Labour license compliance in case of subcontracting

In case a contract has been awarded to a Contractor A who further sub-contratcs a portion to Contractor B. Contractor A has taken the Labour License for 85 people and since there a 15 people in the part sub-contracted Contractor B has not taken the laobour license. Overall there are 100 Manpower but since subcontracting has been done 15 people are working without license.
Is it technically correct?

Since the subcontractor has only less than 20 workers, he need not get a licence under the CLRA. The Contractor is also not under statutory obligation to issue form V to the sub contractor so that the sub contractor can take a licence.

Dear Member,
If the Principal employer does not have any objection on working of sub--contractor, then you can engage a sub-contractor. While filing of application for getting RC under CL& RA Act, the PE is to show this sub-contractor in the details of contractor. In our opinion, if Form V is to be issued to the Sub-contractor then the PE is required to issue Form V & not by the main contractor as the definition of the contractor also includes sub-contractor. In your case the no. of workers is less for coverage under CLRA Act the subcontractor is not to have any license.
R N KHOLA

Hi,

It's imperative to ensure that all workers involved in a project have the necessary licenses and permits. In this case, it seems that Contractor A has obtained a labor license for 85 people, but there are an additional 15 people working on the subcontracted portion who do not have a license.

This situation poses a legal and regulatory risk, as those 15 workers are operating without proper authorization. Here are some steps that can be taken to address this issue:

Identify the Regulatory Authority:
Determine which government body or agency is responsible for issuing labour licenses in your jurisdiction. They will have specific procedures and requirements for obtaining licenses.

Contact Contractor B:
Inform Contractor B about the situation and emphasize the importance of obtaining the necessary labour licenses for the 15 workers. They should be aware of the legal implications and should take immediate action to rectify this.

Document Everything:
Keep detailed records of all communications with Contractor B regarding this issue. This includes emails, letters, and any other forms of communication.

Assist Contractor B with the Application Process: Offer guidance and support to Contractor B in the process of obtaining the labour licenses for their workers. They may need assistance in understanding the requirements and completing the necessary paperwork.

Monitor Progress:
Regularly check in with Contractor B to ensure they are making progress in obtaining the required licenses. It's important to follow up until the licenses are secured.

Consider Legal Advice:
If Contractor B is unresponsive or fails to take action, consider seeking legal advice. A lawyer specializing in labour law can provide guidance on how to proceed.

Mitigate Future Risks:
Put processes in place to prevent similar situations in the future. This may include thorough vetting of subcontractors and ensuring they have all necessary licenses and permits before commencing work.

Please note that operating without the required licenses can result in legal penalties and liabilities for both Contractor A and Contractor B. It's crucial to address this issue promptly and ensure compliance with all relevant regulations.

Thanks

In the instant case, the main contractor sub-contracted a portion or part of work awarded by the PE.
In the present case the main contractor has obtained the license for engagement of 85. But the sub-ontractor did not obtain any license but engaed 15.
Therefore, any engagement above 85 numbers shall termed to be illegal.
As per the law CL(R&A), the contractor can't engage more than the license strength. The number limit is not applicable to the sub-ontractor because no work ha been awarded to him by the PE.
So all the strength of workmen (A+B) will count under the contractor A. The Contractor'A' should enhance the license strength or for the part of work B should be issued a WO or to take a license to avoid action by the licensing authority.

The Principal Employer (PE) might offer contracts to various service agencies based on the project needs specialization/skills. Permitting subcontracting the job is primarily the duty of the PE; nevertheless, it is the main contractor's responsibility to get a Contract Labour license taking into account the total estimated manpower to be deployed, including the subcontractor/s manpower strength. The main contractor is also responsible for keeping A, B, C, and D registers and filing returns including for subcontractor/s workers.
If there is no express provision in the contract to subcontract the job, all statutory payments must be paid using the primary contractor's PF/ESI Code No. and the employer's contributions must be recovered from the subcontractor/s invoices.
Please note that Form III replaces the former certificate from the principal employer in Form V.
Our friend Mr. Prabhat has already discussed the applicability under the CL(R&A) Act, 1970, and I have simply expanded on a few points.

Regards,

Suresh