Labour Contract License

What is Labour Contract License?

Contract labour means the workers are employed by or employed through an intermediary on work of any establishment. Contract labour is different from the direct labour in respect of employer – employee relationship and the method of payment. The workers are recruited by an outside person or agency and are supplied to an establishment or engaged on its work.

The legal definition of contract labour is given in Contract Labour (Regulation and Abolition) Act, 1970. The contract employees are generally from the unorganized sector. Thus, the purpose of the act is to confirm a healthy working environment and conditions and to ensure timely and full payment of the wages.

Any contractor who has hired twenty or more workers on any day of the month has to acquire a license for engaging contract labour working for any organization or undertaking.

Labour-License_1

Types of Labour contract licenses issued in India

The contractors are enlisted according to the classes as;

Class A

Class B

Class C

Class D

The contractors are enlisted according to the categories as;

Building category

Infrastructure category

Horticulture category

Class A

For a firm or individual to become a Class A contractor, they must possess the financial capacity to execute the works of the department in that class. It is required for the contractor to employ a technical staff (at least one degree holder and one diploma holder in civil or mechanical as required) for works costing between rupees 20 to 50 lakhs and a technical staff (at least one diploma holder in civil) for works costing between rupees 10 to 20 lakhs.

The contractor should have successfully and satisfactorily completed at least four works of an aggregate value not less than 20 lakhs and should worked as Class B contractor for at least three years.

In case of technically qualified individual or firms, the fields experience required will be seven years for a degree holder in Civil Engineering and 15 years for a Diploma holder in Civil Engineering in respect of construction of works.

Class B

For a firm or individual to become a Class B contractor, they must possess the financial capacity to execute works of the department in that class. It is required for the contractor to employ at least a diploma holder in civil at the time of award of work for costing above rupees 5 lakhs.

The contractor should have successfully and satisfactory completed as a Class C contractor at least four works of an aggregate value not less than rupees 10 lakhs and should have worked as Class C contractor for at least 3 years.

In case of technically qualified individual or firms, the field experience required will be 7 years for a degree holder in Civil Engineering and 10 years for Diploma holder in Civil Engineering in respect of construction of works.

Class C

For a firm or individual to become a Class C contractor, they must possess the financial capacity to execute works of the department in that class. 

The contractor should have successfully and satisfactorily completed as a contractor at least four works of an aggregate value not less than rupees 20 lakhs and should have worked as Class D contractor for at least 2 years.

No field experience will be needed for the enlistment in this class for Degree and Diploma holder in Civil Engineering.

Class D

For a firm or individual to become a Class D contractor, they must possess the financial capacity to execute works of the department in that class.

The contractor should have worked at least with any registered Class D contractor for a period of one year and acquired himself or themselves sufficiently with the elementary knowledge required for execution of civil works. The certificate to this effect should indicate the name of work where the applicant has worked.

No filed experience will be needed for the enlistment in this class for Degree and Diploma holder in Civil Engineering.

The contractors are enlisted according to the categories as

Building category:

These contractors can bid for building works and infrastructure works. This include the construction of a residential or non-residential structure consisting of foundation, walls, floors, roofs and finishing, civil and electrical services, awarded under a single contract.

Infrastructure category:

Infrastructure category include construction of road, flyover, elevated road or rail corridor, bridge including road over bridge, foot over bridge, approaches of bridge or flyover, box or pipe culvert, subway, underpass, tunnel, runway, sky-walk or river training work.

Horticulture category:

These contractors can bid for horticulture works. These include landscaping, plantation or transportation of tress, grassing, nursery work, or maintenance of trees and lawns.

What are the forms required for Labour contract License?

Form I: This is the application form for the registration of establishments employing contract labour.

Form II: This is the certificate of registration.

Form III: This form is for the register of establishments.

Form IV: This is the application for license.

Form V: This is the form of certificate by principal employer.

Form VA: This is the application for the adjustment of security deposit.

Form VI: This is the form of license granted by the office of licensing officer.

Form VIA: This is the notice of commencement or completion of contract work by the licensee.

Form VIB: This is the notice of commencement or completion of contract work by the employer for each contractor.

Form VII: This is the application for the renewal of license.

Form VIII: This is the application for the temporary registration of establishments employing contract labour.

Form IX: This is the temporary certificate of registration.

Form X: This is the application form for temporary license.

Form XI: This is the temporary license.

Form XII: This is for the register of contractors and it is the responsibility of the principal employer.

Form XIII: This is for the register of workman employed by contractor.

Form XIV: This is the format of employment card.

Form XV: This is the service certificate.

Form XVI: This is the format of muster roll.

Form XVII: This is for the register of wages.

Form XVIII: This is the format of register of wages cum muster roll.

Form XIX: This is the format of the wage slip.

Form XX: This is the register of deductions for damage or loss.

Form XXI: This is the format for the register of fines.

Form XXII: This is the format for the register of advances.

Form XXIII: This is the format for the register of overtime.

Form XXIV: This is the format of the return to be sent by the contractor to the licensing officer.

Form XXV: This is the format of the annual return of principal employer to be sent to the registering officer.

What are the documents required for Labour contract License registration?

Documents required for Labour contract registration

  • Application form duly filled.
  • Solvency certificate from a scheduled bank.
  • PRC certificate.
  • ID proof.
  • PAN card.
  • Passport size photograph.
  • Caste certificate if applicable.
  • The certificate of Property to be issued by the concerned Tehsildar.
  • Copy of press cutting after publicity by the provided authority for inviting objections, if any, within one week.
  • Certificate of plant and equipment should also include possession of sufficient shattering material.
  • Income tax clearance concerned to preceding assessment year. (for all classes except Class D)
  • Details of staff employed as applicable as per class applied for.
  • Aadhar card.
  • Legal bond to the effect that machinery and immovable property declared by him or them is free from all encumbrances except the mortgage of the lending bank or public sector financial institution and will not be transferred or disposed of by him or them without specific authorization of the registration authority. (for all classes)
  • Legal bond authorizing the department to recover any money due from him or them on any account by sale auction of his or their moveable property. (for all classes)
  • Character certificate issued by an officer not below the rank of Superintending of Police of the concerned district after verification from CID.
  • Certificate from chief engineer in relation to the works of any of the department that have been satisfactorily executed.
  • Affidavit as advised. (for all classes)

What is the procedure for applying for Labour Contract license?

  • Fill the application for registration in Form 1 and approach the registering office.
  • Submit the application along with required documents.
  • After the verification, an acknowledgement is provided for the applicant.
  • If the applicant is eligible the registration certificate will be granted in Form II.

What if you violate the law?

  • A person who violate the provisions concerning employment of contract labour is liable to a punishment of custody term of more than three months or a fine of more than rupees 1000 or both.
  • Continuation of violence will lead to an additional fine of more than 100 rupees for every day of such violation.

Conclusion

Being a labour contractor in India, one must possess the labour contract license. It is required for the contractor to strictly follow the rules and regulations as per the act. Failing to comply with these will lead to punishable offenses under the act.

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