Centre proposes three-year licence for contractors: 

Centre proposes three-year licence for contractors


  • The government has proposed an 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.

What was the main concern?

  • The Contract Labor (Regulation and abolition) Act of 1970 provided that engaging contract workers was mainly for temporary, seasonal work but not for work of a perennial nature.
  • Since temporary worker were becoming less productive, more expensive, hard to put to immediate work and legally challenging to lay off in the face of falling demand, the employers found this feature of the Act very restrictive.

What are the amendments proposed?

  • Contractors will no longer require a licence for undertaking each individual project.
  • 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.
  • If the contractor wants to work in a single State for up to three years, the authorization needs to be obtained from the State Government.
  • The contractor will have to inform the government whenever it receives a work order from a company, failing which the licence may be cancelled.
  • The proposal makes a distinction between contractors who provide services and those who provide human resources. Contractors who provide human resources will no longer be responsible for providing canteen and restroom facilities to the workers, it will be the responsibility of the principal employer.
  • 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.
  • There is also a proposal to make wage payment “primarily” through electronic mode instead of cash payment.
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