passbook and other aspects.
- ESIC Act - Employee declaration form, their contribution remittance on a monthly basis. If possible, a training program should be conducted about the contribution period (April to Sep & Oct to March), family additions and deletions, information about the nominee, and portal operations, as well as how to read their own portal. Training about the benefits of medical benefits and others.
- PW Act - Employees should be aware of the act regarding payment disbursement, methods, and all others.
- MW Act - To pay minimum wages as per the state government fix.
- Salary/Wages - Provide proper training about the calculation of wages so that unnecessary chaos will not begin.
- Ensure double overtime pay and payment for national and festival holidays.
- Annual return by the principal employer and half-yearly return by the respective contractor.
- The number of contractor employees should be checked to ensure it aligns with the contractor license.
- Bonus payment as per rules.

Most importantly, you have to ensure that there is no direct relation between the employer and contractor employees in any way. This means no leave, gate passes, and other documents should be signed by the company representatives. For this, you have to deal via the contractor supervisor.