CHECK LIST

FOR PRICNIPAL EMPLOYERS ENGAGING

CONTRACT LABOUR

1). At the outset, it must be ensured that there is no notification prohibition contract labour
system by the appropriate government for the employment of contract in any process,
operation or any work of the establishment.

2). Before identifying a contractor, it is desirable to advertise in classified column (which will be
economical) in the local newspaper inviting offers from the contractors and a copy of
newspaper along with the invoice be preserved.

3). The principal employer is required to obtain registration under section 7 of the Contract
Labour (R&A) Act in Form No.1 (in triplicate) to the Registering Officer of the area in which the
establishment sought to be registered is located. The said Form shall be accompanied by
demand draft showing the payment of fees for payment of registration.

4). Only those contractors be identified who have their own independent code number under
the Employees’ Provident Funds & MP Act and the ESI Act. In case a contractor does not have
independent codes for ESI and Employees’ Provident Fund, an undertaking be taken that his
employees be covered by the principal employer and he will reimburse the amount of
contributions. A pro-forma to this effect is given in Appendix-A.

5). Whenever a contractor will be having 20 or more persons working for him, it is obligatory
that licence be taken under the Act. Accordingly the principal employer will issue Form-V (Form
of certificate by the principal employer) to the contractor for obtaining licence. The principal
employer will ensure that the contractor is also renewing his licence every year.

6). The principal employer should ensure that if the contract labours are employed for same or
similar kind of work as the regular employee of the Principal Employer does, then the wage
rates and other conditions of service should be the same for the contract labour as applicable
to the regular employee.

For instance if the Principal employer has its own security guards and also it is decided to take
from the contractor, it would be appropriate the security guards of the principal employer
should be promoted/re-designed as security officers of surveillance officers/personnel.
7). The Principal Employer must ensure that it issues certificate in Form V to the contractor for
obtaining licence as provided as provided under section 12 of the Act.

8). The Principal Employer should not involve himself in selection process of contract labour
otherwise it may lead to sham and camouflage.

9). Principal Employer should not supervise the activity of contract labour because it may
amount to sham and camouflage and, in turn, the contact labour would be declared employees
of the Principal Employer. In such a scenario, the Industrial Court has the power to direct
Principal Employer to absorb the contract labour.

10). That the Principal Employer gets the registration certificate and the contractor obtains the
licence from the competent authority as provided under section 7 of the Act before
proceedings to engage the contract labour.

11).The payment of wages to the employees, employed by the contractor, is disbursed to his
employees by the contractor himself or this nominee and Principal Employer has to depute his
representative to be present and sign the payment register in token of having disbursed the
salary in his presence by the contractor.

12). Amongst other employees, as provided by the contractor, there must be at least one
supervisor through whom the officials of the Principal Employer could communicate,
preference be given to a contractor who has such type of work at other locations also.

13). Discipline of the employees of the contractor in the discharge of duties must be regulated
by the contractor and not by the Principle Employer.

14). Leave to the employees of the contractor must be sanctioned by the contractor and not by
the Principal Employer.

15). No advance should be paid by the Principle Employer to the contractor’s employees
directly. Only contractor must regulate the same.

16). Maintenance of all types of record in respect of the employees employed by the contractor
should be his own responsibility and Principal Employer should not intervene in such matters.
17). If the Principal Employer is covered by the Employee’s Provident Funds and Miscellaneous
Provisions Act and the Employee’s State Insurance Act, then preference should be given to
those contractors who have their own code numbers under these Acts.

18). The Principal Employer must ensure compliance of the obligation pertaining to the various
provisions regarding amenities and benefits as prescribed under the Act.

19). The Principal Employer must ensure the submission of annual return to the prescribed
authority in the prescribed form under the Act.

20). Experience certificates should not be issued by the Principal Employer to the employees of
the contractor.

21). No performance appraisal of any sort shall be made by Principal Employer to the
employees of the contractor.

22). Principal Employer should avoid any settlement process, either bi-partite or tri-partite.

23). Contractor should prepare and hand over the pass book to the inter-state migrant
employees under the Inter –State migrant employees under the Inter State Workers Migrant
Act, 1976.

24). Avoid engagement of on-roll and off-roll employees in same or similar job.

25). Licence should be displayed at the work-place.

26). Principle Employer must send annual return by 15th February every year.

27). Principal Employer should see that the contract labour should not work in Principal
Employer’s establishment after termination of contract.

28). The colour of the uniforms of the contract labour should be different than that of the
employees of the Principal Employer.

29). Canteen facilities, if being provided by the Principal Employer to its employees, the
contract labour should be charged at little higher rate if it is decided they can also avail such
facility.
30). The Principal Employer should get an undertaking in the following of each month from the
contractor that not only the wages have been paid to its employees but also they have been
paid to its employees but also they have been enrolled under ESI and Employees Provident
Funds & MP Act and the contractor has paid their contributions (with the proof of deposit).
Should there by any reason, the Principal Employer is held liable to discharge any such monitory
obligation, the contractor will be responsible and that amount can be deducted from his dues
as payable by the Principal Employer. A pro-forma to this effect is given as Appendix B.
 APPENDIX – A

PRO-FORMA SUGGESTED FOR DEPOSIT OF EPF/ESI CONTRIBUTIONS FOR THE WORKERS OF THE CONTRACTOR

To,
The Management of M/s.

Sir,
As you know that I have been awarded contract for …….and in order to provide services I have
to engage workers. Since I do not have prescribed number of employees for obtaining ESI and
provident fund code numbers, I request that my workers be enrolled on your ESE/PF code
numbers and I will reimburse the amount of contributions. I further declare that by this
arrangement my workers under no circumstances would become or claim to be employees of
your establishment.

Yours faithfully,

Authorized Signatory.

Note:- merely by allowing the workers of the contractor to be enrolled at the ESI/PF code
numbers, the workers of the contractor would not become the employees of the principal
employer provided a request is taken from the contractor by way of abundant precaution.
Cement corporation of India Vs. Presiding Officer, Labour Court cum Industrial tribunal, Hissar
and other, 2010 LLR 704.
 APPENDIX – B

PRO-FORMA SUGGESTED FOR UNDERTAKING BY THE CONTRACTOR

I …………………………s/o………..Proprietor/Partner/Director of ……………….,do hereby declare and

undertake as under:

1). That in the capacity of independent Labour Contractor for M/s…………I have complied with
the provisions of all laws as applicable. I have paid the wages for the month of ………….which are
not less than the minimum rates as applicable, to all my employees and not other dues are
payable to any employee.

2). That I have covered all the eligible employees under Employees’ Provident Funds and
Miscellaneous Provisions Act and the Employees State Insurance Act and deposited the
contributions for the following months and as such no amount towards contributions
whatsoever is payable.

3). I further declare and undertake that in case any liability pertaining to my employees is to be
discharged by the M/s………………due to my lapse. I undertake to reimburse the same
M/s……………….is also hereby authorized to deduct the same from my dues as payable.

LABOUR CONTRACTOR

Authorized Signatory.