Statutory Compliance made easy

What is the Contract Labour Act? - Highlights, procedure & violations.

 Contract Labour (R&A) Act


The Contract Labour Act was started with the goal to bring equal rights and regulations for the contractual workers. Usually, the working regulations of contract labour are different from the direct workers. Their employment relationship and the method of payment are also different as they are not paid directly by the Company. This labour are hired, managed and paid by the contractor.

So being a business owner, if your business hires contractor and contract employees, you have to follow the guidelines and different regulations of the Contract Labour Act.

The Contract Labour (Regulation & Abolition) Act - Know More About It With PionHR

Contract labour denotes a hired person, hired to work in a corporation through a contractor for a particular work and a limited tenure. The contract laborers are not employed straight by the organizations, and they do not have a specific wage. Establishments hire contractors who further recruit the workers for required jobs. To avoid the ill-treatment of workers in any companies and to make sure a restored working atmosphere for them, the contract labour regulation and elimination act were announced in 1970.  This act, apart from modifying the benefit, fitness, disbursements of the contract labour, also has comprehensive requirements for the registration of the establishments and issuance of the license to the contractors.

This Act Is Important for Most The Establishments Of India

The act is applicable to all those organizations which have more than or equal to 20 workers, currently working or formerly hired on any day of the year. It is also mandatory for every contractor who hires equal to or more than 20 workers in the year.

  • If the organization accomplished more than 120 days in the past twelve months, it cannot be reflected as an irregular one
  • If the organization executes for more than 60 days in an entire year and is periodic, it cannot be measured as a discontinuous one.

Registration Method of The Companies Hiring Contract Labours

Every establishment which hires contract labourers for its work has to obtain a ROC (Registration Certificate) from the  government. PionHR also helps in obtaining registration of such organizations:

  • The company should visit the registration office with the submission for registration in Form laterally with the proof demonstrating the fee of the suggested changes
  • If the request acknowledged is complete in all esteems, the registration officer registers the company and prides the copy of the ROC.

 Method for Obtaining The License

PionHR helps in following the complete procedure for obtaining the license. The key highlights are mentioned below: -

  • Form no. IV has to be filled by the contractor at the Licensing Authority along with the request for the endowment of a license.
  • At the time of submission of application Rs. 20/- security fee has to be deposited.
  • The licensing officer will retain the payment fee by the employer.
  • A certificate by the company in Form V declaring that he has hired the particular contractor for his organization.
  • The licensing officer may make additional essential surveys and issue the license in Form VI, which has to be reintroduced before 30 days of the expiry date besides the recommended fee, deteriorating which the contractor will have to pay 25 percent additional fee than the normal total.