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Ensure Legal Hiring of Contract Workers
Comply with the Contract Labour (Regulation & Abolition) Act, 1970 with Lawfinity’s expert support.
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Know More About CONTRACT LABOUR LICENSE
Introduction and Its Compliance
The employment of contract labour in India is regulated under the Contract Labour (Regulation and Abolition) Act, 1970, which ensures that contract workers are not exploited and are provided with fair wages, proper working conditions, and statutory benefits. Any principal employer or contractor engaging 20 or more contract workers (in most states) must obtain a Contract Labour License from the relevant Labour Department.
Lawfinity India Private Limited specializes in providing end-to-end advisory, documentation, and registration services for Contract Labour License, ensuring total compliance with statutory obligations under labour laws.
Why It Is Needed
Contract Labour License is legally required to regulate the employment of contract workers and ensure their welfare. Without the license, hiring contract workers becomes unlawful and can result in legal penalties.
Lawfinity India Private Limited ensures businesses operate within legal boundaries while employing contract labour and stay protected from legal risks.
Benefits and Advantages
- Legal Compliance Obtaining the license ensures full compliance with the Contract Labour Act, protecting both employer and workers.
- Employer Protection The license shields employers from legal action and labour disputes related to unauthorized employment of contract workers.
- Worker Welfare It ensures fair wages, proper work conditions, and statutory benefits to contract workers, promoting industrial harmony.
- Business Continuity Lawful employment of contract labour ensures smooth business operations and helps avoid work stoppages due to legal non-compliance.
- Credibility with Government and Clients Licensed contractors and employers enjoy greater trust and easier approvals from government bodies and clients.
Eligibility Criteria
Applicable Entities:
- Principal Employers: Any establishment employing 20 or more contract workers through contractors (subject to state-specific applicability thresholds).
- Contractors: Any contractor supplying 20 or more contract workers to any establishment.
- Must be registered with the local Labour Department.
- Should comply with the prescribed welfare, safety, and employment standards under the Act.
Documents Required
For Principal Employer Registration
- Certificate of Incorporation / Establishment Registration
- Address proof of the establishment
- PAN Card of the establishment
- Registration under Shops and Establishment Act / Factories Act
- Identity and address proof of employer/authorized signatory
- Board resolution or authorization letter for filing application
- Estimated number of contract workers engaged
- Agreement or contract with contractor
For Contractor License
- Copy of principal employer registration certificate
- Copy of contract agreement with principal employer
- Identity proof and address proof of contractor
- PAN Card of contractor's firm
- GST Registration Certificate (if applicable)
- Details of contract workers employed
- Labour Welfare Fund registration (if applicable)
- Copy of ESI & EPF registration (if applicable)
- Challan for license fees and security deposit
Steps for Getting Registration
- Consultation and Eligibility Verification: Lawfinity’s experts assess your specific requirement and verify applicable laws as per your location and industry.
- Document Collection and Review: Gathering and validating all necessary documents from both principal employer and contractor.
- Application Preparation: Drafting and preparing the online/offline application as per respective state labour department’s portal.
- Fee Calculation and Payment: Government fees and security deposits are calculated based on the number of contract workers.
- Application Submission: Filing of application with the concerned Labour Commissioner’s Office or online portal.
- Verification and Inspection: The labour department may conduct physical inspection or verification.
- License Issuance: On successful review, the Contract Labour License is granted.
- Post-License Compliance: Lawfinity continues to provide support for ongoing compliance like returns filing, renewals, and audits.
Penalties (If Any)
- Monetary penalties ranging from ₹500 to ₹1000 per day for each default.
- Suspension or cancellation of the license.
- Legal action, prosecution, and even imprisonment.
- Debarment from engaging contract workers in the future.
- Liability for compensation claims from workers or their representatives.
Timelines
Document Preparation
3–5 working days
Application Filing
1–2 days after documentation is complete
Government Processing & License Issuance
15–25 working days (depending on state authority)
Total Timeframe
Around 3–4 weeks
Timelines may vary depending on document verification and government approvals.
Fee
Frequently Asked Questions
Because every great business starts with the right answers.
Both principal employers and contractors engaging 20 or more contract workers (subject to state rules) must obtain registration and license.
No, employing contract labour without a valid license is a legal violation and invites penalties.
Yes, Contract Labour License is valid for a specified period and must be renewed before expiry.
Yes, rules and applicability thresholds may differ slightly from state to state.
The security deposit is usually calculated on a per-worker basis, varying between ₹90 to ₹1000 per worker depending on the state.
In many cases, labour authorities conduct a physical verification of premises and records before granting the license.
Yes, but separate licenses may be required for each establishment or state depending on operations.
Operating without a license may lead to legal penalties, suspension of operations, and criminal liability.
Lawfinity India Private Limited offers complete support from eligibility verification, documentation, filing, liaison with labour authorities, and continuous post-license compliance services.
Voices of Success
Hear from those who have thrived with us and discover how businesses have transformed and grown with our expert guidance and support.
Anil Yadav
Shaperz India Grain Private Limited
“From FSSAI to Trade License, Lawfinity handled all our approvals efficiently. One-stop solution for all licensing needs.”
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