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Why an Entity shuold take Labour Registration and Contractor Licence.

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Why an Entity shuold take Labour Registration and Contractor Licence.

Here is the overview of CL Act,1970


  • 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.


Registration of Establishment

  • Principal employer employing 20 or more workers through the contractor or the contractor(s) on deposit of required fee in Form 1

Contractor Labour Licence Startups Advise

Licensing of Contractor

  • Engaging 20 or more than 20 workers and on deposit of required fee in Form IV.
  • Valid for specified period.Sec.12, Rule 21


Revocation of Registration

  • When obtained by Misrepresentation or suppression of material facts etc. after opportunity to the principal employer Sec. 9


Prohibition of Employment of Contract Labour

  • Only by the appropriate Government through issue of notification after consultation with the Board (and not Courts) can order the prohibition of employment of contract labour. Sec. 10

Welfare measures to be taken by the Contractor

  • Contract labour either one hundred or more employed by a contractor for one or more canteens shall be provided and maintained.
  • First Aid facilities.
  • Number of rest-rooms as required under the Act.
  • Drinking water, latrines and washing facilities. Sec. 16 & 17

Revocation or Suspension & Amendment of Licences

  • When obtained by misrepresentation or suppression of material facts.
  • Failure of the contractor to comply with the conditions or contravention of Act or the Rules. Sec. 14

Contractor Labour Licence Stratups Advise

Liability of Principal Employer

  • To ensure provision for canteen, restrooms, sufficient supply of drinking water, latrines and urinals, washing facilities.
  • Principal employer entitled to recover from the contractor for providing such amenities or to make deductions from amount payable. Sec. 20


Laws, Agreement or standing orders inconsistent with the Act-Not Permissible
Unless the privileges in the contract between the parties or more favourable than the prescribed in the Act, such contract will be invalid and the workers will continue to get more favourable benefits.
Muster Roll, Wages Register, Deduction Register and Overtime Register by Contractor
Every contractor shall:

  • Maintain Muster Roll and a Register of Wages in Form XVI and Form XVII respectively when combined.
  • Register or wage-cum-Muster Roll in Form XVII where the wage period is a fortnight or less.
  • Maintain a Register of Deductions for damage or loss, Register or Fines and Register of Advances in Form XX, from XXI and Form XXII respectively.
  • Maintain a Register of Overtime in Form XXIII.
  • To issue wage slips in Form XIX, to the workmen at least a day prior to the disbursement of wages.
  • Obtain the signature or thumb impression of the worker concerned against the entries relating to him on the Register of wages or Muster Roll-Cum-Wages Register.
  • When covered by Payment of Wages Act, register and records to be maintained under the rules
  • Muster Roll, Register of wages, Register of Deductions, Register of Overtime, Register of Fines, Register of Advances, Wage slip. Rule 79
  • To display an abstract of the act and Rules in English and Hindi and in the language spoken by the Majority of workers in such forms as may be approved by appropriate authority Rule 80
  • To display notices showing rates of wages, hours of work, wage period, dates of payment, names and addresses of the inspector and to send copy to the inspector and any change forwithwith Rule 81


Contractor Labour Licence Startups Advise

Registers of Contractors

  • Principal employer:

To maintain a register of contractor in respect of every establishment in Form XII.

  • Contractor Rule 74

To maintain register of workers for each registered establishment in Form XIII.

To issue an employment card to each worker in Form XIV.

To issue service certificate to every workman on his termination in Form XV. Rules 75, 76 and 77




Please note:

contractors registration / license is applicable for each and every contract work and it is not a Permanent license / registration. As per law each and every contract requires separate registration. It is a Registration of Contract and not registration of Contractor. [In normal language we called Registered Contractor but actual fact is this)
Contract act do not applicable to contractor having less than 20 employees, in that case that contractor does not need to obtain contract license for particular contract work.

Document required for New Contractor Licence


  1. FORM IV – Application for Licence Under Rule 21(1) in Triplicate
  2. FORM V – Form of Certificate by Principal Employer [see rule 21(2)] – original

The contractor will issue the Form V in which the Principle Employer will countersign.

  1. Copy of Work order
  2. Annexure B – Information has to be submitted to the Licensing Officer under the CLA.
  3. Affidavit by Contractors on Rs. 100 Stamp Paper (Original) with copy of work order
  4. Challan fee (Licence Fee)
  5. Security Deposit


Sec. Offence Punishment:

  • Sec. 22 Obstructions For obstructing the inspector or failing to produce registers etc. – 3 months’ imprisonment or fine upto Rs.500, or both.
  • Sec.23 Violation For violation of the provisions of Act or the Rules, imprisonment of 3 Months or fine upto Rs.1000. On continuing contravention, additional fine upto Rs.100 per day

Contractor Labour Licence Startups Advise

According to me since contractors includes subcontractors as well hence following option is available.

1. Principal Employer can issue form-V to the main contractor and the main contractor should include the name and number of the employees employed by the sub-contractor while applying for labour license. Only thing is that there should be a valid sub contract agreement between the contractor and the subcontractor.

2. Principal Employer can issue form-V to the sub contractor provided the name of the sum contractor is included in the principal employers certificate since as per the definition contractors also includes sub contractor and in the eyes of principal employer contractors and sub contractors are one and the same.

Since the principal employer is responsible for any wrong done by both the contractor and the sub-contractor, hence the end result will be the same whether he gives the form V to the sub contractor or main contractor or if the main contractor gives form-V to the sub contractor as far as principal employer is concerned.


Any responsible, designated/ or authorized employee can be delegated for this purpose on behalf of the principal Employer. While issuing form V he/She (Authorized employee) should verify issued work order in detail( i.e Specific job, validity period of the contact, strength of the maximum manpower to be deployed and deployment any sub-contractor with its provision/permission under the issued work order etc.) .
Under the Contract Labour Act -1970 , there is no word for sub-contractor. If sub-contractor will be allowed under any case the footing of the sub-contractor will be the same footing as contractor and deployed manpower by the sub-contractor will come under the definition of the Contract Labour.

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