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Frequently Asked Questions

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


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LEAVE

11 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.
12 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.
13 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.
14 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.

REGISTRATION

15 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.
16 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.
17 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.
18 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.
19 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.
20 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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