The importance of labour licence for contractors can be seen in the The Contract Labour (Regulation and Abolition) 1970 Act, It applies to any establishment in which twenty or more workmen are employed on any day of the accounting year as contract labour.
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.
Applicability of the Act
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:-
- It applies to any establishment in which twenty or more workmen are employed on any day of the of the accounting year as contract labour.
- It applies to any contractor who employs or who employed twenty or more workers on any day of the accounting year.
- Also, it does not apply to the establishments if any work performed in the intermittent nature.
- It does not apply to the establishments if any work not performed for more than one-twenty days in a year.
- It does not apply to the establishments situated in the special economic zone(SEZ).
- It does not apply to the establishments if any work performed in the seasonal nature for more than sixty days in a year.
- It applies to any establishment in which twenty or more workmen are employed on any day of the of the accounting year as contract labour.
- It applies to any contractor who employs or who employed twenty or more workers on any day of the accounting year.
- Also, it does not apply to the establishments if any work performed in the intermittent nature.
- It does not apply to the establishments if any work not performed for more than one-twenty days in a year.
- It does not apply to the establishments situated in the special economic zone(SEZ).
- It does not apply to the establishments if any work performed in the seasonal nature for more than sixty days in a year.
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
- a. Establishment name and address.
- b. Maximum number of employees to hire as contract laborers.
- 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
- 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.
- 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.
Contractor under section(2) of the act
Advisory Boards- The central Government under section 3 is excepted to set up the Central Advisory Contract Labour Board on activities relating to the administration of the act.
The Central Board should consist of the following are
- The Chairman to be appointed by the Central Government.
- The Chief Labour Commissioner (Central).
Central Advisory Board- The number of members, which does not exceeds seventeen but should not be less than eleven, as the Central Government may specify to represent the government, the Railways sector, the coal industry, the mining sector, the contractors, the workmen and any other sector with the opinion of the Central Government have to represent on the Central Board.
State Advisory Board- The State board should consist of the following are
- A Chairman to be nominated by the State Government
- The Labour Commissioner or in his absence any other officer represented by the State Government.
- The number of members, which does not exceed eleven but should not be less than nine, as the State Government may appoint to represent the government, industry, contractors, workers and any other sectors with the opinion of the State Government have to represent on the State Board.
FAQs
What is a labor license in India?
A labor license, also known as a labor registration or labor permit, is a legal document issued by the appropriate state government authority in India. It is required by establishments or businesses that employ a certain number of workers, as specified by state-specific labor laws.
Who needs to obtain a labor license in India?
Any establishment or business that employs a certain number of workers, as defined by the respective state’s Shops and Establishments Act or other labor laws, needs to obtain a labor license. The threshold for the number of workers varies from state to state.
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