DEFINITION:-This is enacted to regulate the employment of contract labour in certain establishments and to provide for its abolition in certain circumstances and for connected matters. The Act was enacted by Parliament in the Twenty-first Year of the Republic of India.

APPLICABILITY:- Every establishment in which 20 or more workmen are employed or were employed on any day of the preceding 12 months as contract labour. Every contractor who employs or who employed on any day of the preceding twelve months 20 or more workmen. It extends to the whole of India.


PRINCIPAL EMPLOYER (PE):- The below can be deemed as Principal Employer:-

Any office or department of the Government or a local authority, the head of office/department or such other officer as the Govt. may specify.

  • In a factory the owner or occupier of the factory (named as the manager of the factory under the Factories Act, 1948.
  • In a mine, the owner/or agent (named as the manager) of the mine.
  • In any other establishment, any person responsible for the supervision and control of the establishment.

Contractor:- A person who undertakes to produce a given result, other than a mere supply of goods, to any establishment through contract labour or who supplies contract labour for any work of the establishment and includes a sub-contractor.

Contract Labour: When workman is employed in connection with the work of an establishment and he is hired through a contractor.


Any office or dept. of the Govt. or a local authority, or

Any place where industry, trade, business, or occupation is carried on.

The Act, restricts the employment of women between 7:00pm & 6:00am.

Workman: Any person employed in connection with the work of any establishment to do any skilled, semiskilled or un-skilled manual, supervisory, or clerical work, whether the terms of employment be express or implied. 

Weekly off (Rest): After 6 days working, every labour is entitle to get one day rest (w/off). Usually it is Sunday, but can be given on rotation basis.

PL (Privilege Leave): The calculation of PL is most likely industry, type of business related. Generally one day PL is entitled for every twenty days of work performed by workmen during the previous calendar year.

Welfare and Health of Contract Labour:- These need to be provided at site: Rest Rooms, proper urinals First-Aid Facilities.

 Overtime (OT):Overtime refers to the time worked in excess of one’s regular working hours which, in India, is eight- nine hours per day and forty eight-fifty hours per week, depending upon the establishment. If someone works for more than that regular working hours, one is eligible to get remuneration for that period twice the normal wage.

RC (Registration Certificate): Every principal employer to which this Act applies is liable to make an application to the registering officer in the prescribed manner for registration of the establishment.

Labour Licence: Every contractor (covered in the Act) is liable to obtain the Labour License from the Labour Office of the area.

Labour Returns: In r/o the contractual labour every PE-Contractor is bound to submit Annual-Half Yearly Labour Returns.

Documentations:- Every PE and every contractor shall maintain such records and registers giving such particulars of contract labour employed, the nature of work performed by the contract labour, the rates of wages paid to the contract labour and such other particulars in such form as may be prescribed.



  • PE must obtain Registration Certificate (RC).
  • The invited BID must be clearly defined all statutory compliances (PF, ESI, Bonus, Gratuity, Wages etc.)
  • Ensure opening of Bank Accounts in r/o contractual labour, wages must be paid through Bank transfer.
  • Payment of Bonus once in a year to every deployed labour.
  • The Contractor should obtain Form-V from PE in the prescribed format.
  • Payment of notified Minimum Wages to the labours.
  • Both should submit Half Yearly / Annual Labour Return to Licensing Officer as specified in the ACT.
  • WC Policy must be taken in r/o employees who are not covered under ESI.


  • Discourage employment of contract workers on permanent, perennial and regular nature of jobs.
  • Don’t allow any contractor to work without a valid Labour License.
  • Never award / deploy any contract without a valid Agreement.
  • PE should comply with all Statutory obligation specified under the Act.
  • Should not employ any woman worker at night (Before 06:00 A.M. and After 07:00 P.M.).
  • Should not award/undertake any other job other than the license taken.
  • Not to employ sub-contractors unless specified by the PE in the Agreement.


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