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Contract Labour License

Objectives The purpose of the 1970 Contract Labour Regulation and Abolition Act is to prevent the exploitation of contract labour, as well as to introduce better working conditions. A worker is considered to be employed as a Contract Labour when recruite

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The purpose of the 1970 Contract Labour Regulation and Abolition Act is to prevent the exploitation of contract labour, as well as to introduce better working conditions. A worker is considered to be employed as a Contract Labour when recruited by or through a Contractor in connection with an establishment’s work. Indirect employees are considered as contract workmen. Contract Labour varies in terms of the employment relationship with the establishment and a wage payment method from Direct Labour. By and large, contract human labour is not borne on payroll and is not paid directly. The Contract Workmen shall be hired, supervised and remunerated by the Contractor, who in turn shall be remunerated by the Establishment of hiring the Contractor services.


The act extends to all those companies that have twenty or more employees, currently employed or previously employed in the past twelve months on any day. It also applies to any contractor that has twenty or more workers employed or employed on any day of the past twelve months. It does not apply to companies that conduct casual or irregular work. It has sub-sections, again:-

  • If the institution had performed over the past twelve months for more than one hundred and twenty days, it cannot be considered continuous work.
  • If the establishment performs in a year for more than sixty days and is seasonal, that can not be considered continuous work.

Registration process for businesses recruiting contract laboratories

Any business that hires contract labor for its work must obtain a registration certificate from the correct government. The procedure for registering those companies is given below:

a. With the application for registration in Form No. 1, the employer will go to the registration office along with the receipt indicating payment of the prescribed fee.

b. The registration officer registers the company and grants the copy of the registered certificate in Form-II if the application obtained is complete in all respects.


Details regarding registration certificate

  1. a. Establishment name and address.
  2. b. Maximum number of employees to hire as contract laborers.
  3. c. Business category and any other relevant detail.


Contractor's license

Any contractor who works for an organization employing twenty or more employees on any day in the past twelve months must obtain a permit for contract labor. This license is issued by the licensing officer pursuant to the provisions of section 12 of the contract labor act. Under this section, a permit may contain conditions relating to work hours, wage-fixing, and other necessary facilities for contract laborers.

Process of the grant of license

a. The contract will make an application for a grant of license in form no IV to licensing authority

b. At the time of application INR 20 will be deposited as security

c. Retain the receipt of fee payment

d. An employer's certificate in Form V stating that the contractor concerned has been employed for his establishment.

e. The licensing officer may carry out more required investigations and issue the license in Form VI, which must be renewed in accordance with the prescribed fee within 30 days of the expiry date, under which the contractor will have to pay 25 percent more fee than the normal sum.

Duties of Contractor and Penalties on Voilation

The contractor should:

a. Do the payment of wages foxed by government or fixed by the commissioner of labour or in absence of fixed amount pay the fair wages to the labour

b. Provide facilities like

Canteen facility (if has employed more than 100 workers and their work is going to perform for more than 6 months)

  • Provide employment card to the labours

  • Restroom facilities

  • Urinals and toilet facility

  • The facility of drinking water, first aid, crèche, etc

c. Contractor shall maintain the various register, record and notices etc.

Penalty on violations

  1. Any person who violates any part of any provision of the act will be punished with detention for more than three months, or with a Rs 1,000 fine, or even both, depending on the extent of the violations.
  2. If a person breaks any rules under the act for which there is no additional fine, then he or she is sentenced to three months' imprisonment or a fine of one thousand or both rupees.
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