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A curated and categorised database of common questions regarding the law.

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1 Do all establishments have to be registered under Contract Labour (Regulation and Abolition) Act ?

Every principal employer of an establishment which employs 20 or more contract workers has to register under this Act.

The Act is not applicable to establishments performing work only of an intermittent or casual nature.

Work is deemed to be of an intermittent nature if it is of a seasonal character and is performed for not more than 60 days in a year, or in other cases if it was performed for not more than 120 days in the preceding 12 months
2 Do all contractors have to be licenced under Contract Labour (R and A) Act

A labour licence is required under the Act for every vendor who has more than 20 employees at a registered site
3 Is the Contract Labour Act always applicable when jobs and services are outsourced?

When services outsourced are carried out in some other premises not being premises of the principal employer, Contract Labour Act will not apply.
4 What is appropriate Government ? Is the appropriate government the state or the central government ?

Appropriate Government means –
i) in relation to any Industrial Disputes concerning any industry
  • carried on by or under the authority of the Central Government
  • or by a railway Company
  • or concerning any such controlled industry as may be specified in this behalf by the central Government
  • or concerning a Dock Labour Board
  • or and nbsp; the Industrial Finance Corporation of India Limited ,
  • or the Employees State Insurance Corporation or the Board of Trustees of the Coal Mines Provident Fund and Miscellaneous Provisions Actor the Central Board of Trustees and the State Board of Trustees of the Employees Provident Fund and Miscellaneous provisions Act, 1952,
  • or the Life Insurance Corporation of India
  • or [the Oil and Natural Gas Corporation Limited
  • or the Deposit Insurance and Credit Guarantee Corporation
  • or the Central Warehousing Corporation
  • or the Unit Trust of India
  • or the Food Corporation of India
  • or a Board of Management established for two or more contiguous states the Food Corporations Act, 1964,
  • or [the Airports Authority of India
  • or a Regional Rural Bank established
  • or the Export Credit and Guarantees Corporation Limited
  • or the Industrial Reconstruction Bank of India Limited
  • or [the Banking Service Commission
  • or an air transport service,
  • or a banking or an insurance company,
  • a mine,
  • an oil-field],
  • a Cantonment Board,
  • or a major port, and nbsp;
the Central Government,

ii) in relation to any other Industrial Dispute, the State Government..
5 Who is a contractor ?

A person who undertakes to produce a given result for the establishment, other than a mere supply of goods or articles of manufacture to such establishment, through contract labour or who supplies contract labour for any work of the establishment and includes a sub-contractor.


6 How much leave is to be given to contract employees ? is it different in each state ?

Leave is defined under State Shops and amp; Establishment Act and amp; Rules and differs from State to State. Some states such as Andhra Pradesh, Orissa and Karnataka have separate service conditions for Contract Labour.
7 It is difficult to track the leave of the vendor’s employees since there is a high attrition rate. Can the leave encashment of the vendor’s employees’ be paid on monthly basis ?

As per Shops & Establishment Act, the leave encashment is only applicable during separation and full and final settlement. However, the employer can pay wages in lieu of leaves accumulated. If it is paid on monthly basis, needs to be shown as leave encashment in the wages / salary sheet and ESI and PT to be deducted accordingly.


8 What are the requirements regarding Registration and Licensing under the Contract Labour Act ?

The Contract Labour Act is applicable to every site which has more than 20 contract employees. Thus the Principal Employer has to register under the act. A labour licence is required under the Act for every vendor who has more than 20 employees.
9 Please explain what is a labour licence and what is an Registration Certificate (RC)

Under the Contract Labour Act, the client (known as the Principal Employer) is expected to register the site and obtain the RC if there are more than 20 contract/vendor/indirect employees at the site, whether from one vendor or more.
The RC should list all the vendors under the site. Any vendor who has more than 20 employees at the site as mentioned in the RC, needs to obtain a labour licence. A labour licence can only be obtained after the Registration Certificate is complete, so it is incumbent on the client (Principal Employer) to obtain the RC first.
10 The Registration Certificate does not include the name of the sub-vendors and only includes the name of one vendor. Can we be compliant under the Act ?

The Contract Labour Act does not provide for sub-vendors, all sub-vendors are treated as independent vendors. All vendors who are at the site need to be mentioned in the Registration Certificate, and any vendors who have more than 20 employees need to take a labour licence. It is important to communicate this to the client and ensure they amend their Registration Certificate whenever there is a change in vendors or if the number of employees deployed exceeds that in the license.
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