Navigating CLRA Licensing: Who Should Issue Form 5, Us or Our Customer?

We are working on a customer site as their contractors in Jharkhand. We have our CLRA license from the customer. Meanwhile, we have engaged workmen on the rolls of our third-party vendor at the customer premises to subcontract some specialized skill jobs. To obtain a CLRA license, this third-party vendor requires Form 5 from the Principal employer. My question is: are we the Principal employer or is our customer, to issue Form 5 to enable them to obtain the CLRA license?

Regards,
Sania

This arrangement is very common in India - Contractor and Sub-contractor. For labor licenses, the Principal Employer (PE) can only issue Form-V, not the contractor under the PE.

Why would the PE issue Form-V to the subcontractor?

It all depends on the PE's intention. In Jharkhand, a very big and renowned steel plant is issuing Form-V to subcontractors after checking the basic credibility of the subcontractor along with the vendor's code.

Example from Maharashtra

In Maharashtra, I have noticed in the past that there was an agreement where the contractor would do the main job, but the manpower supply would be from the subcontractor. Based on the merit of the agreement, the PE issued Form-V to both the contractor and subcontractor.

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Most companies will not provide the documentation to the contractor to allow his subcontractors to work. The contractor is not the Principal Employer (PE), so he cannot issue the form either.

Proper Management of Subcontractors
A properly managed company will ask the contractor to put the employees into his own register and ensure compliance from his end. His personal agreement with the subcontractor is of no importance to the PE.

Dear SricityHR, At no point in time can the same person be both a Principal Employer and a Contractor for the same establishment where work is performed through contract labor. A contractor engaging subcontractors during the course of execution of the work for reasons such as economy, specialty, urgency, and the like are practical possibilities. However, such a contingency would not alter the status of the main contractor or subcontractors, and as such, they are bound by all the provisions of the CLRA Act, 1970 pertaining to contractors.

Dear Member,

I would like to add:

License Requirements for Subcontractors

It is important to check how many personnel you have taken the license for. If, as a prime contractor, you have taken the license for extra personnel (actual + projected) and the subcontractor does not require deploying 20 or more persons in Jharkhand, then your license is sufficient. However, you need to include the data of the subcontractor's employees in the Half-Yearly Labour Return.

When Subcontractors Need a Separate License

If the subcontractor is required to deploy 20 or more employees, then they can apply separately. The Form V will be issued by the Principal Employer (PE) only. They will mention, "M/s XXXXX has been engaged as a subcontractor to M/s XXXXXX (Contractor) in my establishment for XXXXXXX work."

Our Practice

In most of our sites, we generally take a license for the whole manpower (Technical, Garden, Security, Housekeeping + extra projected) and include their data in the Half-Yearly Labour Return. Our subcontractors have never taken the CLRA License.