The Contract Labor Act, 1970

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 Applicability of the Act

The employment of Contract Labor is prohibited under the Law where the work is of
permanent nature. But where the work is of intermittent nature the State Govt by its
notification may allow to employ the Contract Labor.
• Every establishment employing 20 or more workers as contract labor.
• Every contractor employing 20 or more workers.

Non Applicability

It shall not apply to the establishment in which work only of an intermittent or casual nature
is performed.

What is Intermittent nature of Job

 If the work is performed for more than 220 days in the last 12 months or
 If the work is of seasonal nature & it is performed more than 60 days in a year then it shall
not be deemed to be intermittent nature.
 Who is a Principal employer

In a factory, the owner or the occupier of the factory & where a person has been named as
Manager under the Factories Act, 1948

Who is a Contractor

A person who undertakes to produce a given result for the establishment through contract
labour or who supplies contract labour for any work of establishment & includes a sub
contractor.

Who is a Contract labor

Any worker will be a contract labour when he is hired for work of establishment through a
contractor, with or without the knowledge of the principal employer
 Prohibition of employment of contract labor

The State govt. can prohibit the employment of Contract Labor by a notification in the
following areas:

• The process, operation is the main business of the establishment

• Continuous Manufacturing
• Perennial nature of work
• Where the work should be done by whole – time workmen.

Employment permitted by the State Govt for employment of Contract Labor

• Housekeeping
• Horticulture
• Loading & Unloading
• Material Movements
• Canteen Employment
 Registration of Establishment
The Principal employer if employing 20 or more workers through the contractor, he is obliged
to get himself registered through FORM No. 1.

Licensing of Contractors
The Contractor has to obtain License if employing more than 20 workers & deposit the
required fees on FORM No. 4 along with the Principal Employer Certificate on FORM No. 5.

Validity & Renewal

The License will be valid for one year and can be renewed thereafter before 30 days of its
expiry

Revocation, suspension & amendment of license

If the license is obtained by misrepresentation or suppression of material facts.

Security Deposit
The Contractor has to deposit the Security amount as prescribed by the State Govt.
Welfare Provisions

Sr. No. Provision Conditions

1 Canteen Where 100 or more contract labour employed &

employment of contract worker continue more than 6
months

2 Rest rooms If contract labour is required to halt at night &

employment of contract worker continue for 3 or more
months

3 Crèche Where 20 or more female contract labor are

employed.

4 Drinking Water Sufficient supply at convenient place.

5 Latrines & Urinals At least one latrine for every 25 male & female
contract labor separately

6 Washing Facilities Separate for female & male contract labor

7 First aid Facilities At least one First aid box for every 150 contract labor
Responsibility for payment of wages: - A contractor shall be responsible for the
payment of wages

• Wages shall be paid in the presence of authorized person nominated by the Principal
employer.

• No wage period shall exceed one month.

• Wages of terminated worker shall be paid before the expiry of second working day from the
day on which his services were terminated.

• Wages to every worker shall be paid directly or to any person authorized by him.

• The wages paid to the contract workers shall be authenticated by the representative of the
Principal employer at the end of the wage sheet.
Register & records to be maintained:

Sr. No. Register to be maintained Form No.

1 Register of Contractor 12

2 Register of Person employed 13

3 Employment card 14

4 Service Certificate 15

5 Muster Roll 16

6 Register of wages 17

7 Wages cum Muster roll register where is fortnightly or less 18

8 Register of Deductions 20

9 Register of Fines 21

10 Register of Advances 22

11 Register of Overtime 23

12 Wages slip where wage period is more than one week 29

 All the records & register shall be preserved for a period of 3 years from the date of last
entry.

Annual Return
Annual return in Form 25 (In duplicate) Principal employer by 15th Feb.

Half Yearly Returns

Half yearly return in Form 24 (In duplicate) Contractor not later than 30 days from the close
of half year.

Penalty
Punishable with 3 months imprisonment or fine up to Rs.1000 or both.

IMPORTANT
If the Contractor fails to adhere the statutory requirements and unable to provide the above
facilities it will be the Liability of principal employer.