The government implemented The Contract Labour (Regulation and Abolition) Act, 1970 (CLRA) to establish standards for working conditions of contract laborers in specified establishments. Its purpose is to stop exploitation through mandatory payment of fair wages and provision of proper workplace conditions together with essential benefits.

Objectives of the CLRA Act

• The Act enforces rules that control the use of contract workers for selected businesses.

• Welfare benefits must be provided to contract workers.

• The elimination of contractual work must occur whenever such arrangements are unessential.

• Principal employers together with contractors must follow all labor laws as part of their responsibilities.

Applicability of CLRA Registration & Licensing

The CLRA Act applies to:

• Any establishment where 20 or more contract workers are employed in the preceding 12 months.

• Any contractor who employs 20 or more workers on any day in the preceding 12 months.

• It applies to both the principal employer and the contractor.

CLRA Registration Process for Principal Employers

• Determine Applicability: Check whether the establishment falls under the criteria of the CLRA Act.

• Prepare Required Documents:

1. Details of contractors engaged.
2. Nature of work performed by contract workers.
3. Proof of business registration (Company Incorporation Certificate, GST, PAN, etc.).
4. Address proof of the establishment.

• Application Submission:

1. Submit Form I (Application for Registration) to the Labour Department.
2. Pay the prescribed fee based on the number of workers.

• Inspection & Verification:

1. The labour authorities verify the application and may conduct an inspection.

• Issue of Registration Certificate:

1. After verification, a Registration Certificate (RC) is issued, allowing the principal employer to engage contract workers.

CLRA Licensing Process for Contractors

• Obtain Form-V: The principal employer provides Form-V as an authorization to apply for a license.

• Submit Application in Form-IV: The contractor must apply to the Licensing Officer with Form-IV along with the required documents.

• Attach Required Documents:

1. Copy of the Registration Certificate of the principal employer.
2. Agreement between the contractor and the principal employer.
3. Details of contract workers and wages.
4. Security deposit payment proof.

• Payment of Fees: Fees depend on the number of workers engaged.

• Inspection & Approval: Labour authorities review the documents and conduct an inspection.

• Issue of License: Upon approval, a CLRA License is granted, valid for a specific period and subject to renewal.

Compliance & Responsibilities under CLRA

Obligations of the Principal Employer

• Maintain Registers of Contractors & Contract Workers.

• Ensure payment of wages and compliance with labour laws.

• Provide necessary facilities like canteens, restrooms, drinking water, and first aid.

• Submit Annual Return (Form-XXV) to the labour department.

Obligations of the Contractor

• Maintain Register of Wages (Form-XVII) and ensure timely payment.

• Maintain an Employment Card (Form-XIV) for each worker.

• Ensure compliance with EPF, ESI, and other statutory benefits.

• Submit Half-yearly Return (Form-XXIV).

Penalties for Non-Compliance

• The punishment includes both a maximum fine of ₹1000 and a maximum imprisonment period of 3 months for neglecting to acquire registration/license.

• Cancellation of License/Registration for repeated violations.

• Legal action under labour laws for non-payment of wages, unfair labour practices, or unsafe working conditions.

CLRA License Renewal Process

• Apply for Renewal Before Expiry: The application should be made at least 30 days before the license expiry.

• Submit Renewal Application: Use Form VII along with updated contractor details.

• Pay the Renewal Fees: Fees depend on the number of workers engaged.

• Verification & Approval: Labour authorities review and renew the license.

• Receive Renewed License: The new license is issued for the next validity period.

Conclusion

The registration process under CLRA along with licensure requires companies to maintain labour law compliance and provide proper treatment to their contract workers. Principal employers together with contractors need to follow required procedures while keeping proper records and fulfilling their legal requirements to stay outside of penalties. Regular audits combined with timely renewals protect business operations and safeguard the rights of workers who are contracted through labor services.

Expert help from a labour law expert or legal consultant should be sought for CLRA Registration & Licensing to achieve smooth compliance.

Disclaimer

The information provided in this blog is purely for general informational purposes only. While every effort has been made to ensure the accuracy, reliability and completeness of the content presented, we make no representations or warranties of any kind, express or implied, for the same. 

We expressly disclaim any and all liability for any loss, damage or injury arising from or in connection with the use of or reliance on this information. This includes, but is not limited to, any direct, indirect, incidental, consequential or punitive damage.

Further, we reserve the right to make changes to the content at any time without prior notice. For specific advice tailored to your situation, we request you to get in touch with us.