Centre proposes three-year licence for contractors

The government has proposed a major overhaul in the contract labour law, which includes a three-year licence for contractors to work across the country instead of a separate one for new work orders.
Contractors will no longer require a licence for undertaking each project, as per the proposed changes to the Contract Labour (Regulation and Abolition) Act, 1970.
“The contractors can obtain a one-time licence valid for three years to work anywhere in the country from the Central Government. The contractor will have to, however, clearly define a particular area of work,” a senior Labour and Employment Ministry official said.
If the contractor wants to work in a single State for up to three years, the permit needs to be obtained from the State Government, according to the proposal.
However, the contractor will need to inform the government whenever it receives a work order from a company, failing which the licence may be cancelled, the proposed law stated.
Responsibility ceases
The proposed law also seeks to make a distinction between contractors who provide services and those who provide human resources. Contractors who provide human resources to a company will no longer be responsible for providing canteen and restroom facilities to the workers. “Providing facilities such as canteen and restroom to contract workers has to be the responsibility of the principal employer who had hired workers from the contractor,” the official explained.
If a work order is given to a contractor who has hired employees on payroll, then the workers will not be treated as contract workers under the Contract Labour (Regulation and Abolition) Act, according to a proposed clarification in the law.
As per the current law, a worker is “deemed to be employed as contract labour in or in connection with the work of an establishment when he is hired in or in connection with such work by or through a contractor.”
The government has also proposed to make wage payment “primarily” through electronic mode instead of cash payment.
“The proposed law is in line with International Labour Organisation Convention 181 [on private employment agencies]. A one-time three-year licence for contractors comes as a blessing. Presently, contractors hide away from labour law compliance due to the complexity involved in renewing licence with each work contract,” Rituparna Chakraborty, co-founder and executive vice-president, TeamLease Services said.